Funding Your Commercial Solar Installation

As the energy transition gains momentum, businesses are increasingly turning to solar power to manage costs in an increasingly volatile energy market and meet their sustainability goals. If you’re considering a solar installation for your commercial premises, one of the key decisions is how to fund the project, of which there are two main options – capital expenditure (Capex) or a Power Purchase Agreement (PPA). In this blog we take a look at the advantages and considerations of both options to help you make the right choice.

 

Option 1: Capex

 

Capex involves purchasing the solar PV system outright, using your own funds. Once installed, you own the system and reap the full benefits of the energy it generates.

 

 

Advantages of Capex

 

Complete ownership and control: Owning the system outright gives you complete control of the installation and system. You don’t have ask permission to make any changes to it (such as expanding or relocating it), or to make any alterations to the roof on which it is fixed. 

Greater financial returns: With a typical ROI of three to four years, Capex-funded systems provide the greatest financial returns over the system’s lifespan. Your business benefits from 100% of the energy generated and can sell excess power back to the grid via the Smart Export Guarantee (SEG).
Energy independence: You can generate your own power and reduce your reliance on fluctuating grid prices.

 

Considerations of Capex

 

High upfront costs: The initial investment can be significant, which may not suit all businesses and because it is a capital expenditure, it appears on your cash flow statement and cannot be deducted in the year it is paid

 

As the system owner, you’re responsible for ensuring its upkeep, though modern systems require minimal maintenance.

 

 

Option 2: Solar PPAs

 

A Solar Power Purchase Agreement (PPA) is a financing model where a third-party company installs, owns and maintains the solar system. Scroll to the bottom of the blog to find out about Plug Me In’s PPA offering. In a PPA arrangement, your business agrees to purchase the electricity generated at a predetermined rate, typically below market prices.

 

Advantages of Solar PPAs:

 

No upfront investment: The installation is funded entirely by PPA provider, making solar power accessible to businesses with limited cash reserves.
Immediate cost savings: Solar PPAs offer lower electricity rates than grid prices, providing instant financial relief and because they are typically long-term contracts (lasting 10 to 25 years) they provide predictable electricity costs over an extended period.

Hassle-free maintenance: The PPA provider handles all installation, maintenance, and operational responsibilities, so you can focus on running your business.

 

Sustainability made simple: A PPA contributes directly to a company’s sustainability goals without requiring any capital outlay.

 

 

Considerations of Solar PPAs:

 

Long-term contract: PPAs are typically a 10-25 year contract, which may impact future energy decisions and can be restrictive, especially if your business might relocate or expand before the contract ends.
Fixed savings: While PPAs guarantee savings, they may be less than owning the system outright, especially if energy prices drop.

 

 

Why choose Plug Me In for your PPA?

 

At Plug Me In, we’re more than just solar PV installers - we’re your energy partners. Our Power Purchase Agreements (PPAs) deliver exceptional value with unmatched expertise and service.

 

End-to-end expertise: Because we handle everything, from system design and installation to long-term maintenance – you can have complete confidence in your system’s performance and cost efficiency.

Highly competitive rates: And because we understand your system and the energy performance calculations, we provide PPAs tailored to your needs at market-leading rates, making solar power an easy and affordable choice.

Guaranteed quality and reliability: With Plug Me In maintaining your system to the highest standards, you benefit from hassle-free, reliable energy savings and peace of mind.

 

 

Ready to explore your options?

 

Whether you’re leaning towards Capex or a PPA, Plug Me In can help you make the right choice for your business. Contact our team today for a free consultation and discover how we can design, install and finance the perfect solar solution for your commercial premises.

 

Let’s work together to power your business sustainably and reduce your energy costs.