A new guide compiled by industry experts has been launched to help owners of commercial buildings make the business case for rooftop solar and identify the best approach to investment.
It includes a range of scenarios to suit a number of different needs, including financing options, third party ownership and purchase power agreements (PPAs), project processes and timescales, and the role of the government’s Feed-in Tariff (FIT).
Rooftop solar on commercial buildings is widely seen to be the most important market for the solar industry due to large subsidy cuts which have made domestic installations and ground-mounted solar farms less attractive.
With the FIT subsidy cut considerably in early 2016, the report argues that the business case for any project should be capable of standing up without the tariff.
Instead of using solar PV as a direct revenue stream, companies are now encouraged to maximise ‘self-consumption’ as much as possible to displace electricity purchased from the grid, especially at peak rate times.
The benefit of a regular supply of electricity at a fixed price under a PPA model, whereby a third party finances the panels and sells the electricity back to the building owner, is also becoming increasingly attractive to businesses.
However, for businesses looking to fund the capital expenditure of a solar project directly, there is still a robust business case depending on the size of the installation and the electricity consumption of the site.
Solar PV technology has seen cost reductions of nearly 70 per cent in the last five years, while ongoing maintenance requirements are minimal.
Beyond the financial benefits, the report also highlights less tangible benefits such as positive press and access to supply chains with strict sustainability criteria.
The guide also provides a downloadable financial model for calculating the average cost of electricity produced by a solar installation over its lifespan, or Levelised Cost of Electricity (LCOE). This can be compared to cost of buying electricity from the grid, which is expected to rise in future.
Gaynor Hartnell, advisor to the REA, said: “There is enough commercial roof area in the UK to generate around half of our electricity needs.
“With solar PV, companies can have more control of their energy supplies, manage their costs and cut down on their carbon emissions.”
To read the guide in full, click here.