Rooftop Solar PV for Groups of Investors & Landlords
Facing stiff energy costs? The answer could be right overhead…
Whether you’re a property group, investor or landlord, managing electricity costs in your property can be a persistent challenge.
Especially if those premises have communal areas and vacant units.
There is an answer: commercial solar roofing.
It may just have gone over your head until now!
Your rooftop could have incredible energy generating potential.
And by getting together with your fellow property owners, landlords or investors, you can realise that potential in an affordable way.
Collaborative solar PV projects not only offer an opportunity to offset these costs but also promise attractive returns on investment.
In this insight article, we take you through:
- The Benefits of Collaborative Solar PV Projects
- Generating Electricity. Generating Revenue.
- Landlord Solar PV Funding Options
Beyond the immediate financial incentives, there are long term rewards too: integrating solar into your investment strategy can diversify your portfolio and showcase a commitment to sustainability.
Want to find out how to fund your rooftop solar PV project? Ask Our Finance Partners for more information:
For competitive and flexible finance solutions, we recommend:
Compass Business Finance: Specialist Funding Solutions
Landlord or Investor? Let’s Get Together
Collaborative solar PV projects present a compelling opportunity for groups of investors and landlords.
By spreading risk, leveraging expertise, and enjoying attractive financial returns, participants can achieve both their environmental and profit-driven objectives.
That all makes it a really good idea to encourage potential stakeholders to explore this avenue as a means of contributing to a sustainable future while diversifying their investment portfolios.
Find out how you can make savings of up to 100% on daytime electricity costs.
Collaborative Solar PV Projects: Explained
A collaborative solar PV roofing project is one where multiple investors and landlords join forces to fund and benefit from a single, large-scale system.
The primary benefit is clear: the creation of an opportunity to take advantage of a rooftop solar PV energy source where that wouldn’t otherwise happen.
Photovoltaic panel installation offers a myriad of advantages:
Mitigating Risk
There’s a financial outlay associated with PV installation that can be substantial.
Pooling resources among multiple stakeholders spreads the financial risk associated with solar PV investments. This makes it a more attractive proposition, especially for those investors who may be wary of bearing the entire financial burden.
Leveraging Expertise
Collaborative projects often bring together diverse expertise for the greater good.
Investors and landlords can tap into the knowledge and experience of each participant, ensuring that the project is planned and executed with precision.
Economies of Scale
Large-scale solar PV installations typically benefit from the cost advantages achieved by economies of scale.
The combined purchasing power of multiple investors can result in cost savings on equipment procurement and installation, ultimately improving the overall ROI.
Generating Electricity. Generating Revenue.
For business people, collaborative solar PV projects must make solid financial sense. So here we’ve broken down the benefits in terms of returns on your investment:
Attractive Returns on Investment (ROI)
Financially, collaborative solar PV projects can realise opportunities that otherwise go unrealised:
Steady Income Stream
Solar photovoltaic panel installations generate a consistent income stream through electricity sales or feed-in tariffs.
You or your Investors can expect regular returns on their investment, providing a predictable source of income.
Long-Term Gains
Solar PV systems have a long lifespan, often exceeding 25 years.
This means that investors can enjoy continuous returns over an extended period, ensuring the longevity of their investment portfolio.
Environmental Benefits
Beyond financial returns, investors and landlords can take pride in contributing to a sustainable future. Highlight the environmental impact of such projects, including the reduction in carbon emissions and reliance on fossil fuels.
Diversification of Portfolios
Investing in solar PV is an opportunity for investors to consider diversifying their portfolios with renewable energy assets: an area of the economy that will only continue to become more important.
Reduced Portfolio Risk
Adding renewable energy assets, such as collaborative solar PV projects, can reduce the overall risk of an investment portfolio.
This kind of diversification can act as a hedge against fluctuations in other sectors, providing stability in the face of economic uncertainties.
Alignment with Market Trends
Sustainable investing is a growing trend. Investors who allocate resources to renewable energy assets are aligning themselves with the shifting preferences of consumers and regulatory changes. This strategic positioning can yield competitive advantages in the long run.
Maximising the benefits of Solar PV in industrial and commercial environments
Large Scale Solar PV
Maximising efficiency.
Minimising cost.
Landlord Solar PV Funding Options
In our broad experience, collaborative commercial solar roofing projects typically involve these three key figures:
The consumer – the person who uses the electricity, most likely the tenant or the person who lives there.
The property owner – which can be an individual or group/consortium, the landlord or the inhabitant.
