Solar Power For Businesses

Author: Ir. Prabha

Businesses don’t always think about solar power systems as part of their “financial strategy”. They should, because, it’s a great way to significantly reduce their operating costs, and help preserve the environment at the same time. For all intent and purposes, it is the very definition of a win-win situation.

Electricity cost, represent a major portion of any businesses’ operating cost and they are on the rise year-on-year to the point of exceeding the cost of inflation.  

As little as 15 years ago, solar power was almost for the tree-hugging hippies. It was an afterthought to score some brownie points during the company’s annual dinner under the CSR segment. 

Solar Farm

With escalating prices of coal, oil and gas, and increased capacities on energy storage systems and solar modules, the cost per energy output from solar these days are actually cheaper than traditional sources of energy, and they will continue to be even cheaper. So why is adoption slow?

Despite all the incentives for cleaner energy, our country have traditionally been a net oil exporter, and the sector contribute greatly to our economy. It is only natural that investments, policies, and existing infrastructures of the energy industry in Malaysia  as a whole leans favourably towards the direction of fossil fuels, but the clock is ticking, and tide will eventually win. 

What are the benefits of solar?

  • By installing solar power systems, companies can either significantly reduce or eliminate their electric bill for the next 25 years.
  • Installing solar protects your business from rising electricity prices and makes it possible for you to forecast these expenses accurately. As a result, you greatly improve your ability to manage your budgets and expenses over the long term.
  • Solar is also a great investment. Your business can earn annual returns on investments that exceed 30% or more with minimal risk. In other words, you can recover your investment in a solar panel system in about 6 years.
  • There are environmental benefits, too. For every kilowatt of solar panels, you install, your business avoids about 1 ton of carbon emissions every year. That’s roughly the same as planting 20 Amazon Trees trees every year.
  • Additionally, your solar panels are a visible sign of your company’s commitment to sustainability and to the community in which you operate. This visibility often translates into significant brand and marketing advantages part of Corporate Social Responsibility.
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Rooftop installation – LRT station

Solar Incentives

  • Investment tax credits reduces your initial investment by more than 70%.
  • Federal investment tax credit covers up to 24% of the total installed cost of your system. This is not a deduction; instead, it’s a Ringgit for Ringgit credit.
  • Businesses also benefit from accelerated depreciation provisions. Your business can write off 70% of the system’s cost over the first 10 years, reducing your overall tax burden significantly.

Solar Schemes

  1. Large Scale Solar (LSS) No 4
  2. Net Energy Metering (NEM)
  3. Self-Consumption (SELCO)
  4. New Enhanced Dispatch Arrangements (NEDA)

For maximum benefits, paying for your solar panels upfront, either with cash or via a loan is the way to go.

This allows you to take advantage of generous tax credits and other incentives that are often tied to ownership of the system.

For those that prefer NOT to invest capital upfront or those with limited tax liability, there are several attractive leasing options. These include:

  • Operating leases
  • Capital leases
  • Power Purchase Agreements (PPAs)

Each schemes helps to significantly reduce your electricity costs and generate considerable Profit Margins. There are various financing methods require little or no money down and the monthly savings on your electric bill exceeds the monthly lease or PPA payments. In other words, your investment in solar is cash flow positive from Day 1.

Whether you choose to own or lease your solar power system, your business will still be able to hedge against electricity rate increases and gain more control over its utility expenses.

Installing solar onsite frees up significant amounts of cash — cash that can be reinvested to support future business growth. Solar will improve your bottom line, make your business more competitive, and fuel future success.

Hydro Solar installations

Contact AFRIMA Afrima Consulting Engineers @ Majawit & Co. For More Information On How To Start Your Journey Into Clean and Profitable Energy

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