Businesses are exploring ways to save their operation expenditure amidst of the economy crisis due to COVID-19 pandemic. Instead of cutting pays or headcounts, energy saving solutions can be a good savior during hard times like this. Among all the energy saving integration options, solar energy is sustainable, long-lasting, and very straightforward to adopt. For big and small businesses, the savings one can enjoy after solar installation can have a tremendous impact, which is sometimes almost equivalent to prepaying for almost 40 years of energy.
It is a common misconception that solar system installation for commercial and industrial buildings involve a large investment cost with a slow return on investment (ROI). The truth is, with the upgrowth of solar market and maturity of solar technology, many financial institutions as well as local and foreign investors are eyeing at solar energy investment in a large scale to secure a stable recurring income. Various financing models are hence being launched to ease building owners to take up the solar installation.
There are two types of financing models for building owners to pay for a solar system, one is CAPEX (Capital Expenditure) model and the other is Leasing model.
In short, CAPEX model or outright purchase is to own a solar system with your own money. Buying your solar system with cash is excellent, you can directly benefit from the energy saving from solar energy generated and also the local tax incentives for which you qualify.
Purchasing and operating solar system on your own is also very straightforward and the fastest way to get the project completed because you do not have to wait for credit checks, approvals, funding, and involvement from a third-party investor.
If you have limited cash in hand, you can get a capital improvement loan from your bank or any financial institution that offers solar financing loans. However, note that if you purchase a solar system outright, you are solely responsible for its operation and maintenance.
Leasing model gives business owners better option where there’s basically zero upfront cost to install a solar system at their buildings. Solar leasing provides building owners the use of the solar system in exchange for an agreed monthly fee or with an agreed solar tariff which is a lower electricity rates than the grid, depends on the leasing agreement offered by the third party investors.
With the solar leasing option, you get to benefit from the clean electricity generated from the rented installation, and you don’t have to operate or maintain the system yourself. The little to no upfront cost, lease payments, and lower utility bills usually lead to an immediate reduction in electricity costs and increased savings over time.
Lease agreements are usually between 15-25 years. At the end of lease agreement period, the ownership of solar system will be transferred to building owners. Some may have to purchase the solar system at the end of the agreed time frame at a subsidized rate, renew the lease or have the system removed.
Finally, the decision of choosing a financing solution for a solar PV system comes down to the financial capability and goals of your organisation. For more information, get in touch with our friendly and professional specialists to get a FREE SOLAR CONSULTATION.