Frequently Asked Questions
Setting aside the recognized environmental benefits, there are many financial benefits that make commercial solar a lucrative investment for many businesses. Programs and incentives that help pay for the system, offsetting current operating costs and reducing future electricity costs; commercial solar is a proven solution for many commercial, industrial and agricultural businesses in the UK and throughout the world.
Commercial solar systems reduce electricity bills by offsetting a building's electricity use with solar energy generated from the sun; this offset results in significant savings throughout the life of the system, making the business more competitive. The UK's electricity rates have consistently risen, but recently are growing faster than historical averages. A commercial solar system protects against a certain future of rising costs by offsetting electricity use throughout the system's life.
Commercial solar, like other renewable energy resources, has many environmental benefits. Businesses reduce greenhouse gas emissions by using solar energy to offset their electricity use, which in turn, reduces air pollutants like sulphur dioxide and particulate matter produced through typical electricity generation, which have shown to cause health problems. Solar is more important now than ever, many businesses are looking forward and committing to a more sustainable future.
Yes, commercial solar is worth the price, worth the time investment, and worth the effort that it takes to get panels onto the roof of your business to reduce reliance on the utility. If your business can take advantage of the lucrative incentives, like the solar investment tax credit, the high return on investment and short payback periods quickly generates positive cash flow.
Larger than solar panels designed for residential use, photovoltaic commercial solar panels absorb the sun's energy throughout the day, converting UV rays into direct current (DC) electricity. Most businesses run on alternating current (AC) electricity, so along with the solar panels, inverters are needed to convert DC to AC electricity for the building's use.
No, solar energy generation is currently dependent on sunlight and can only generate electricity during the day. Other external factors like clouds and shading can affect the generation potential of a system. When paired with an energy storage system, any extra generated energy can be kept and used when needed rather than being used immediately as it was generated.
Interestingly, in a recent development to this frequently asked question about commercial solar; a team of engineers at Stanford University have developed a solar cell that can generate some electricity at night by incorporating a thermoelectric generator.
Solar panels are designed with no moving parts and durable tempered glass that requires little-to-no maintenance for the expected 25 to 35-year lifetime of the panels. Often, tier-1 commercial solar panels only lose about 15% of their efficiency over that lifetime.
UK businesses paying more than £3,000 on monthly electricity bills should consider commercial solar to help reduce their operating costs. Utilities intend to keep those costs on a rising trajectory, so the sooner a business considers commercial solar, they will create more savings into the future.
The easiest way to learn how much your business is paying for electricity is simply by referring to your utility electricity bill. Here's a guide on how to read and make sense of your electricity bills. Commercial, agricultural and industrial businesses throughout the UK have witnessed their electricity costs rising dramatically, some businesses seeing up to 30% just from 2020 to 2022.
Electricity bills can be reduced drastically with a commercial solar system designed to offset the energy a facility would typically consume with solar power, instead of relying on the utility for. Unless a commercial solar solution is specifically designed with an energy storage system to be fully independent, you will likely still receive a small bill from your utility. Although with solar offsetting use, businesses are more protected against a certain future of rising electricity costs from your utility.
Commercial solar installations effectively mitigate standard energy consumption; however, enterprises subject to demand charges remain obligated to remit substantial fees to their utility providers to ensure the availability of sufficient energy during peak demand periods. This issue can be addressed through the implementation of energy storage systems employing a technique known as Peak Shaving. By utilizing reserve battery capacity to meet elevated demand, rather than relying solely on the utility for instantaneous spikes in electricity demand, a commercial solar system coupled with energy storage can autonomously smooth its peak energy consumption without incurring the associated demand charges.
The Smart Export Guarantee (SEG) is the primary net metering scheme available in the UK, and it can help add increased value to many renewable energy installations. As more homeowners and businesses are rewarded for producing renewable energy, more people may be incentivised to adopt the technology.
Solar net metering in the UK
The first known policy ran until 2019 and was the Feed-in Tariff. This was the first government-backed scheme to incentivise people to switch to renewable energy technology. Under this scheme, utility companies would pay a fixed rate for electricity exported to the grid guaranteeing these payments for up to 20 years.
This scheme was eventually closed to new applicants. However, it was soon replaced with the Smart Export Guarantee (SEG). This scheme is also a form of net metering, which can earn solar panel owners a rate per unit of electricity they send to the grid.
The SEG can greatly benefit solar energy generators, with annual earnings dependant on usage and feed in. Combined with the savings solar panels generate, this additional income can speed up the return on your solar installation investment.