The Solar PV system owner – which can be the landlord, the tenant, the owner occupier or even an external third party where a Power Purchase Agreement (PPA) is in play.
As you can see, there’s some room for overlap between the key roles.
For landlords, property owners, or tenants contemplating a dive into solar PV roofing systems, the following details are crucial. Though it’s a rarer occurrence, some tenants do indeed invest in PV systems.
So while our focus here on self-funding is tailored for property owners, this information should also be of value to tenants.
High Energy Costs? It’s Time to See the Light with Solar PV!
Should both the electricity user and property owner find themselves unable or unwilling to pool in the necessary funds, turning to the PPA business model might be worth a look.
Dive deeper into the PPA model here…
Power Purchase Agreement (PPA)
A PPA for solar PV is a contract between a solar project developer and a buyer, typically a business, government entity, or utility.
As part of this agreement, the solar project developer agrees to design, finance, build, and operate a solar PV system, and the buyer agrees to purchase the electricity generated by the system for a specified period, often ranging from 10 to 25 years.
Key elements of a Power Purchase Agreement for solar PV include:
Electricity Purchase Price
The PPA outlines the price at which the buyer agrees to purchase the electricity generated by the solar PV system. This price can be fixed, escalate over time, or vary based on certain factors.
Project Scope
The agreement defines the technical specifications of the solar PV system, including the capacity, expected electricity production, and any other relevant details.
Term of the Agreement
The duration of the PPA specifies how long the buyer will purchase electricity from the solar project. Typical terms are long-term, often 10 to 25 years, to ensure a stable return on investment for the project developer.
Responsibilities of Parties
The roles and responsibilities of both the project developer and the buyer are outlined in the agreement. This includes details on project development, operation, and maintenance.
Payment Terms
The PPA specifies the payment terms, including the invoicing and payment schedule. Payments are usually based on the actual electricity generated by the solar PV system.
Performance Guarantees
The project developer may provide performance guarantees, ensuring that the solar PV system will meet certain production targets and performance standards.
Environmental Attributes
The agreement may address the ownership and treatment of environmental attributes such as Renewable Energy Certificates (RECs) or carbon credits generated by the solar project.
PPAs are commonly used to facilitate the financing and development of solar projects, allowing businesses and organisations to benefit from clean energy without having to invest in the upfront costs of solar infrastructure. This arrangement is particularly popular where renewable energy incentives and policies support the growth of solar energy projects.
Direct Investment
When the landlord, property proprietor, and the solar PV infrastructure owner are one and the same, they have the luxury of directly investing. By doing so, they can tap into all revenue avenues solar PV brings to the table.
This generally paves the way for a good Internal Rate of Return (IRR), rapid recoupment, and an enviable ROI.
A major factor behind this is the absence of interest costs for the funds put into the solar PV project, allowing a larger chunk of the revenue to be pure profit. One can even weigh the potential IRR against other potential ventures.
Of course, not every entity will have the requisite funds lying around. Given that resources channelled into the solar PV cannot be reallocated, one must also ponder the missed opportunities elsewhere. If in-house funds aren’t accessible or don’t make financial sense, a plethora of external funding sources could be available.
Business Loans & Project Financing
This route might resonate with a variety of stakeholders.
If you are blessed with a robust credit history, you may be able to secure an appealing deal without pledging your installed infrastructure.
On the other hand, those with shakier credit standings may need to offer collateral to secure funds. Such setups allow the firm to relish all the perks of the PV system, albeit with a slightly diminished ROI due to interest expenditures.
Loan interest rates usually hover between 3% and 10%, influenced by the borrower’s credit profile and inherent project risks. Most repayment structures span 1-7 years, though asset finance might extend that duration.
While conventional banks are always an option, more enticing rates might come from niche lenders or eco-friendly investment initiatives. These specialised financiers typically have a penchant for grander projects or a combo of petite ones with a substantial combined heft.
There’s no dearth of revered asset finance providers either. Often, the stakeholder manages all revenues and funnels them towards repayments based on a pre-agreed scheme. They hold the reins for operations and upkeep, though outsourcing remains an option. A 5–7-year term reigns supreme, but certain deals or bulkier transactions might stretch that timeframe.
Please note, while we’re deeply entrenched in the world of Solar PV, we are not financial advisors nor finance consultants. Our primary focus is on facilitating a sustainable future, but when it comes to intricate financial decisions, it’s imperative to engage with specialists in that field.
For advice, competitive and flexible finance solutions we have partnered with, and highly recommend: Compass Business Finance: Specialist Funding Solutions
