There has by no means been a greater time for Australian companies to put money into business solar power. Last yr Solar Choice analysed electrical energy payments & meter information to generate free indicative solar enterprise circumstances for almost 300 companies, starting from faculties to farms to buying centres to automobile dealerships to strata items to medical doctors’ surgical procedures (to call just some). The overwhelmingly clearly final result from these analyses was this: solar is a incredible funding for any enterprise with daytime electrical energy consumption and area to put in panels.
Below we’ve put collectively some details about how solar for enterprise works, in addition to a few of the key takeaways from the information that we’ve collated – with a give attention to payback durations & inside charge of return (IRR).
Understanding business electrical energy payments
Before launching into particulars about Electricity payments for companies & business premises could be difficult, convoluted and in any other case obscure – which might make it difficult to work out intimately whether or not solar is worth it. The construction of business electrical energy payments varies from state to state, however there are a number of charge parts that make an look on most payments.
- Retailer costs: The charge that your retailer (the corporate that sells you your electrical energy) levies on every unit of energy (in kilowatt-hours, kWh) that you just draw from the grid/electrical energy mains.
- Network costs: A separate cost (additionally per kWh) that’s levied by the native electrical energy community firm and handed by means of to you by your retailer.
- Note that each retailer and community costs could also be levied as both
- ‘Flat rate’ – the place the identical charge is charged across the clock, 24/7; or
- ‘Time of use’ – the place totally different charges are charged relying on the time of day (larger throughout ‘peak’ utilization occasions, and decrease throughout ‘off-peak’ and ‘shoulder).
- Note that each retailer and community costs could also be levied as both
- Other kWh costs: The two costs above represent the majority of the typical business electrical energy invoice, however extra costs may additionally be itemised on a c/kWh foundation.
- Demand costs: Not all business electrical energy payments have a requirement cost, the place the shopper is billed for the utmost quantity of power (in kilowatts – kW – not kWh) that they draw from the grid throughout a time period (whether or not that be a day, month or quarter, and so forth).
How solar saves companies cash
The potential advantages of solar rely on the circumstances of the enterprise – together with the scale of the enterprise, their electrical energy plan particulars, energy utilization patterns of the enterprise and the state the place the property is situated. In basic, there are three ways in which solar helps to cut back electrical energy payments:
- Offsetting: This is by far crucial monetary profit that solar delivers for a enterprise. The larger the full charge you pay per kWh of electrical energy out of your retailer, the extra sense solar will make for you financially. Furthermore, the extra solar energy produced throughout enterprise hours, the much less electrical energy must be bought from the grid on the whole c/kWh charge (the ‘offset rate’). Most varieties of companies have their heaviest hundreds throughout daylight, which makes solar a no brainer. And as a result of solar offsetting is price saving measure versus a income stream, there aren’t any unfavourable tax implications.
- Solar feed-in credit: Depending on the scale of your system, the deal you’ve gotten struck along with your electrical energy retailer and the native insurance policies of the state through which your online business operates, your online business may additionally be eligible to earn credit (in c/kWh) for extra solar energy despatched into the grid. Though solely a secondary profit to offsetting, the place out there feed-in credit might help to bolster the enterprise case for going solar – particularly for companies that work diminished hours on weekends.
- Demand cost discount: For companies with demand costs, solar may additionally assist to cut back most demand. Because that is laborious to mannequin (attributable to each day climate fluctuations), nonetheless, any demand cost reductions ought to be seen as a bonus slightly than one thing to be relied on. (This could change as battery storage turns into extra viable for business premises.)
Popular solar system sizes for a small to medium enterprises (SMEs)
While we observe that solar is smart for a variety of enterprise sorts & sizes, small companies could discover that essentially the most engaging dimension choices are lower than 100kW for 2 most important causes:
- Affordability: Solar programs underneath 100kW in capability are eligible for an up-front incentive by means of the federal authorities’s Renewable Energy Target. This means much less capital expenditure to have the system put in and commissioned, which is bound to be an ‘easy win’ for enterprise house owners grappling with rising spiralling electrical energy prices.
- Right-sizing: For small companies, maximising the returns of a solar system requires guaranteeing that the system will not be too ‘large’ for the location’s energy necessities, as the best profit comes from solar offsetting. For most small to medium-sized companies, the optimum dimension will normally are available in at underneath 100kW. (Relatedly, small companies are inclined to have much less roof area for panels – which serves as a secondary constraint on allowable system dimension.)
