Insights
More and more building owners are looking to add renewable energy to their rooftops. The first decision is whether to own the PV system yourself or lease the roof to a solar company. We’re here to help you make the right choice.
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Sunday Power offers solutions for commercial buildings, both for those who want to rent out the roof and for those who want to own their own. To understand the advantages and disadvantages of the different models, we have had a chat with the CFO of Sunday Power, Adrian Bergem.
How Solar as a Service Works
Adrian, can you explain how Solar as a Service works?
Absolutely. With Solar as a Service, Sunday Power takes care of the investment in the solar plant. We own and operate the plant, and sell the solar power to the building at a discounted price with no mark-up on the spot price. The farm owner gets a share of the income from the solar plant, giving them a stable and risk-free source of income.
What are the advantages of this model?
— There are several advantages. Firstly, there is no cost to the farm owner, since we take on the entire investment. Moreover, it is very easy because we handle all operations, maintenance and management. The farm owner receives a risk-free income, meaning they lose nothing if the electricity price becomes low or production is lower than expected. And of course, the tenant gets green electricity at a discounted rate, which is a win-win situation for all parties,” Bergem says.
Are there any downsides?
“The main disadvantage is that the farm owner receives only a share of the income from the solar plant. At particularly high electricity prices, as we saw, for example, during the energy crisis in 2022, it could be more profitable to own the plant yourself, since you would then receive the entire income.
Read also: Solar as a Service — An Easier Way to Greener Building
Pros and cons of owning
What are the most important factors to consider when thinking about owning the solar plant yourself?
“By owning the plant yourself, you get full access to the income from the photovoltaic system, including savings on your electricity bill and any sale of surplus electricity. You also assume all the responsibility for monitoring, operation and management — unless you outsource that service to us,” Bergem says.
What about the risks to electricity prices?
“Then you are at the heart of what is both the advantage and the disadvantage of owning yourself: you take the exposure to the price of electricity and what it will be in the future. If it gets high, you have good returns, but if it gets low, you've made a bad investment. With the future prices we see today, the investment case for solar cells on residential buildings is quite “tight”, so it is important to make realistic assumptions.
Are there other disadvantages to owning yourself?
“Start-up costs for solar photovoltaic systems can be significant, even with support schemes. Many people underestimate the amount of time that goes into developing the solar project. The second disadvantage is that you yourself take the operational responsibility. Owning a solar system requires expertise and good systems for monitoring, operation and maintenance.
Read also: The most common errors that occur in solar photovoltaic systems
What about future electricity prices?
“An important factor to consider is the difference between the average electricity price throughout the year and the solar electricity price. The average price of electricity throughout the year is normally higher than the average price weighted against solar production, because electricity prices are usually higher in winter when solar production is lower, and often lowest at midday in summer, so-called “duck-curve”.
Different risks — equal green buildings
— Solar as a Service has no start-up costs and offers a risk-free source of income. That makes it easy for farm owners who don't want to take on operational responsibilities or the financial risks of owning. On the other hand, by owning the solar plant itself, one can achieve higher long-term savings at a high electricity price and have full control over revenues and operations.
What determines what customers choose?
“Owning yourself involves a greater financial risk, especially in relation to fluctuations in electricity prices. We see that it is the owner's financial situation, risk appetite and desire for control, that determine which option the customer chooses.
Does anyone have any regrets?
'We haven't heard of anyone regretting having solar cells on their roof, but we have some who come to us and regret taking the investment themselves. These invested in facilities when the future electricity price was expected to be high. In addition, they find that owning the plant itself is more work than first thought.
Don't sit on the fence
What would you recommend to farm owners or renters considering these options?
“For those who want a risk-free source of income without upfront costs, Solar as a Service is a good choice. For those who are willing to take more risks and like to own and do the work themselves, owning can be nice. The most important thing is to get started. Don't spend two years wondering which option to choose. What we see, as the figure above illustrates, is that the greatest value lies in getting a greener building, and not in the direct cash flow from the solar project, regardless of which model you go for. This green prize is beginning to see the outlines of today, and we are convinced that it will come to its fullest in the years to come.
Read also: Lower interest rates with solar cells on the roof
