Solar Finance: How To Finance Solar

In this day and age sustainability (and solar finance) is at the forefront of our minds and we are all looking for ways to reduce our energy bills whilst contributing to a greener future…

One significant step towards achieving this goal is investing in solar panels
for your business

However, the costs can seem a bit daunting for some but often not once we have broken it down and presented all the options…

Solar Finance Funding Options

GB NRG offers three key funding options for businesses looking to install solar:
  1. Self-finance i.e. working capital (so money in the bank)
  2. Borrow the money (typically 10% initial outlay)
  3. Power Purchase Agreement (zero cost)
Every business’ circumstances are different and circumstances can change. At GB NRG we help you weigh up the pros and cons of each option. We want to ensure you are making the correct decision for your business.

Diving a bit deeper

  1. Working capital:

    • The majority of businesses still opt for this solution and it makes sense. This is because the cost to install a system is ~1/5 of what it was back in 2010.
    • By purchasing outright on day one, you will pay no interest and reap the full rewards from your solar pv system.
    • Because of recent energy price spikes, we have seen our systems pay back in as little as 3 years!
    • If you are in a position to fund outright, this tends to be the best option.
  2. Borrowing the capital:

    • More and more companies are choosing to spread the costs to minimise the impacts on cash flow in the current climate.
    • Typically the business contributes ~10% of the initial outlay or pays the VAT.
    • Extending payments over ~5 years can make capital expenditure more affordable. Though, there can be a downside such as monthly interest charges in HP agreements.
    • However, the money saved on energy bills from solar can offset the HP interest costs
    • Analysing a large system, a company with £50k monthly energy spending, could save £20k per month with a 1.5MW solar system. This potentially makes the business £5k per month better off after financing costs.
  3. Power Purchase Agreement (PPA):

    • The zero cost option, which many businesses are considering.
    • PPAs involve third party funders stepping in to finance the installation, at no cost to you.
    • The way they make their money back is by selling you the generated power at a fixed price for 15-25 years.
    • This option is beneficial for highly geared companies (those with high borrowing).
    • While you won’t initially own the panels, you gain access to below-market energy prices. This will protect you from future energy cost increases due to fixed rates and annual adjustments for inflation.
    • We have funding partners that we work with to finance these projects.

Furthermore, opting with options 1 & 2 would mean that you own the entirety of the system yourself. This is beneficial because the purchase would also be eligible for capital allowances. 

Capital allowances are a way of obtaining tax relief on some types of capital expenditure. In effect the purchase cost can be treated as a business expense in a tax return. As a result, investing in solar can reduce your taxable profit within your basis period.

If you would like further information on any of these options, drop us a line. One of our advisors will be in touch to discuss all the options with you and answer any questions you might have.

Here at GB NRG we have got it all. We have spent the last two decades within the industry perfecting the best methods to ensure a consistent and cost effective supply.

Is it time for you to have a chat with our team? Contact us today!

Want to see what previous clients are saying? Check out our Youtube channel!