While it is possible to design a system that is separated from the grid with energy storage systems, it would cost significantly more to design that system with the safeguards, backups, and redundancy that the utility provides. A typical system is designed to tie-in to the grid, accessing utility power for when solar can't generate electricity - like at night.
The Smart Export Guarantee (SEG) https://www.ofgem.gov.uk/environmental-and-social-schemes/smart-export-guarantee-seg
Hire purchase financing - Under a hire purchase financing agreement, you'll pay upfront for the VAT and a small deposit associated with the installation. The remainder of the purchase price is paid in instalments over an agreed number of years.
Solar leasing - Under a solar leasing agreement, your business will not pay for any of the upfront installation costs. Instead, your company pays a monthly commercial solar leasing charge, including VAT, at 20%.
Purchase Power Agreements - In a PPA arrangement, a third-party investor will pay to install solar panels on your property and then sell you the electricity they generate at an agreed price. These business electricity bills will include VAT at the standard rate of 20%.
Government grants - In certain areas, your business can use government grants to reduce the upfront costs of purchasing and installing commercial solar panels. Government grants do not attract any VAT.
Under the 50% First Year Allowance scheme, companies can deduct half the value of new solar panel installations from their profits in the first year of installation, thus reducing their Corporation Tax bill. The remaining 50% will be written down at 6% in subsequent years.
In the UK, the Government encourages commercial enterprises to invest in renewable energy through tax incentives, primarily capital allowances. These incentives mean that as well as a significant reduction in electricity spend, businesses pay reduced taxes by claiming back the cost of installing solar panel systems.
50% First Year Allowance
The Government's post-Covid stimulation package, "The 130% Super-Deduction and the 50% First Year Allowance" operated from 1st April 2021 to 31st March 2023. Only the latter part of the package applies to solar panel installations, as solar panels are classed as "Special Rate Assets".
Under the 50% First Year Allowance scheme, companies can deduct half the value of new solar panel installations from their profits in the first year of installation, thus reducing their Corporation Tax bill. The remaining 50% will be written down at 6% in subsequent years. Previously, solar panels only qualified for the 6% special rate writing down allowance.
Although the 50% First Year Allowance was due to end on 31st March 2023, the 2023 Spring Budget extended the allowance for a further three years until 31st March 2026.
All UK businesses that pay Corporation Tax, from farms to factories, can benefit from the current tax incentives if they are legally entitled to install solar equipment. To qualify, your solar panel system must be fixed on your property to generate electricity to power your business. You cannot claim on portable or temporary solar panel systems.
In some instances, planning permission may be required before solar panel building and installation can take place such as listed buildings, so it's worth checking with your local council.
While a cash purchase can monetize all incentives and benefits, we have helped businesses find ways to pay for the initial cost of the system through creative financing solutions like bank financing, commercial property assessed clean energy (CPACE) financing, lease-to-own financing, and power purchase agreements.
If you own the building (not leasing), pay the utility bill, have a sunny rooftop, are taxed on your business' income, and the business can either self-finance or qualify for financing, then the building is a great candidate for solar.
There are different ways to mount solar panels to commercial building rooftops. If needed, we work with your roofer or a certified roofer to seal any penetrations made to maintain the existing warranty. If your roof needs replacement, we work with the roofer to incorporate the solar system into the warranty that will come with the roof.
Each solar module weighs approximately 25 kg, evenly distributing the weight, we keep the weight per sf to 2.2 kg. If you have your as-builts we can look at the live load listed on the specifications and tell you if it can hold the weight. With newer buildings this is much less of an issue, but our team's due diligence ensures the system fits the building. After we have a signed contract, we conduct engineering surveys and create a full set of plans that include structural load calculations to ensure the building can support the commercial solar system.
Repairs can typically take place without removing any solar modules. Your roofer can just work around the equipment since there is space and walkways to do so. However, if they need to repair an area covered by modules or if you need to re-roof, a coating is recommended. A coating, like silicone, can extend your roof life for 20+ years.
In the case of repairing an area covered by modules, it is best to remove the modules and have the roofer do their work, and then have the modules put back.
Limited traffic will be on the roof unless modules or components require a replacement. We offer O&M service and can monitor your system 24/7 remotely and alert you to any issue, as well as deploy a service unit in the event of a problem. Panel washing is recommended 1 to 2 times per year and this would be one of the few times someone would be on the roof.