Business owners know that they should invest in solar power systems, but they often hold back because they are misinformed after reading myths about costs and results of these off-grid solutions.
The internet is awash with spam and peers or acquaintances can often put people off installing solar power because they give them the wrong information. Here’s why you shouldn’t hold off investing solar:
I cannot afford solar power right now, it’s too expensive
In most cases, financiers will lend you 100% of the cash you need for rooftop solar power systems, meaning you do not have to pay anything upfront for the project.
If you take a 5-7 year operating lease with no upfront payment, in most cases the savings outweigh the finance repayments.
So in reality, you’re generating income, being cashflow positive, not negative.
Example: A pub owner in western NSW recently reached out to us to identify where he can save money on his electricity. We identified a number of different technologies to reduce energy waste at the site. We also recommended a rooftop solar power system to generate power behind the meter.
With no upfront payment, his monthly lease payments stood at $1,200, and he was spending $1,700 less on energy every month. This means he was $500 cashflow positive per month or $6,000 per annum during the lease term.
I plan to go down the solar power route in a year’s time
Like most investments, it is about getting in early. If you decide that you are going to install solar in a year’s time, you have already missed out on a year’s saving. When considering the benefits of financing as stated above, you should be investing now.
Example: We presented a project through a channel partner, in which the project cost was $105,000 (which can be financed in full). The annual reduction on energy spending was $30,000, resulting in a 3.5-year payback.
So by waiting for one year to install, you have missed out on reducing your expenditure on energy by $30,000.
This all takes too long to pay off
We see a return on investments from 2-6 years, depending on certain factors. The truth is that electricity rates are more costly than they have ever been over the last few years while the price of solar and other smart energy technologies is dropping.
For every kWh you use, you pay a rate higher than ever, so for every kWh you generate, your savings grow exponentially. The reality is that Australians pay some of the highest energy rates in the world, but the advantage is that these high rates pay off our energy investments a lot quicker.
Example: We work with an energy-intensive business partner who was contracted on very low rates. When his contract came to an end, we tendered for the best possible rates, which still hit the business hard because the market is what it is and prices were highly inflated compared to when they last locked into a contract some years ago.
We identified a solution and crunched the numbers on a solar and efficiency project and calculated a return on investment of 5.5 years on the old rates the business was on. When we compared this to the rates in the new contract, the return on investment was much shorter and the system will pay for itself in 3.5 years rater than 5.5 years.
I am waiting for a government grant
Let’s say the government brings out a grant in July next year for NSW businesses. The grant gives businesses a free audit and $10,000 to implement solar power systems solutions.
Business A decides to wait for the grant, whereas Business B goes straight ahead with an audit for $2’500, and implements the solutions.
They both make an annual saving of $25’000 per annum. Two years after Business A’s project implementation, they have saved $60’000 in energy costs. Business B which installed the system a year earlier has saved $75’000 minus the audit cost. Business B made the right decision.
Example: South Australia made a grant available to businesses, however, they put the grant on hold, and it has now been on hold for over six months. Your business could have made six months’ worth of savings by now.
Want to find out more about solar power?
Want to be part of the Leading Edge Energy journey? Contact our Energy Experts by calling us on tel: 1300 852 770 or e-mail us on info@leadingedgeenergy.com.au.
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