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Why commercial solar is a bright idea for landlords

7 August, 2018
Categories: Commercial

Millions of Australians are using solar radiation to power their homes. But what about businesses? Commercial property owners in Australia are starting to looking to the sun for a way to make tenants stickier.

While businesses are hard at work from 9 to 5, the sun is too. And this makes solar power systems hot property for the commercial sector.

By operating sustainably, businesses are able to garner respect in the public eye, reduce electrical bill burdens and collect government support in the process. It shows a workplace is committed to the environment. And this can even resonate with modern-minded customers.

Come rain, hail or shine (only at a reduced output on overcast days) the sun can work for businesses. We show why going solar is a bright idea for your workplace or tenant.

But firstly, how popular is commercial solar power these days?

Businesses under the sun

Currently, over 2.6 million Australians households are using solar radiation to power their homes. Last year, 3.5 million panels were installed on Aussie rooftops, smashing 2012’s previous record and showing no slowdown in 2018.

You’d think this would translate to commercial properties having the same growth. And you’d be right.

The commercial sector only accounts for about 18% of the nation’s total installations, but this is on the up. In 2017, commercial solar panel installations increased by about 54% from the previous year.

And we’re not only seeing quantity of solar installations increasing, but quality too.

In 2016, WA saw its State’s larger solar power system installed. The Broadway Fair Shopping Centre in Perth is currently wearing 948 solar panels on its roof, which generates one third of its power consumption. With a $600,000 price tag, this is the biggest solar power system on Western Power’s grid. As a measure of sustainability, it saves the equivalent of about 1,530 trees per year – and saves the shopping centre about $20,000 per month.

Other States are joining the party too, with Sydney leading the charge. Australia’s largest city is aiming to run 100% on renewable energy by 2030.

Solar power is a ballooning industry. So why should you jump on board?

The Power of Solar

Green Credentials

Sustainability is synonymous with community admiration. Businesses and commercial property owners can leverage their ability to demonstrate sustainable features of their operations or premises. They call this license to gloat green credentials.

Being rewarded for having superior environmental principles is now measurable across Australia thanks to the NABERS (National Australian Built Environment Rating System).  The system gives commercial properties a rating between 1 and 6 stars on their environmental efficiency and is now Australia’s industry standard. It is definitely something landlords and business owners should be aware of.

Yes, a solid NABERS rating shows a cost-effective premise. And as a result it will likely attract a higher property valuation. Savvy investors are buying with green credentials and the future in mind. 

Reducing Energy Bills

The Broadway Fair Shopping Centre has reached their third year under almost 1,000 solar panels. An enormous $240,000 is scraped from their electricity bill each year, meaning their $600,000 investment is practically paid off in two and a half years.

SME businesses in Australia may typically use around 40,000 kWh per year (Broadway Fair uses 540,000 kWh). So, even if a small business had a tenth of this installation… that’s a brilliant saving to be had with just a short time under the sun.

Solar is a durable investment

Want a long-term investment strategy?

The life expectancy of a solar panel is 25-30 years. This will resonate with those taking a ‘set and forget’ approach to their property or share portfolio.

Government solar rebates 

The Australian Clean Energy Council (CEC) says there is enough roof space area across the nation to power the entire continent through solar power.

So, why wouldn’t parliament nudge home and business owners to adopt sustainable techniques?

Small businesses embracing solar power can cash in on the Small-scale Renewable Energy Scheme. This scheme aims to assist Australia’s Clean Energy Regulator achieving their target of 33,000 gigawatt hours of extra renewable electricity by 2020 (this is the equivalent of approx. 151.8 billion solar panels).

Businesses can lodge a small-scale technology certificate for each megawatt hour (MWh) of electricity generated by solar power. It is worth about $630 per kW installed. So, if an eligible business fits the maximum small-scale amount of 100 kW, they could put their hand up for $63,000 in rebates. That may shock cost-focused businesses.

Businesses can enjoy a healthier, cost-saving and more reputable operation. Landlords can enjoy a better investment:

  • Tenants will endure lower occupancy costs and outgoings;
  • As a result, tenants will become stickier and potentially much less likely to move to another premises;
  • Commercial property owners can boast a brighter set of green credentials with a more sustainable building to show the public and potential occupants.

Value-add opportunities are an important part of good investing. And with Australia enjoying more solar radiation than most countries, why not harness that energy and garner a better investment.

Make hay while the sun shines.

Properties & Pathways is a dynamic commercial property investment firm. We manage a boutique, high-yielding portfolio and have enjoyed 82% average annual portfolio growth alongside our investors since inception.

Contact us today for more information.

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