Current Commercial Solar Pricing Explained

Commercial solar is becoming an increasingly popular energy choice for businesses around Australia. But how does this rise in take-up impact its commercial price? 

If you currently have solar or are thinking about using it to power your business, then getting a commercial solar quote can help you determine whether or not your organisation is paying too much for energy.

Read more to understand solar farm costs for businesses and use our original commercial solar calculator to get a quote for your business. 

Major factors affecting the price of commercial solar

The cost of installing a commercial solar system varies widely. This is because it’s affected by a range of factors, such as:

• Your location: The rebates for small-scale technology certificates (STC) vary based on the location of your commercial solar system.
• The equipment you use: from the type, size, and number of panels and inverters to the complexity of the layout and the position and type of roof. Learn more about the commercial solar sweet spot.
• The solar retailer or installer: these will vary depending on the source of the products being used.
• Your warranties: guarantees and any after-sales service agreements will determine the terms which repairs or exchanges will be made.
• Available government incentives: various rebates and other measures are provided to assist your business.

The size of your commercial solar system

If you test the commercial solar pricing tool below, you’ll come across some general patterns. For example, the larger the kilowatt (kW) the lower the cost per watt ($/Watt). This indicates that the cost-efficiency improves with more kW. A few reasons contribute to this, but the main one is economies of scale.

However, there are two notable exceptions to this:

1. Above 39 kW and below 60 kW

As soon as you exceed 30kW of connected inverter capacity (39kW of panel capacity), some significant additional costs immediately push the $/Watt up. This is due to the grid protection unit requirement and the engineering involved in the grid connection process. These costs can reach up to tens of thousands of dollars. 

Even if the roof space or the consumption warrant a 50kW system, we would usually recommend 39kW. However, this isn’t absolute because it depends on your preference and needs. For example, a business that’s not tightly governed by payback or ROI metrics might want to maximise the saving or the rebate by moving away from the sweet spot. 

2. Above 100 kW and below 140kW

As soon as it exceeds 100kW, STC incentives don’t apply anymore. Instead, the ongoing large-scale generation certificates (LGC) incentive kicks in and this can lead to another comprehensive topic. This incentive works once the generated data is approved periodically by the authority. Currently, the LGC values and projection are not high, so some businesses prefer to get the upfront rebate to bring the $/Watt down. They do this by keeping to about 99kW, even if the roof space or consumption warrant between 100kW and 140kW.

Again, this is not definite because it depends on your business objectives. It would still make sense for sites with higher consumption to go with an LGC system above 140kW because the economy of scale is excellent for LGC systems. Also, large systems offset more grid electricity.

Common pitfalls in buying commercial solar

Commercial solar systems can go wrong in a number of ways depending on what business decisions are made. The main ones we commonly see are:

Decisions are based only on price 

If the commercial solar quote is too cheap then shortcuts could compromise on quality, service, and safety. Without the right project and technical knowledge, these will not be discovered until it’s too late.

When project drivers are unclear

What is the motivation behind adopting a commercial solar system? Reasons include reducing energy cost, hedging energy price, maximising rebate, optimising payback and ROI, and becoming Energy-as-a-Service.

Confusion between exclusions and inclusions

Not understanding these two factors can surprise you with cost variations later.

When there’s no due diligence on the solar retailer/installer

Most solar retail companies come from residential sectors, which means they often lack enough project and engineering experience to deal with commercial projects. Only a small percentage of solar retailers last more than a few years, so due diligence is necessary.

Giving in to sales solutions 

Many solar companies have stock they need to move and will sell you suboptimal solutions. It’s worthwhile taking the time to select the best equipment for your specific site.

How to avoid these common pitfalls?

You can generally avoid these issues by engaging independent engineers – such as the commercial solar experts at Solarpedia – who specialise in solar first. This will help you reduce the risk of your commercial solar system by helping you make informed decisions.

How to obtain the best commercial solar quote

Deciding to purchase a solar or battery system is no ordinary task because it’s a technical system that ideally should last up to 25 years. To tackle this challenge it’s crucial to have an engineering and project mindset from the beginning. Some important this consider: 

1. Understand the project drivers and objectives
2. Outline the tariff structure and consumption profile
3. Undertake a site assessment
4. Use the project brief or specifications so solar companies can quote suitable solutions
5. Compare choices carefully because there will be variations in prices, equipment brands, financing, design, and sizing. 

In our experience, an engineer who doesn’t specialise in solar would need more than 40 hours to research and make an informed decision for a small 30kW project. Bigger projects such as a 100kW system would warrant more hours. If you or your team are busy and want to make it easy and low-risk, then consider having an independent technical advisor doing this work for you.

Scope, exclusion, and inclusion 

A common problem when sourcing commercial solar quotes is that different solar companies use various formats for their proposals and quotes. This can be frustrating as it becomes difficult to pinpoint the total cost of the project. In order to help with consistency and efficiency, ask for the minimum inclusions below:

• Solar Panels 
• Inverter(s) 
• Mounting 
• Full installation by Clean Energy Council accredited electricians 
• System design and supply 
• Freight to site 
• Cabling, conduit, and safety labelling 
• DC & AC circuit breakers and enclosures 
• A solar electrical distribution board(s) – for larger systems 
• The balance of the system, including other consumables
• Appropriate labelling and connection to the existing electrical switchboard 
• Project management
• Grid connection and meter reconfiguration
• Documentation and manuals 
• Final commissioning and handover on-site. 

