With the cost of electricity predicted to rise by 20% before 2020, many businesses have begun to look at installing commercial solar panels as a means of cutting energy costs. When it comes to investing in solar energy as an actual profit-making scheme, rather than simply a cost-saving measure, it can be difficult for businesses to figure out whether it will prove a financially sound venture, as the ever-changing nature of government discounts and energy prices means that advice given a year ago may no longer be as relevant.
So let’s take a look at the actual current figures regarding commercial solar panelling, and see if a renewable energy investment is right for you.
Small business owners are likely to have around the same amount of space for solar panels as a domestic premises; which usually equates to a 4kW system on average. The up-front costs of such a system are between £5,000 and £10,000, depending on the type of cell, additional equipment, and the installation price quoted.
Obviously you will save on energy prices from the beginning, around £670 per year on average, but if you front the financing for the installation yourself and avoid interest costs, you can expect to see a profit from your initial outlay within ten years.
However, these figures only apply to systems installed in 2015. In early 2016 the Government’s Feed-in Tariff, a payment made to businesses and individuals who generate their own electricity, will be slashed by 87%. This reduces yearly savings to around £266, meaning a 4kW system will take nearly 30 years to turn a profit.
But when medium to larger businesses take on a solar panel investment, their increased capacity and financing options make turning a profit far easier. A 20kW system requires around 140m square of roof space, costing approximately £30,000 to install.
Even with the cuts to the Feed-in Tariff payments, a business can expect to make a profit within 15 years on the system due to accumulated savings in on-site energy expenditure, and it could be even sooner dependent on your energy use.
The cuts to the Feed-in Tariff are, at the time of writing, only planned cuts and not necessarily definite. If your business has time before the turn of the year to sign up for the old rate then it certainly makes sense to do so, as the payments are guaranteed for 20 years, giving you plenty of time to build up a healthy profit.
But even if you miss the cut-off point and FIT is reduced to the lowest predicted rate, solar panels still prove to be a fantastic investment in your company’s future.
When installed correctly in an optimum position, commercial solar panels can give you reductions of up to 50% on your energy bills, and the extra energy you put back into the grid will constantly generate extra profit. When you also consider that installation costs are falling year on year, it may be that the Government cuts to the Feed-in Tariff are only a temporary dent in the long-term profitability of solar panel investments.