What solar panel funding is available for my business?
So, you’ve decided that you’re going to install solar panels at your sites. But how are you going to fund the projects? There are a couple of different options for your organisation to cover the costs of installing solar panels. Finding the right option can be tricky, so we’ve broken down the different ways you can fund solar panel installation.
Funding Solar Panels through Capital Purchase
This is the easiest method of funding your solar panel installation. For this method, you’ll use cash in the bank to fund the installation project. If you choose this payment method, you’ll own the assets right from day one. So, you won’t have to worry about any interest rates that might extend the payback period or reducing your return on investment. If you choose to fund your solar panels with capital purchase, you can also take advantage of the Annual Investment Allowance (AIA). This allows you to deduct the full value of an item that qualifies from your profits before tax. Currently, this is capped at £1 million.
Solar Panel Funding with PPA’s
Another way you can fund your solar panel installation is using PPA’s. This stands for Power Purchase Agreements. If the upfront costs of installing solar panels is your barrier at the moment, this is probably the best solution for you. PPA’s allow you to install your solar panels without any investment at all. You’ll be able to benefit from lower electricity costs and a reduced carbon footprint right from the get-go whilst avoiding any pressure on your cashflow or balance sheets. Using a PPA means the solar panels will be funded, operated, and managed by a third party. Any electricity your panels generate is then sold back to you at a discounted rate.
Funding Solar Panels through Asset Finance
The third option for funding your solar installation is to use Asset Finance. Using this method allows your business to borrow the money needed for installing solar panels with all the funds secured against the asset that’s being purchased. Using this option helps businesses to leave their traditional security, such as property or land, untouched. It also allows for any cash that you would use to fund the project to remain in the bank for other business activity. This method also lets you pay for your system over a period of time, unlike capital purchase options, using the savings and income generated by your system. This helps to reduce the impact that an outright purchase would have on your cashflow.
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