Commercial Solar Financing Explained

Our team helps regularly installs commercial solar panels.

We find that many businesses are realising the benefits of solar power, including:

• Reducing your company’s impact on the environment
• Future-proofing against rising energy bills
• Securing the power supply to your operations.

However, real challenge is being able to afford or finance them.

They are, after all, an investment that will pay for itself over time. But the initial outlay can be a daunting prospect. 

Fortunately, there are multiple ways you can finance your solar panels over time.

Power Purchase Agreements (PPA)

PPA is a way of financing your commercial solar panels where you don’t have to pay upfront.

The price of your solar energy system is locked in, typically for 25 years, and you garner immediate savings from day one. (Energy generated will cost typically 40-50% less than on the grid.)

Your solar PV system will also be maintained by the PPA company. So, you don’t have to worry about solar maintenance and servicing. 

At the end of the PPA term (typically 10-25 years) the system is gifted to the company to continue to use.

Lease schemes

Lease or hire Purchase is a loan secured on the equipment being purchased.

The equipment remains the property of the lease company until the end of the arrangement at which point it is signed over to the client for a peppercorn payment.

Leasing is tax efficient and will still enable the client to remain cash flow positive on the system generation after paying the finance premium.

The client is responsible for keeping the system maintained with these arrangements and The Little Green Energy Company (TLGEC) can assist with this.

We work with a few trusted companies to provide solar financing to our clients, including:

• Zestec (owned by funds, managed by Octopus Energy Generation)
• Smart Ease UK, who we can obtain approval with Smart Ease for systems up to £150K in a matter of minutes with some basic company information. (However, project values into the millions can be applied for.)
• The Lease Group. 

Buying panels outright

While this option is the most expensive upfront, you will generally get the quickest savings if funds are available to purchase your solar PV system outright.

This finance option is the one to pick if your business is cash rich with no investments in new equipment required in the immediate future.

This option provides you with complete control of the system and savings right from the start and with no interest to pay, the amortisation period is the shortest of all the finance options.

You can also use when installing commercial battery storage at your premises. 

PPA Vs. leasing

A solar lease is where you pay a fixed monthly lease payment, which is effectively a loan secured on the equipment with a peppercorn payment at the end to transfer ownership to the client. 

When you choose PPA, your financer will install and maintain the solar panels as part of the agreement. You only pay them for the energy you use (at a significantly lower rate than you would pay via the grid).

The PPA typically targets a 40-50% reduction in energy cost compared to grid energy.

At the end of the PPA, the system becomes you property. 

There are only upsides to investing in solar PV

While a commercial solar PV system is an investment, it is a worthwhile one.

There are only upsides to investing in solar energy, and then benefits will keep increasing over time. Here are a couple of reasons you should consider investing in solar energy for your commercial business:

• You will see an immediate reduction of your carbon footprint
• There is a fixed cost of energy from the system generation, which protects your company from market fluctuations. You won’t be impacted by rising energy bills!
• You will get green credentials, which makes your company more attractive to work with to other companies wishing to improve their carbon reduction targets, such as net zero
• Your ESG score will increase.

Types of companies that should invest in solar

Solar is suitable for many different types of industries and companies. For example:

• Cold storage: Solar provides constant power, even when the grid is down. This makes cold storage cheaper, more stable, and reduces the risk of a power cut ruining stock.

• Large retailers: Large retailers often need to maintain stable air-conditioning for long periods.

• Car dealerships: Car dealerships’s solar advantages include the costs they save on constant lighting, the suitability of their large roofs, and more.

And more!

The consistency of solar’s lower costs also helps make more accurate financial plans.

If you’re unsure of how much solar can save your business, contact us for an informed discussion.

Get in touch with us to discuss financing your solar energy system

If you have any questions, or would like to speak to one of our experts about which solar financing option is right for you, do not hesitate to get in touch with us.

We would be more than happy to talk to you.