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Commercial Solar Panel Installation – Is It Worth It?

Expert Solar Panel Installers in Worthing- William Dexter-Managing Director

Written by

William Dexter

Updated on

April 11, 2024

solar panel installation - energize solar - worthing

Commercial Solar Panel Installation – Is It Worth It?

Table of Contents

References 

IBISWorld. (n.d.). Solar Panel Installation in the UK – Market Size 2009–2023.Retrieved from:https://www.ibisworld.com/united-kingdom/number-of-businesses/solar-panel-installation/14628

Department for Business, Energy & Industrial Strategy. (2022). Energy Trends: renewables, quarter 3 (July to September) 2022. Retrieved from https://www.gov.uk/government/statistics/renewables-quarterly-report 

Energy Saving Trust. (2023). Feed-in Tariffs. Retrieved from https://energysavingtrust.org.uk/advice/feed-tariffs/ 

Cone Communications. (2021). 2021 Cone/Porter Novelli Purpose Study. Retrieved from https://www.conecomm.com/research-blog/2021-cone-porter-novelli-purpose-study

Green Building Council. (2020). Solar Power and Property Value. Retrieved from https://www.ukgbc.org/news/solar-power-and-property-value/ 

Renewable Energy Assurance Ltd. (n.d.). Microgeneration Certification Scheme (MCS). Retrieved from https://www.microgenerationcertification.org 

Solar Trade Association. (n.d.). MCS Installer Certification. Retrieved from https://www.solar-trade.org.uk/consumers/choosing-an-installer/mcs-installers/ 

Photovoltaic Quality Assurance Task Force. (2018). Best Practices for Solar Photovoltaic Installation Best Practices for Solar Photovoltaic Installation. Sandia National Laboratories. Retrieved from https://www.nrel.gov/docs/fy18osti/70415.pdf 

Solar Power Europe. (2020). Global Market Outlook for Solar Power / 2020-2024. Retrieved from https://www.solarpowereurope.org/reports/global-market-outlook-for-solar-power/

Introduction 

So, you’re looking into Commercial Solar Panel Installation. Odds are you researching this for 1 of 3 reasons mainly

1. Reduction Of Energy Bills

2. Reach and Exceed Net Zero targets 

3. Secure Your Businesses Energy Future


You’re not the only business to do this. In recent years, the adoption of solar energy has gained significant traction among businesses seeking to reduce costs, avoid fluctuating energy prices in an increasingly unstable macro-economical world and demonstrate corporate responsibility. 

According to recent data, over 2,100 businesses in the UK have adopted solar energy to reap these rewards and secure their energy future. This baseline figure underscores proactive rather than reactive business management. It also shows how adopting renewable energy as a profit protection mechanism for businesses is becoming more prolific across the UK business sector. The benefits for commercial solar panel installation are compelling but the advantages extend far beyond mere cost savings.

Importantly, we’ll help you understand how you take the idea of commercial solar panel installation from concept to panels on roof. The purpose of this blog is to demonstrate how historic hurdles of securing commercial solar panel installation are being removed. The idea is simple, the sooner the panels are installed, the sooner you save money and set a path for energy independence

The Advantages of Commercial Solar Panel Installation

Recent years have demonstrated the need  for businesses to strive to become more environmentally conscious and economically savvy when it comes to energy. The installation of solar panels presents itself as a viable solution. Beyond its ecological benefits, commercial solar panel installation offers substantial economic advantages, ranging from reduced energy costs to potential revenue streams. Here’s the headlines for you.

Reduced Energy Costs

According to recent statistics from the UK government, businesses can save up to 30-40% on their electricity bills over the lifespan of solar panels installed on their premises (Department for Business, Energy & Industrial Strategy, 2022). 

With such huge savings on energy, reinvestment into the operational side of businesses, particularly for manufacturing and construction industries, becomes something that can be conducted at scale. bottom lines are increased and tangible profitability 

By utilising commercial solar installation as a cost saving and protection asset, businesses can significantly reduce their dependence on traditional grid electricity, thereby mitigating the impact of rising energy prices. 

This reduction in operational costs can directly contribute to improving the bottom line of businesses across various industries. With cashflow comes opportunity. Solar energy is such an asset that allows for greater scope in this area.

