Australia: Commercial rooftop sector gets unexpected budget boost

While the news for renewables coming from Australia’s government under Prime Minister Tony Abbott has been invariably bad, particularly for the large-scale sector, a new budget provision may provide a significant boost for small commercial rooftop solar arrays. The new rule will allow small businesses to purchase a solar array and immediately write the entire purchase amount off against tax.

“Small businesses across Australia can install solar systems, slash their power bills and get an immediate tax write-off of their asset,” said John Grimes, the CEO of the Australian Solar Council. “It is the best use of capital.”

Leading Australian renewables website Reneweconomy has concluded that the AUD$20,000 sum is ideal for small businesses which own their premises to install an array of around 10kW in size and even integrate battery storage. Existing subsidies pertaining to small solar systems would further enhance the economics of such a move.

The potential windfall for the commercial rooftop sector comes at a time when the sector is experiencing rapid growth. Speaking at an event today in Melbourne, the Clean Energy Finance Corporation’s (CEFC) CEO Oliver Yates said that the commercial sector is “rapidly ramping” to account for almost 25% of annual installations in Australia.

“We expect this trend to continue, as more businesses experience the benefits of solar in helping them bring down their energy and operating costs over time,” Yates said. “The emergence of battery technology in particular is likely to be a game changer for commercial solar, because of its ability to improve the reliability of supply.”

Yates noted that self-consumption of PV power in Australia can be significantly increased with the installation of storage. By way of explanation, Yates said that for residential properties solar self-consumption could be increased from 30% up to 70% with the addition of storage.

“Solar with storage can also reduce the reliance on diesel-fired generators in remote areas.” Said Yates. The CEFC notes that Australia’s installed capacity is not in excess of 4 GW. The rooftop sector added around 800 MW of capacity in 2014 with recent figures indicating that is set to be matched in 2015.

Rural and remote commercial properties are in the perfect position to benefit from the government’s new AUD$20,000 investment write off policy. Ric Brazzale, from Green Energy Trading, told Reneweconomy that business in regional Australia are more likely to own their own property and pay more for their electricity than their counterparts in the major cities – making an investment in a solar array even more attractive.

“It means that for small businesses, PV is now an even more compelling proposition, given one third of the cost will be recovered from the tax office,” Brazzale said.