21 Nov 2017
Power prices in Australia are now officially amongst the highest in the world, with prices doubling over the last three years, with more pain to come. This is crazy for a country with such abundant energy resources.
Let’s look at what businesses can do to reduce the damage from recent price rises and guard against the inevitable future price rises to come.
There are three ways that businesses can combat rising power prices:
1. Energy Efficiency – Reduce the amount of power that you use through measures such as LED lights and more efficient machinery.
2. Renegotiating Electricity contracts – Commercial clients have real power in Australia to demand better prices for their power from their retailers and should demand a better rate or switch.
3. Commercial Solar – producing power on site at a price you set when installing the system reduces your reliance on the grid and hence the uncertainty associated with ever increasing power prices.
Residential solar has boomed in Australia over the last 10 years and over 25% of homes now have it installed. Commercial solar has taken a bit longer to get a foot hold but now a record number of businesses are investing as prices come down, innovative financing solutions become available and combating power price increases becomes a matter of life and death for many businesses.
So what are the main benefits associated with investing in a commercial solar system?
Reduced Energy Costs
As a given percentage of your energy will be produced on your roof at zero marginal cost rather than from the being drawn from the grid at ever increasing prices, you can expect considerable savings on what your pay to your electricity retailer. As well as reduced energy costs, you will make income through the sale of Large Generator Certificates and the sale of electricity that you don’t use via commercial Feed-in Tariffs.
Reduced Exposure to Increasing Power Prices
The percentage of your power that you produce on site will be generated at a fixed rate that will not increase over the life of the system. Once the system has paid itself off, between three and seven years, the electricity from the system is free. The larger the system the larger the percentage of your bill that is quarantined from the volatile electricity market giving you a competitive advantage over other businesses who haven’t invested in solar.
Exceptional Payback Periods and Financial Returns
Most commercial solar clients are finding that systems are paying for themselves in around three to seven years, Which equates to investment returns of between 33% and 15% p.a which is much better than any other investment available on the market. When deciding to invest in a system, a good solar company will provide you with detailed financial information outlining how much power the system is expected to produce over 25 years compared with conservative projections of how much grid electricity will cost over that period.
Low Risk Investment
By installing good quality tier 1 solar panels and inverters and then choosing a reputable installer, you can achieve great returns at negligible risk. Solar panels come with production warranties of up to 25 years and inverters of around 10 years. Many companies also offer performance guarantees, which means that you can bank on the systems production over an extended period.
Increases Business Value
A solar system on a business’ roof produces predictable revenue consistently over the life of the system. This will add to the value of the business by more than the cost of the initial investment. Systems also improve the NABERs and Greenstar ratings for your building which will further enhance value.
Reduced CO2 Emissions
By producing power on site from the sun, you’ll not only negate the burning of coal or gas for that energy, you’ll also be reducing the losses that come from transporting the energy from mine or gas field to the power station and then onto your premise via power lines. In this case, 1kW produced on your roof will offset much more that 1kW of energy consumed from the grid.
Customers value businesses that act in a sustainable way and are increasingly rewarding organisations who display a commitment to reducing their carbon emissions. Tenders from governments and large organisations are increasingly also looking to include the environmental sustainability of the organisations bidding in their decision-making process. Solar production data can also be displayed in prominent locations within your business on TV screens to display your green credentials to staff and customers alike.
As you can see, investing in a commercial solar system for your business has many benefits and in many instances, is a real no brainer.
The steps involved to getting a system on your roof and start saving:
1. Let Solar Market organise no obligation commercial solar proposals
2. Companies will conduct a physical inspection of your premises to determine if your site can accommodate a solar system
3. The company will then ask to access your interval electricity data to determine the financial benefits of a system for your particular circumstances and present then to you.
4. Decide on a good and reputable installation company.
5. Choose the best system size along with the relevant components. With a commercial system, we recommend going for top tier products from a reputable installer with a proven track record.
6. You’ll need to decide how to finance the system, either a straight Capital Expenditure (CapEx) or zero capital outlay options such a Power Purchase Agreement or Solar Lease.
7. Installation and commissioning will take then place.
8. Enjoy an enhanced competitive advantage and reduced business risk by locking in a large percentage of your energy prices for decades to come.
If you’d like Solar Market to arrange for you to receive proposals from CEC accredited installers, please fill out the form below.