Commercial Solar
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Financial Business Case
Solar is a financial product capable of generating excellent financial returns.
Given the extremely generous government incentives involved, the financial business case for installing solar is overwhelmingly positive.
Typical capex financial modelling for a 63W system is as follows:
NPV
Simple payback period
ROI
IRR
$244,886
2.64 years (then enjoy free electricity for the next 20 – 30 years)
464%
37%
A capex investment is usually recovered in two to three years, resulting in free electricity for the rest of the solar system’s lifetime (usually 20 – 30 years). A financed solar system (PPA or lease) eliminates the need to find the cash to pay for the solar system. In most cases, monthly lease payments can be tailored so that the reduction in your electricity bill is greater than your lease payments, meaning you are cash flow positive from day one.
In the following “live” example you are cash flow positive from day one AND own the solar system within 3 years:
Finance Amount
$52,727 plus GST
Lease payment
Monthly Savings with Solar
Net positions after lease payment
All figures exclusive of GST
24mths 36mths 48mths
$2,429.00 $1,663.00 $1,280.00
$1,687.00 $1,687.00 $1,687.00
$742.00 -$24.00 -$407.00
A Power Purchase Agreement requires no outlay whatsoever, so you are always cash flow positive from day one.
Commercial Solar
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