Here’s a hypothetical example of the savings between 30-40% as a result of an average high energy usage business over the course of a year:

Month

Energy Usage (kWh)

Energy Cost (£/kWh)

Total Energy Cost (£)

Savings (40%) (£)

January

115,000

0.27

31,050

12,420

February

97,500

0.27

26,325

10,530

March

97,500

0.27

26,325

10,530

April

97,500

0.27

26,325

10,530

May

115,000

0.27

31,050

12,420

June

115,000

0.27

31,050

12,420

July

115,000

0.27

31,050

12,420

August

115,000

0.27

31,050

12,420

September

97,500

0.27

26,325

10,530

October

97,500

0.27

26,325

10,530

November

97,500

0.27

26,325

10,530

December

115,000

0.27

31,050

12,420

Total

1,239,000


£334,275

£133,710

Income Generation through Feed-in Tariffs (FiTs) and Export Tariffs

In addition to cost savings, commercial solar panel installation opens up avenues for income generation through government incentives such as Feed-in Tariffs (FiTs) and Export Tariffs. 

FiTs allow businesses to earn money by generating renewable electricity, which is then fed back into the grid. The UK government provides FiTs for eligible solar panel installations, offering businesses a guaranteed payment for every unit of electricity generated, irrespective of whether it is consumed internally or exported to the grid. 

Prices here can vary, however, another income source for no effort is always going to be a benefit for businesses.

Moreover, businesses can also benefit from Export Tariffs, wherein they receive payment for surplus electricity exported to the grid (Energy Saving Trust, 2023). 

These financial incentives not only offset the initial investment in solar panel installation, should this be the funding metric of choice for businesses, but also provide a steady income stream over the lifespan of the system.

Asset Acquisition and Appreciation

Another compelling economic benefit of commercial solar panel installation is the acquisition of valuable assets that appreciate over time. 

Solar panels represent a tangible asset on a business’s balance sheet, with the potential to enhance the overall value of the property. As businesses invest in solar energy infrastructure, they effectively diversify their asset portfolio and reduce reliance on volatile energy markets. 

Additionally, solar panels are known to increase the attractiveness of commercial properties, leading to potential appreciation in property value. Studies have shown that properties equipped with solar panels tend to command higher rental rates and attract more tenants, thereby boosting the overall profitability of real estate investments (Green Building Council, 2020).

Enhanced Corporate Social Responsibility (CSR) and Brand Image

CSR and Brand Image are often forgotten elements of business. But, they can have huge impacts on a business. Beyond direct economic benefits, embracing solar energy aligns with corporate social responsibility (CSR) initiatives, enhancing the brand image and reputation of businesses. 

As consumers increasingly prioritise sustainability and environmental stewardship, companies that demonstrate a commitment to renewable energy are likely to enjoy a competitive advantage in the market. 

Studies have shown that businesses with strong CSR policies tend to attract more customers and investors, thereby bolstering their long-term financial performance (Cone Communications, 2021). 

Secondarily, as consumers become more conscious of their environmental responsibility, they want to pair with employers who share this vision. With commercial solar installations, attraction of new talent becomes streamlined. A shared vision is a stronger vision.

By investing in commercial solar panel installation, companies can showcase their dedication to sustainability while reaping the associated economic rewards.

Let’s calculate your potential savings

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Finance Options for Commercial Solar Panel Installation

1. Cash Purchase

The most straightforward financing option for commercial solar panel installation is a cash purchase, wherein businesses pay the full upfront cost of the system. 

While this approach requires a significant initial investment, it offers immediate ownership of the solar equipment and allows businesses to maximise long-term savings on energy costs without incurring additional financing charges or interest expenses. 

Cash purchases are particularly suitable for businesses with ample capital reserves or those seeking to take advantage of available tax incentives and rebates.

2. Solar Loans (Capex Finance)

Solar loans also known as Capex are specifically tailored financing options designed to help businesses spread the upfront cost of solar panel installation over time. 

These loans typically offer favourable terms, competitive interest rates, and flexible repayment options, making them an attractive choice for businesses looking to minimise upfront expenses while enjoying the benefits of solar energy. 

Solar loans can be obtained from banks, credit unions, or specialised solar financing companies, and businesses can choose between secured or unsecured loans based on their creditworthiness and collateral availability.

3. Power Purchase Agreements (PPAs)

Power Purchase Agreements (PPAs) are third-party financing arrangements wherein a solar developer or provider installs, owns, and operates the solar panel system on a business’s premises at no cost to the business.

Under a PPA, the business agrees to purchase the electricity generated by the solar system at a predetermined rate over a specified contract term, typically ranging from 10 to 25 years. The rate of power purchased is typically 50% below market rates.

