Utilizer’s Adem Ali breaks down the new commercial solar rebate and the five things he checks before any client signs a contract.
This week’s announcement by Climate and Energy Minister Chris Bowen to expand the Small-scale Renewable Energy Scheme to commercial buildings is the most significant change to the economics of commercial rooftop solar in years.
The expansion of the scheme – which has been hugely successful for residential buildings since being established in 2011 – will increase eligibility for Small-scale Technology Certificates from 100 kilowatt to 1 MW, a 10-fold increase. It comes into effect on 1 October.
For the majority of commercial buildings, the 100 kilowatt cap barely scratched the surface of their available roof space. The increase to 1 MW will solve that problem.
The government says that based on its numbers the expansion could reduce the upfront cost of commercial solar installations by around 20% making renewable energy more affordable for manufacturing facilities, distribution centres, shopping centres, agricultural buildings, schools and universities, commercial office buildings, cold storage facilities and logistics warehouses.
Many of these facilities consume most of their electricity during daylight hours, making solar particularly effective in reducing power costs.
The government’s own estimates are that a 250 kilowatt commercial solar system will save around $68,000 on installation and going forward they would be generating about 345 megawatt hours of electricity annually, a potential saving of $50,000 in electricity costs.
An 850 kilowatt installation, says the government, could reduce upfront costs by more than $230,000.
There are roughly eight weeks until the start date and several details have not been published such as whether certificates apply across the full system size or only a portion of it, the deeming schedule at the new scale, and what happens to projects already quoted or contracted before the start date.
If you’re being asked to sign an installation contract in the next few weeks, that last one matters a great deal. Check the eligibility timing before you commit, not after.
The five things to check before you sign anything
These are our recommendations, in this order, drawn from how we assess sites for clients.
When you actually use power. Self-consumption drives the return. Two businesses with identical roofs, one running days and one running nights, are not remotely the same investment. This sits in your interval data, which you already own and most businesses have never read.
What your network will approve at that connection. Check this before sizing, not after. It can reduce a viable system independently of your demand or your budget, and on current evidence it is the most common thing that stops a project.
What’s actually in the quote. The discount is paid to whoever holds the right to create the certificates, which is normally your installer, and it reaches you inside the price you’re shown. Ask for it as a line item. A larger incentive means a larger amount moving through someone else’s hands on the way to you, which makes it more worth verifying, not less.
Your retail contract expiry. Generating your own power changes both how much electricity you buy and when you buy it. Retail contracts are priced on both. Sign a three-year deal before modelling your post-solar load and you’ve priced it against a consumption profile that’s about to disappear. In our experience retailers typically begin setting renewal offers around six months ahead of contract start, so for many businesses that conversation is happening right now.
Your lease, if you don’t own the building. Nothing in this announcement resolves who pays for and who benefits from a system on a leased roof. That remains a commercial negotiation, and as the cold storage example shows, an unresolved one can cost more than the system.
This is a good change, and it’s aimed at a group that has been consistently missed. Industry has absorbed the price rises and the inflation while most consumer-facing energy support went to households. A rebate pointed at factories, warehouses, farms and community facilities is overdue.
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