Systems bigger than 100kW
Depending on the scale of the ‘small’ enterprise, a system bigger than 100kW may additionally be a viable possibility – significantly those that have excessive electrical energy demand throughout daylight (e.g. companies which have a lot of refrigeration gear). That being stated, programs within the 100kW+ vary are usually a greater match for bigger business & industrial properties the place electrical energy consumption ranges are even larger. Nationally, the typical payback interval for programs within the >100kW vary is about 5.3 years.
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Commercial solar payback durations (& IRR) by state
The information under relies on almost 300 indicative enterprise circumstances that Solar Choice’s engineering group compiled for business shoppers based mostly on their electrical energy payments. This takes into consideration plenty of various kinds of roof orientations and electrical energy utilization profiles to present a mean view of return on funding for business solar initiatives in Australia.
Continue under to see element & info by state.
Indicative payback durations & IRR for <100kW solar programs* |
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| ACT | NSW | NT | QLD | SA | TAS | VIC | WA | |
| Payback interval (Years) | 3.4 | 4.8 | 2.5 | 4.6 | 3.4 | 5.1 | 5.3 | 3.3 |
| Internal Rate of Return | 33% | 25% | 40% | 29% | 37% | 22% | 24% | 34% |
*(Based on enterprise circumstances composed by the Solar Choice group for business shoppers. Assumes 3% annual electrical energy inflation charge; indicative buy costs from our Commercial Solar PV Price Index for the month of the evaluation.)
Commercial Solar Payback Periods in Australian Capital Territory
| Electricity offset charge vary | Payback Period | Internal Rate of Return (IRR) |
| 10c/kWh – 20c/kWh | 3.6 years | 29% |
| 20c/kWh – 30c/kWh | 3.2 years | 33% |
Commercial Solar Payback Periods in New South Wales
| Electricity offset charge vary | Payback Period | Internal Rate of Return (IRR) |
| 7.7 years | 13% | |
| 10c/kWh – 20c/kWh | 5.4 years | 20% |
| 20c/kWh – 30c/kWh | 3.6 years | 30% |
| 30c/kWh”}”>>30c/kWh | 2.7 years | 40% |
Commercial Solar Payback Periods in Queensland
| Electricity offset charge vary | Payback Period | Internal Rate of Return (IRR) |
| 7.5 years | 13% | |
| 10c/kWh – 20c/kWh | 5.2 years | 21% |
| 20c/kWh – 30c/kWh | 3.4 years | 31% |
| 30c/kWh”}”>>30c/kWh | 2.3 years | 50% |
Commercial Solar Payback Periods in South Australia
| Electricity offset charge vary | Payback Period | Internal Rate of Return (IRR) |
| 10c/kWh – 20c/kWh | 4 years | 26% |
| 20c/kWh – 30c/kWh | 3.7 years | 29% |
| 30c/kWh”}”>>30c/kWh | 2.4 years | 43% |
Commercial Solar Payback Periods in Tasmania
| Electricity offset charge vary | Payback Period | Internal Rate of Return (IRR) |
| 10c/kWh – 20c/kWh | 5.4 years | 19% |
| 20c/kWh – 30c/kWh | 4.7 years | 24% |
Commercial Solar Payback Periods in Victoria
| Electricity offset charge vary | Payback Period | Internal Rate of Return (IRR) |
| 8.7 years | 11% | |
| 10c/kWh – 20c/kWh | 5.7 years | 18% |
| 20c/kWh – 30c/kWh | 3.5 years | 31% |
| 30c/kWh”}” data-sheets-numberformat=”{“1″:2,”2″:”#,##0.0″,”3″:1}”>>30c/kWh | 3.3 years | 32% |
Western Australia
| Electricity offset charge vary | Payback Period (years) | Internal Rate of Return (IRR) |
| 10c/kWh – 20c/kWh | 4.3 | 24% |
| 20c/kWh – 30c/kWh | 3.1 | 35% |
| 30c/kWh”}”>>30c/kWh | 2.5 | 43% |
Request a free solar enterprise case and examine main business installers
Since 2008 Solar Choice has consulted with over 3,000 companies round Australia and helped develop over 800MW solar business and solar farm initiatives.
