Financing

SOLAR FINANCING & FUNDING

There Are Three Ways To
Fund A Solar Installation

Our team will work with you to find the most affordable way to fund your solar solution.

At the end of the day, the decision is down to you, but we will use our experience to help you choose.

Capital Purchase

By funding the system via cash, not only do you own the asset from day one, you will not need to worry about interest costs eating into your return on investment.

This particular method of funding also offers some benefits that some of the other funding methods do not, such as being able to take advantage of the Annual Investment Allowance (AIA) The AIA allows a business to deduct the total value of an item that qualifies for an annual investment allowance from your profits before tax.

This is currently capped at £1million per tax year. For example, suppose a business was to invest in a solar PV array costing £250,000. In that case, they could potentially reduce their taxable liability by £50,000 if they were a 20% taxpayer and had sufficient profits to offset.

Asset Finance

Asset finance allows a business to borrow the money for a solar panel installation with the funds secured against the asset that is being purchased – in this example, the solar panels and associated equipment.

Asset finance lets businesses keep cash that they might have spent on a solar array in the bank for use in the company’s core operation. An added benefit of asset finance is that it allows the business to pay for its system over time using savings and income.

This, in turn, reduces the impact on cash flow that buying the system outright might have otherwise had. There is an abundance of funders to choose from when considering asset finance – all with their unique approaches. One lender, for example, will allow a business to fund its installation over a period of 10 years.

This funding term helps keep the annual repayments low enough that the income and savings from the solar array almost cover them completely.

Power Purchase Agreement (PPA)

While solar panels provide cheaper power, the downside is there is usually a high upfront cost to access this more affordable power. Thankfully, there are several ways for businesses to harness the sun’s energy without putting unnecessary pressure on their cash flow or balance sheet, the most popular of which is Power Purchase Agreements PPAs.

A PPA sees the solar array funded, operated, and maintained by a third party with access to institutional investors’ significant funds. The third party will have unrivaled experience developing high-quality solar arrays that deliver maximum benefit for both the host business and the investors.

Once the system is operational, the host business does not pay for the solar array, but they agree to buy the solar energy from the panels on their roof at a cheaper rate than the power they buy from their traditional supplier.

This arrangement sees the host business realize immediate savings from the solar system as they have no capital to recover. The third party remains responsible for the operation and maintenance of the array for the life of the system – usually 25 years. At the end of the PPA terms – which can run from 10 to 25 years – the ownership of the array, and therefore the full benefit of the system, passes to the host business. While the benefits of PPA far outweigh the disadvantages, it is essential to consider why PPA might not be suitable for you.

The main drawback is that the solar panels become a ‘tenant’ of the host business. In practical terms, nothing will change other than providing the right of access to the panels, but it does mean that if you do not own your site, you will need a minimum of 10 years remaining on your lease and permission from the owner to enter into the PPA.

Additionally, if you own your site and have plans to sell the building within the PPA term, you will need to be satisfied that the next owner of the building will not develop the site or remove the solar array from the roof. If this is part of their plans, you will need to factor in the cost of purchasing the system from the investor in the asking price for your site.

Why Choose Us

building up trust as your solar partner

We work tirelessly to build a trusting relationship with you, our customer, through clear communication and dependable processes.

Our competitive pricing and 24/7 support service also serve to build trust and a long-lasting relationship.

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