Extensive power consumption makes us stand on the verge of exhausting natural fuel consumption every day. The world is taking every powerful initiative to go green assuming the threats of the future when the resources will exhaust completely. Therefore, commercial solar power is the smartest and best way of conserving energy and planning undisturbed source of power in the future. Since even the government of most nations understands the dire need of the hour to conserve energy, it is offering comprehensive support to commercial enterprises in installing commercial solar power systems. Most commercial projects can seek Government Rebate with maximum range of 50% for installation of commercial solar systems. Though a huge investment, yet it is best way to get the maximum return on your value (ROI of near about 40%).
Solar panels in general is a long-term investment which offers you return for up to 25 to 30 years. Now, once you decide to take up a major commercial initiative of planting a solar system. The investment amount is substantially huge according to the requirement of your commercial project. However, today since solar system is believed to be a smart and thoughtful investment, you also have a range of commercial solar financingoptions like PPA, business loans, chattel mortgages, operating lease, etc.
Bulk Cash Investment
For any entrepreneur owning a small-scale business or a large, making a bulk investment from business fund and savings is a major risk as well as decision. It could easily impede the steady growth of the business, stake your business freedom at risk, or lead you to a no savings status. However, at the same time, there are advantages as well of buying a solar system with cash like ready ownership, GST of the purchase can be claimed in next financial term, tax depreciation of up to 5%, etc. But with all the advantages comes a huge financial risk, as well.
Commercial Loans And Chattel Mortgages
This is one of the most common forms of commercial solar financing when loan is acquired from banks or private finance companies in order to buy and install solar systems. In such cases, you mostly need to keep collateral for state, have good credit records, show steady flow of cash in your business in order to avail such financing. Again, when the purchased equipment itself stands as the security of the loan, it is termed as chattel mortgage, as well. Some of the advantages of this kind of financing are:
- Ready ownership of solar system
- Save business funds
- GST can be claimed
- Easy to avail with a good credit record
- There are options available on interest rates, term of loan, etc.
- Scope for payment before term
Power Purchase Agreement
A PPA is a typical financing arrangement which eliminates the need for upfront capital investment, and which can be easily availed by small, mid, and large-scale businesses, government initiatives, cottage industries, and educational institutions to buy solar systems for commercial purposes. What happens in this finance system is that you buy only the solar energy and not the system, which means, you are only the solar power user and not the owner and operator.
- A third-party PPA takes responsibility of funding the solar system and even the installation of the system.
- Ownership, maintenance, and operational responsibilities lie with the fund provider.
- A commercial agreement is settled where to buy electric power from the installed system at a predetermined rate of per kilowatt-hour (kWh), as per your commercial requirement of load.
- You can renew the agreement.
- In general, such agreements run for minimum 20 to 30 years.
Therefore, with so many convenient commercial solar financingoptions many small and mid scale business along with large enterprises are taking up solar systems for their energy requirements.