Is Solar Worth the Investment? Making the business case for renewables
- Thursday, June 8, 2023
- Posted By The Growth Company
As energy becomes one of the largest expenses for businesses in all sectors, many are now installing solar systems to help them manage costs. Having onsite renewables like solar pv for your business provides energy security, helping your business to avoid the threat of rising energy costs and also reduce your carbon footprint and helping net zero credentials.
Irrespective of your industry, replacing your monthly electricity bill with a solar power system that generates electricity for you with zero variable cost is a sensible investment that can pay dividends in the long-run, especially with rising energy costs.
However, with such a significant outlay, making the business care means you’ll have to demonstrate a positive return-on-investment and outline the benefits of powering your business with renewables. In the current economic climate, when costs are tight, it’s harder for businesses to justify the upfront costs even when knowing the potential long-term benefits. Investing in renewables is about changing mindsets to see longer paybacks, rather than expecting instant results, if you can do that then making the business case to your employer or benefactor is easy.
Investing in solar
Investing in solar PV means a significant initial investment, but it could save you thousands in the long-term.
The cost of solar panels depends on the size of your commercial building, the level of kilowatt needed and the installation provider you choose. On average, the cost of buying and installing solar panels for SMEs can range from £6,000 and £10,000. However, depending on the required power output and size, prices can be significantly higher.
The solar market is particularly buoyant right now, with households and businesses alike seeking alternative solutions to heat their homes and workplaces due to high energy prices.
Any building with a sloping or flat roof has the potential to generate solar energy, and it’s the fastest renewable energy source to install and see a return on investment on. Across Greater Manchester, many businesses own buildings and sites which make ideal spaces for solar generation and could help the city as a whole to contribute to net zero targets.
Businesses that own their own buildings, or seek a landlord’s permissions, can use the power produced on-site in their operations, providing energy security and reducing the risk of rising energy prices once and for all.
Making the business case for solar pv
When will you see a return on investment?
Typically, businesses that install solar panels begin to see a return on investment within 5 to 7 years. However, if energy prices remain high – or in fact if they continue to grow- businesses will see this return much more quickly.
Solar panels will stop your business having to buy energy from the grid, which will significantly reduce your energy bill. Depending on how much electricity your company uses on an annual basis, a solar power system could even reduce your electricity bill to zero.
However, it also provides businesses the opportunity to earn money back through payments from the Smart Export Guarantee. The SEG allows you to sell any surplus energy back to the National Grid, paying on average between £120 and £180 per year.
Minimal operational and maintenance costs
Once installed, solar pv systems have low operational and maintenance costs. Because solar panels come with very few parts, there are fewer things that can break and other than annual inspections and cleaning, solar panels require almost no maintenance. What’s more, solar panels are made to last over 25 years, with evidence of some installed in the 1980s still working to this day at around 90% of their original output. Not only are solar panels reliable, but their longevity makes them worth the investment.
Boost the value of your property
Due to the longevity of solar panels and the potential return on investment they provide, solar panels have been known to add value to properties. Installing solar panels to your commercial property in Greater Manchester has potential to increase its value and make it more attractive to buyers if you were to sell it. In that sense, the value of the solar panels could outlast your business’s time on the premises. Everyone wants to save money on energy and ass solar panels will make the lettable space cheaper to power and heat, tenants and buyers are attracted to reduced running costs. The RICS is now factoring sustainability and ESG into commercial property valuation, proving a strong correlation between the environmental performance of an asset to its market value.
Rate protection
As energy prices continue to rise, business owners across Greater Manchester are under a huge amount of strain. Producing your own energy means you don’t have to worry about variable and fluctuating rates, instead, you can focus on business as usual. Not every business will be able to generate enough electricity through solar to manage all of their costs, however, taking a significant amount of energy away from the grid means your business will be less reliant on external energy suppliers and much more independent.
Green financing options to reduce costs
In a challenging economic climate, finding the money for your business to implement renewable energy sources like solar isn’t always a priority, even when you’re aware of the advantages. However, before you write it off completely, there are a number of green finance solutions which can help you reduce costs as you implement green technologies. Financing your solar pv installation may make it easier to justify, as you can replace your monthly energy bill with a payment towards your solar pv system. This won’t restrict your cashflow and will soon mean you’re spending no money at all, once the solar pv is paid for and your energy costs reduce.
From business finance and green loans to grants specifically for green projects, as the government encourages the switch to renewables and net zero, there are more solutions available to make the initial outlay of solar panels more feasible for businesses.
Check out Bee Net Zero’s guide to Green Finance to learn about the specific green finance offerings available.
Greening your brand and business
A final business case for solar panels which shouldn’t be taken lightly, is how much a switch to onsite renewables will improve your brand image. Talent, customers and partners are becoming more environmentally aware and with this, they want to work with businesses that share their views, beliefs and mindsets. Your investment in solar power can be incorporated into your brand identity and leveraged into a powerful selling point for your products, services and even vacant roles to help you connect with people and encourage loyalty for years to come.
Therefore, solar panels may be a significant investment, but if you alter your mindset to see the long-term benefits they far outweigh the initial short-term outlay. As energy prices continue to rise and environmental concerns become more important to all of us, investing in solar pv for your Greater Manchester business could also be seen as investing in your future; reducing risks, costs and improving your reputation.
To learn more about investing in solar, check out our Switching to Solar landing page which features guides, case studies and content that will help you make informed choices.
The Bee Net Zero partnership can connect you with trusted local suppliers from the Greater Manchester area, advise you on the right kind of solar pv for your business and help you set targest to reach your net zero ambitions. To gain tailored advice from Bee Net Zero partners like Electricity North West and Green Economy, contact us.