Some solar retailers exclude these points, but you should also include:

• Grid connection application fee
• Network protection unit – for larger than 30kW systems
• Upgrades to existing electrical switchboard(s) 
• Network augmentation
• Permanent roof access ladders and walkways
• Underground electrical works

Removing payback concerns with smart funding

Directors or managers often argue that the high cost or payback time is too much to make the switch worth it. What if you could get solar photovoltaic (PV) cells that pay themselves off? Payback would no longer be a concern.

How it works

Fund your commercial solar system by using alternative $0 solar scheme options such as lease, rental, PPA, or the Environmental Upgrade Agreement (EUA). The specialist financiers provide the funds to fully supply and install the system, allowing businesses to continue operating whilst conserving money and benefitting from solar.

This works because in many cases the ROI from solar can be as high as 25-45% and the cost of funding on solar rental or EUA can be as little as under 7%. Given the current increasing energy costs and significant fall in solar panel costs, the average saving can be considerably more than the monthly repayment of the above options.

To illustrate this, the example below demonstrates how a manufacturer with a current $10,000 monthly power bill can save through solar rental without capital outlay:

• Avg. monthly bill (pre-solar): $10,000
• Avg. monthly bill (post-solar): $5,000
• Monthly rental payment (after-tax): $3,500
• Net avg. monthly savings: $1,500

 The benefits of $0 solar farm cost for businesses

1. Easier board or management approval compared to the CAPEX process
2. Remove opportunity cost for spending on new machines, hiring new personnel, or other business investments instead of solar
3. EUA, PPA, and solar rental are typically off-balance sheet, so there’s less impact on your borrowing capacity 
4. Fixed repayment and more control on your future energy costs
5. If you don’t outlay anything but get some savings, then your ROI is very beneficial
6. Your organisation can probably benefit from either full tax deduction or tax depreciation
7. Reduce the stress associated with acquiring funding
8. It’s a hassle-free process, particularly if the business has been operating for at least two years
9. Can be transferred to another party
10. Can own it at the end of the schemes (5-10 years typically)

"Which would you prefer - continue to PAY the $10,000 power bill each month and never own a commercial solar power system, or SAVE $1,500 each month and own the solar power system in a few years??"

Example: A breakdown of a commercial solar quote from Melbourne

Below is a breakdown of a quality 100kW system in Melbourne’s metropolitan area as of January 2021. While it’s not specifically associated with a particular project, it’s in the ballpark when it comes to a quality solution installed by a reputable installer. Precise costing is subject to site conditions as every site requires a bespoke solution.

Roof-mount vs ground-mount

Most commercial or industrial solar systems in Australia are roof-mounted because it’s currently very cost-effective and doesn’t require additional land. However, only a handful of solar installers have enough experience to make it happen successfully. Consider the following important factors for ground-mount installation are:

• Development approval and permits, are critical and take a longer time than roof-mount
• Grid connection usually costs more because ground-mount systems are typically larger than roof-mount
• Electrical cabling and switchboards costs need to be assessed properly as they can make or break the project
• Geotechnical and engineering on the mounting will be critical.

In saying that, ground-mount has been gaining considerable traction in the last several years as the $/Watt cost is becoming more affordable.

Commercial solar calculator

Use this tool to determine the solar farm cost for your business. Feel free to adjust numbers to learn more.

 https://tinyurl.com/yxwf7kqx

 How your business can save

A range of factors will affect your suitability for adopting commercial solar, as well as the time it’ll take to pay for itself. If you analyse your power bills after moving to solar energy, you’ll find cost savings based on: 

• Energy consumption and size of the solar power system: 

 Using more power than your system can produce will reduce your savings. It’s important to choose the correct system for your needs.

• Feed-in tariff: 

 The amount your electricity retailer pays you for any excess power your solar panels generate.

• Usage patterns: 

 Solar panels can only generate electricity while the sun is shining. So households that use a lot of power during the day may attract greater savings than those that consume most of their power at night. However, you’ll still receive a feed-in tariff for the excess electricity you generate during the day.

• Where you live: 

 Some areas of Australia receive a lot more sunlight than others, so a solar system in Brisbane will usually generate more power than one in Hobart.

It’d make sense to have an engineer or energy analyst provide a site-specific estimate of your system’s energy generation. Be aware that solar companies may calculate the impact this has on your bill inaccurately, either intentionally or unintentionally. 

Businesses also have to consider a couple of other things, including the tax implications of any revenue received from feed-in tariffs. 

Switch to a commercial solar system today 

If you’re thinking of making the switch to power your business with solar, then be prepared with a commercial solar quote. Get in touch with one of our friendly staff from Solarpedia to determine whether or not your organisation is paying too much for energy.

Final notes:

• The prices mentioned on this page don’t incorporate meter installation fees or additional costs, such as ground-mounting or grid network studies for larger systems.
• Please consult your accountant if Instant Asset Write-Off applies to your organisation.
• This estimate is usually within +/- 5% and subject to site-specific conditions.
• Please submit the form below if you want one of Solarpedia's approved engineers to:
• fine-tune this estimate and obtain the latest quotes
• estimate a more than 1MW (MegaWatt) system
• estimate ground-mount systems
• Source: https://www.cleanenergycouncil.org.au/consumers/buying-solar/costs-and-savings