A second Australian solar buy-back scheme has been announced in the space of one week, the latest being a partnership between Smart Commercial Solar teaming up with not-for-profit Clear Sky Solar Investments.
The offering from Smart and Clear Sky aims to give companies struggling through the Covid-19 crisis an opportunity use their existing rooftop solar system to unlock cash flow, get a short breather from paying bills, and then continued access to discounted power.
The companies say the planned “widespread buyback” of existing commercial solar systems apply to solar systems valued at up to $2 million dollars, which would be bought at a premium of 105 per cent of the paid value if the system is under a year old.
The original owner of the solar array would then get free energy for the first six months of operation, and then buy the energy generated back from the investors at costs lower than current utility prices.
The approach puts a Coronavirus twist on Clear Sky’s usual modus operandi, which uses investor funds to pay for the installation of solar panels on a company’s roof, and uses the power generated from those panels to pays them back over a roughly seven-year term.
“We saw a huge demand for this and realised that the economics of commercial solar allow for a historic win-win in which businesses get needed cash while maintaining the benefits of cheap renewable energy,” said Smart Commercial Solar’s founder Huon Hoogesteger.
“The community investors supplying the capital that supports the buyback get a 7% return on their investment which is extremely attractive in a low-interest environment,” he added.
Hoogesteger said the buyback scheme was inspired by “obvious need” in the market, where the federal government’s boosted asset-write off “wasn’t necessarily doing the full stimulus job” of driving commercial solar uptake during Covid-19.
Hoogesteger said the scheme was also an important “trend shift” in the Australia’s commercial solar market, which he said was moving from a focus on installation to a more comprehensive energy provision and monitoring approach.
“If you are a business owner looking at the next 12 months and wondering how you will get through, this will go a long way to helping,” says Huon Hoogesteger, Smart’s founder.
The move follows last week’s announcement from renewable energy fund Solar Bay that it was looking to use a $350 million investment vehicle, backed by a consortium of family offices, to buy out existing solar systems from large businesses.
The fund’s investment director, Andrew Archibald, said the “Family Office” fund would offer attractive purchase prices for existing PV systems, as well as long-term energy costs below market prices to a range of businesses including ASX listed companies.
“The PPA will provide businesses with long term price certainty at rates that are often up to 20-40% below their current cost of power from the grid,” said James Doyle, another of Solar Bay’s investment directors.
The fund’s first purchase, the rooftop array on Sydney’s International Convention Centre, was previously held by the Sydney Renewable Power Company Limited (SRPCL) and was one of the first community-funded PV projects in Australia.