As mentioned, PPAs require no upfront investment from the business and offer fixed electricity rates, providing cost certainty and savings compared to traditional utility rates. Additionally, PPAs include maintenance and performance guarantees, shifting the responsibility of system upkeep to the solar provider.

With an average estimate of 80% of commercial installations being conducted under PPA agreements, this is the most common installation choice for businesses.

Here is a table that provides an overview of a hypothetical commercial installation and the various costs of how each finance option will affect a business.

Financing Option

Size of Installation

Upfront Cost

Maintenance Costs (per year)

Annual Payments (if applicable)

APR (Assumed at 5%)

Energy Purchase Price

Total Cost Over 10 Years

Total Cost Over 20 Years

Cash Purchase

200 kW

£180,000

£900

N/A

N/A

N/A

£189,000

£198,000

Solar Loan

200 kW

£0

£900

£12,000

5%

N/A

£141,000

£282,000

Power Purchase Agreement (PPA)

200 kW

£0

£0

£0

N/A

£0.11 per kWh

£0

£0

Let’s calculate your potential savings

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The Importance of MCS Accreditation For Installers and Tier 1 Products For Commercial Solar Panel Installation

When it comes to commercial solar panel installation project, ensuring the competence of installers and the quality of solar products are paramount. This is where MCS (Microgeneration Certification Scheme) accreditation for installers and the use of Tier 1 products come into play. Their importance cannot be understated as these products stand for protection, quality and longevity of your investment.

MCS Accreditation for Installers

MCS accreditation serves as a hallmark of quality and professionalism in the renewable energy industry, providing assurance to businesses that installers possess the necessary skills, expertise, and adherence to industry standards. Here’s why MCS accreditation is vital for commercial solar panel installations:

Quality Assurance: MCS-accredited installers undergo rigorous training and assessment to demonstrate their competence in designing, installing, and maintaining solar panel systems. This ensures that installations meet high-quality standards and comply with relevant regulations and best practices.

Access to Incentives: Many government incentive schemes, such as the Feed-in Tariff (FiT) and Renewable Heat Incentive (RHI), require installations to be carried out by MCS-accredited installers to qualify for financial incentives. Working with accredited installers enables businesses to maximise their potential returns on investment through incentive schemes.

Commercial Confidence: MCS accreditation instils confidence, assuring them that the installer has the necessary expertise and credentials to deliver a reliable and efficient solar panel system. This can be particularly reassuring for commercial entities making substantial investments in renewable energy infrastructure.

Warranty Compliance: Manufacturers of solar panel equipment often require installations to be carried out by MCS-accredited installers to validate product warranties. By choosing accredited installers, businesses can ensure that their installations comply with warranty requirements, providing additional protection and peace of mind.

Tier 1 Products

In addition to installer accreditation, the quality of solar panel products used in commercial installations is crucial for performance, reliability, and long-term durability. Tier 1 products refer to solar panels manufactured by reputable companies with a proven track record of quality and reliability. Here’s why opting for Tier 1 products is essential:

Quality Assurance: Tier 1 manufacturers adhere to stringent quality control processes and use high-quality materials and components in their products. This results in solar panels that are more efficient, durable, and reliable, ensuring optimal performance over their lifespan.

Long-Term Performance: Tier 1 products typically come with longer warranties and higher performance guarantees compared to lower-tier products. Investing in Tier 1 panels reduces the risk of premature degradation or failure, providing businesses with greater assurance of long-term performance and energy generation.

Bankability and Financing: Tier 1 products are often preferred by lenders and financial institutions due to their proven reliability and bankability. Choosing Tier 1 products can facilitate easier access to financing options and lower interest rates for commercial solar panel installations.

Manufacturer Support: Tier 1 manufacturers typically offer comprehensive technical support, warranty coverage, and after-sales service, ensuring that businesses receive timely assistance and resolution in the event of any issues or concerns with their solar panel systems.

MCS accreditation for installers and the use of Tier 1 products are critical factors that can significantly influence the success, reliability, and performance of commercial solar panel installations. By prioritising these considerations, businesses can mitigate risks, maximise returns on investment, and contribute to a sustainable and renewable energy future.

Conclusion 

In exploring the multifaceted landscape of commercial solar panel installation, it becomes evident that its advantages extend far beyond the extensive economic considerations. From fostering environmental sustainability to offering diverse finance options and prioritising installer expertise and product quality, the journey towards adopting solar energy for commercial endeavours encompasses a spectrum of benefits.

Let’s calculate your potential savings

This will only take a couple of minutes!

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