Which solar payment option is best for your business?
When you’re deciding whether commercial solar a right option for your business, the cost of solar panels and installation is probably a major factor in your decision.
You’re probably familiar with the concept of the ‘payback period’ – that’s the time it takes for the electricity cost savings you might make to add up to the total cost of your system. The payback period of a solar power system will be different for every business. A reliable solar provider should be able to give you an estimate based on the solar system you’ve been quoted and the way your business uses electricity.
If you’ve decided that solar is a great solution for your business, the next step is working out how to pay for your system. Here are some options which might be available to your business.
You might pay for your solar power system in full
If your business cashflow allows, paying in full for your system could have some advantages. For a start, you would own your solar system from the start, so you wouldn’t need to budget for future repayments or any interest from these repayments.
There could also be tax advantages for your business. The Federal Government's instant asset write off, could mean you might be able to claim the entire cost of your solar system as a tax write-off.*
* To find out more, including whether your business is eligible and the status of the increase, visit the ATO website and speak with a registered tax agent.
Your solar supplier can match your business needs to the right solar systems – and your registered tax agent can help you figure out if you are eligible to claim.
Your business might be eligible for finance
If you think solar is right for your business but you don’t want to invest a lump sum in paying for it in full, finance options might suit your business.
Finance options for solar panels generally take two forms:
- The first is a rental agreement, where a finance organisation pays for and owns the asset and their client (that’s you) rents it from them for an agreed period. With this kind of finance, your business might make a monthly repayment, with the option to buy out the solar system at the end of the agreed period or continue leasing.
- The other common type of finance some businesses use to pay for solar is what’s known as a chattel mortgage. With this kind of finance, your business could own the solar system immediately and make monthly repayments to your lender to pay off your loan.
You could explore if grants and subsidies are available
Some local councils offer grants to encourage business owners to use solar power for their business needs. Check with your local government authority to find out if they have any solar incentives.
You might also be eligible to apply for small business grants from government or private organisations, depending on your business and industry.
Your business could be eligible to receive Small-scale Technology Certificates (STCs). The government uses these certificates to encourage businesses (and residential customers) to choose solar power, which results in a discount built into the upfront cost of your system. The amount of STCs your business could receive will vary, but generally the bigger your system, the more STCs you will receive.
To find out if commercial solar is right for your business, discuss your needs with your preferred solar installer.
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