Commercial solar finance

Commercial solar finance options for Townsville businesses

There are three practical ways to finance a commercial solar installation. Each one has a different cost structure, a different impact on cashflow and a different long-term return. We go through all three with every business customer so you can make the right decision for your situation, not just the easiest one.

Best long-term return

Option 1 — Cash purchase

A cash purchase is the most straightforward option and delivers the highest return over the life of the system. You pay the full cost upfront, take ownership of the asset immediately and start generating savings from day one. There are no loan repayments, no interest costs and no finance company to deal with.

For businesses with available capital, cash is almost always the right answer. The return on investment for a well-sized commercial solar system in North Queensland is typically 30 to 40% per year, which compares favourably to most other business investments of similar size. The system pays for itself within three to four years and continues generating savings for the remainder of its 25-year-plus life.

Highest long-term return

No interest, no finance costs and no repayments. Every dollar saved on your power bill from day one goes directly to the bottom line. Cash purchase delivers the lowest effective cost per kWh of solar power generated across the full life of the system.

Depreciation and tax benefits

A solar system is a depreciable business asset. Depending on your business structure and the applicable depreciation rules, there may be significant tax advantages to a cash purchase in the year of installation. Discuss this with your accountant alongside our ROI projections before you decide.

STC rebate and feed-in tariff

The federal STC rebate reduces your upfront cost regardless of how you fund the system. Any surplus solar exported to the grid earns a feed-in tariff credit on your power bill. Both apply to a cash purchase.

Cashflow positive from day one

Option 2 — Green loan finance

Green loan finance allows you to install a commercial solar system with no upfront capital outlay. The system is funded through a loan with repayment terms of three to ten years. Because a well-sized solar system generates meaningful savings from the first month, most commercial solar finance arrangements are cashflow positive from day one, meaning the savings on your power bill exceed your loan repayments.

This option is well suited to businesses that want the financial benefits of owning a solar system without tying up capital. The return is lower than a cash purchase because of interest costs, but for businesses that deploy capital elsewhere at a high return, financing solar can still make strong financial sense.

Zero deposit, no upfront outlay

No capital required to get started. The full system cost is funded through the loan, with repayments structured to begin after installation is complete.

Cashflow positive from year one

A correctly sized commercial solar system typically generates enough savings to exceed loan repayments from the first year. You are improving your cashflow position even while the loan is being repaid.

Flexible terms up to ten years

Green loan finance is available with terms of three to ten years and loan amounts up to $100,000 for qualifying businesses. Longer terms reduce monthly repayments and improve short-term cashflow. Shorter terms reduce total interest paid and improve overall return.

No ownership, no maintenance

Option 3 — Power Purchase Agreement

A Power Purchase Agreement, or PPA, is a different model entirely. Rather than buying or financing a solar system, you agree to purchase the solar power the system generates at a fixed per-kWh rate, which is lower than the retail rate you currently pay. The system is owned and maintained by the finance provider, not your business.

A PPA requires no capital, no loan and no maintenance responsibility. The trade-off is that the per-kWh rate you pay for solar power under a PPA is higher than what you would pay generating it yourself through a purchased or financed system, and the typical term is ten to fifteen years. The overall return over the life of the agreement is lower than the other two options, but for businesses that cannot commit capital or want to eliminate maintenance responsibilities entirely, it can be appropriate.

No capital, no loan, no maintenance

The system is installed and maintained at no cost to your business. You simply pay for the solar power it generates at a rate below the retail tariff. All maintenance, warranties and performance monitoring are the responsibility of the system owner.

Immediate power bill reduction

Because the PPA rate is set below the retail power rate, your power costs drop from day one. The saving per kWh is smaller than with a purchased system, but it applies immediately and without any upfront commitment.

Important considerations

A PPA typically involves two power bills rather than one, a separate bill for solar power consumed plus the standard network bill for grid power used outside the solar generation period. Terms are usually ten to fifteen years. You also pay for any solar power exported to the grid under most PPA structures, which affects the economics if your daytime consumption is low relative to your system size.

Who suits a PPA

Businesses on short to medium lease terms, those with strict capital expenditure rules, or those that simply want to reduce power costs without any financial or maintenance risk. A PPA delivers a lower total return than the other two options but removes all complexity from the business owner’s side.

Common questions

Finance questions, answered

Which finance option delivers the best return?

Cash purchase delivers the highest return. With no interest or finance costs, every dollar of savings goes straight to your bottom line. The return on investment is typically 30 to 40% per year and the system pays for itself in three to four years. Green loan finance delivers the second-best return. A PPA delivers the lowest return but requires no capital or loan.

Can solar finance be cashflow positive from day one?

Yes, for a correctly sized system. When your power bill savings exceed your loan repayments from the first year, the system is cashflow positive before it is even paid off. We model this for your specific energy usage and system size in the quote.

Are there tax benefits to buying a commercial solar system?

Yes. A solar system is a depreciable business asset and may attract significant tax advantages in the year of installation depending on your business structure and the applicable depreciation rules. We recommend discussing this with your accountant alongside our ROI projections.

Does the STC rebate apply to financed systems?

Yes. The federal STC rebate reduces the installed cost of the system regardless of how it is funded. It applies to cash purchases and financed systems equally and is applied directly to your quote by us.

What is the difference between a PPA and a green loan?

With a green loan, you own the system and receive all the financial benefits including the STC rebate, depreciation and the feed-in tariff. With a PPA, you do not own the system. You simply pay per kWh for the solar power it generates at a rate below the retail tariff. Green loans deliver a better return. PPAs suit businesses that cannot or prefer not to take on a loan.

How do I know which option is right for my business?

Bring us a recent power bill and we will model all three options for your specific situation, showing the savings, return and cashflow impact of each. Most businesses find the right answer is clear once they see the numbers side by side.

Finance options at a glance

Cash — ROI

30 to 40% per year

Cash — payback

3 to 4 years

Cash — deposit

Full cost upfront

Finance — deposit

Zero deposit

Finance — terms

3 to 10 years, up to $100,000

Finance — cashflow

Positive from year one

PPA — deposit

Zero

PPA — term

10 to 15 years

PPA — maintenance

Provider responsibility

STC rebate

Cash and finance only