What is Commercial Solar ?
Businesses across the UK – including factories, offices and education facilities – are increasingly realising the benefits of installing a Commercial Solar PV system to earn a significant tax-free income, make substantial savings on energy bills and improve green credentials.
A Commercial Solar system consists of Solar Panels which convert the sun’s light into electricity using Photovoltaic (PV) cells. Businesses can then take advantage of this generated energy by using it for free to power lighting, technology and machinery.
What are the benefits of Commercial Solar Power?
Commercial Solar Panels represent a secure, risk free and extremely profitable opportunity for Businesses of all sizes, with a Return on Investment typically around 12.7%.
Through the Government’s Feed-in Tariff (FIT) scheme, Businesses will receive guaranteed payments for each unit of energy that the Solar PV Panels produce for the next 20 years, providing a lucrative tax-free income.
The Feed-in Tariff gives Businesses three ways to earn and save money, through the Generation Tariff, Export Tariff and Bill Savings:
The Generation Tariff pays for each unit, or kWh, of electricity that is used. These payments are secure, tax-free and last for 20 years from installation.
The Export Tariff pays for each unit of electricity that is not used and is exported back to the national grid. Most utility companies will assume that 50% of the energy generated is exported.
Substantial Bill Savings are also to be had, as the Green Energy produced by the Commercial Solar Panels can be used to power lighting, technology and machinery for free, reducing the need to buy the energy from the grid. As Businesses use up to 100% of the electricity generated, the Bill Savings are typically larger than those for domestic Solar Panels.
How does the scheme work ?
Under the government’s feed-in tariff (FIT) scheme, you’ll be paid for every unit of electricity your solar PV system generates whether you use it or not and, in most cases, also be paid for the unused electricity you export back to the grid.
To date, the scheme has helped encourage over half a million home owners and thousands of businesses to install solar PV – a significant contribution towards the Government’s target of generating 15% of UK electricity demand via renewable energy sources by the year 2020.
However, in December 2015, after a lengthy consultation period, the Government confirmed that deep cuts to the feed-in tariff would be enforced for installations after 15th January 2016 due to over spending of the initial budget. Many of the bandings were also consolidated and new ones introduced. Despite the cuts, the feed-in tariff still provides a supporting contribution to the vast savings made on energy bills when investing in solar PV.
What is the feed-in tariff?
The FIT was introduced in 2010 to incentivise homeowners and businesses to invest in renewable energy technology with guaranteed tax-free payments for 20 years. These payments, based on how many units (kWh) your system generates and exports, are also increased in line with inflation.
Our expert team will forecast your feed-in tariff payments (based on the current rates and your projected generation & export) and energy bill savings to demonstrate how many years it will take for your PV system to pay for itself and also your rate of return.
The generation tariff
The FIT has two elements, the first being the ‘generation tariff’. Your electricity supplier will pay you the current FIT rates – depending on the size of your system – for every unit (kWh) of electricity your system generates, whether you use it your or not.
The current generation rates are shown further down the page, together with the export rate which we explain next.
The export tariff
The second element of the FIT is the ‘export tariff’. For smaller systems under 30 kWp, your electricity provider will assume you only use half of the electricity generated, therefore exporting half of this back to the grid. Consequently, you will receive the current export rate for a quantity of electricity equivalent to half of your generation.
For system sizes over 30 kWp, it is a requirement that you have an export meter fitted to qualify for and receive export payments. You may also be required to pay an annual fee to your electricity supplier for the service. As solar PV systems are designed based on your electricity demand, the extra cost to install and administer metering doesn’t generally offer any financial advantage and we commonly advise against it. However, our expert team will assess each project individually and advise accordingly.