Commercial Solar Investment Business Case Examples

Commercial Solar Business Case – Board Submission Example

Project Reference: Car Showroom & Dealership (Client Name Withheld)

Prepared By: Energy Gain

Sector: Motor – Dealership – Showroom – Parts & Service

Location: Midlands, UK

*The below solar investment business case is an example from a real-world example.

Executive Summary

Energy Gain was appointed to prepare a commercial solar investment business case for the proposed rooftop solar PV installation. The purpose of this commercial solar board submission was to assess the technical feasibility, financial viability and long-term return on investment before seeking approval from the client’s Board of Directors.

Following a detailed technical survey and financial appraisal, a bespoke commercial solar PV system was recommended. The proposed installation was designed using the client’s electricity consumption profile, half-hourly metering data and future business growth plans to maximise financial return rather than simply maximise installed capacity.

The assessment demonstrated that the investment would deliver significant reductions in electricity expenditure while creating a long-term business asset capable of generating electricity for more than 30 years.

Business as Usual – Cost of Doing Nothing

If no investment is made:

• electricity prices remain uncertain
• every bill disappears forever from the Profit and Loss
• no asset is created
• no tax benefit
• no hedge against inflation

The below table shows the effects of energy inflation the dealership would spend approximately on the equivalent volume of electricity that the commercial solar system would have generated.

Estimated Generation: 156,000 KWh p/annum

Current Unit Rate: 24p

Investment Summary – Commercial Solar PV System 200 KWp

Business Need

The client had experienced significant increases in electricity costs over recent years and wanted to reduce its reliance on grid electricity without impacting day to day operations.

Electricity represented a substantial operating cost and was expected to remain a key business risk due to continued market volatility.

The objective was to reduce long-term operating costs while investing in infrastructure that would continue generating value for many years.

Client Position

The client a car dealership included a showroom and on-site service and parts department.

Weekly Operating Hours

Showroom Hours

• Monday–Friday: 08:30 – 18:00
• Saturday: 09:00 – 17:00
• Sunday: 12:00 – 17:00

Service and Parts Department

• Monday–Friday: 08:30 – 17:00
• Saturday: 08:30 – 12:30
• Sunday: Closed

Showroom: 60.5 hours total (9.5 hours daily Monday to Friday, 8 hours on Saturday, and 5 hours on Sunday).

Service and Parts: 46.5 hours total (8.5 hours daily Monday to Friday, 4 hours on Saturday, and closed on Sunday).

Annual electricity consumption

Daylight Energy Usage:              270,252 KWh p/annum 81%

Non Daylight Energy Usage:      64,083   KWh p/annum 19%

Existing electricity tariff

Delivered electricity rate:            24p p/KWh

Carbon reduction targets & ESG Objectives

Major vehicle manufacturers are increasingly encouraging their dealership networks to install solar PV to reduce operating costs, improve energy resilience and support corporate sustainability targets. As dealerships transition towards electric vehicle sales and charging infrastructure, on-site solar generation helps lower electricity costs while demonstrating a visible commitment to environmental responsibility that aligns with the manufacturer’s brand values.

Options Considered

Option 1 – Continue Purchasing Electricity from the Grid

Advantages

• No capital investment.
• No installation programme.
• No responsibility for owning or maintaining energy generation assets.

Disadvantages

• Continued exposure to electricity price increases.
• No reduction in operating costs.
• No asset created.
• Ongoing reliance on external energy suppliers.
• Limited control over future energy costs.

It was forecast that, if electricity rates remained at 24p/kWh and no energy inflation was applied, the dealership would spend approximately £186,000 on the equivalent volume of electricity that the commercial solar system would have generated.

This expenditure provided no ownership or asset value benefits, as the full amount was paid directly to the energy supplier. As long as the dealership remained operational, these costs would have continued to pass through the profit and loss account, resulting in approximately £186,000 leaving the business over the same period.  The installation cost of the commercial solar system was £128k and the asset would sit on the balance sheet.

Option 2 – Purchase a Commercial Solar PV System

Advantages

• Significant reduction in imported electricity.
• Long-term reduction in operating costs.
• Productive business asset.
• Improved energy resilience.
• Supports sustainability objectives.
• Full ownership of energy savings and system performance.
• Maximum financial benefits.

Disadvantages

• Initial capital investment.
• Planned installation programme.
• Ongoing maintenance requirements throughout the asset life.

Option 3 – Asset Finance

Advantages

• Preserves working capital.
• Spreads the investment over an agreed term.
• Monthly repayments can often be offset by energy cost savings.
• Business owns the asset at the end of the finance agreement.

Disadvantages

• Finance charges apply.
• Subject to lender approval.
• Overall project cost is higher than purchasing outright.

Option 4 – Power Purchase Agreement (PPA)

Advantages

• No upfront capital investment.
• Immediate reduction in electricity costs.
• Operation and maintenance are typically included.
• Predictable electricity pricing over the contract term.

Disadvantages

• Electricity is purchased through a long-term agreement.
• Lower financial return than outright ownership.
• Limited ownership and control of the asset.

Why Energy Gain recommended this solar system size

Although sufficient roof space existed for a substantially larger installation, analysis of half-hourly electricity consumption data demonstrated that a 200kWp system would maximise self-consumption, minimise exported electricity and generate the highest financial return over the lifetime of the asset.

Half-Hourly Electricity Consumption Data

The site consumes approximately 334,335 kWh of electricity per annum, with approximately 270,252 kWh consumed between 7:00am and 7:00pm, when the solar PV system will generate most of its electricity. The highest electricity demand is from the service and parts departments. As these operations are closed on Saturday afternoons and throughout Sunday, there will inevitably be periods of surplus generation, particularly during the summer months, resulting in electricity being exported to the grid.

Roof Layout and Structural Assessment

The installation comprised a combination of flat and pitched (trapezoidal) roofs. Detailed roof and structural surveys identified no issues that would affect the installation. Roof construction, structural capacity, ballast requirements, together with wind and snow load calculations, were all assessed and incorporated into the final system design.

Self-Consumption Analysis

The analysis predicted that 78% of the electricity generated would be consumed on site, with the remaining 22% exported to the grid. Battery storage was also assessed; however, it did not meet the required financial business case at the time of the assessment. As electricity prices and battery technology continue to evolve, battery storage may become a viable option in the future.

Export Capability

Following the Distribution Network Operator (DNO) approval process, the site was granted permission for full export.  As there were no export restrictions, an export limitation scheme was not required.

Financial modelling was completed to optimise return on investment rather than simply maximising installed capacity.  This approach ensures the recommended system delivers the strongest financial return while supporting the client’s operational and long-term business objectives.  Rather than recommending the largest system possible, the design was optimised to maximise the financial return over the lifetime of the asset.

“Although sufficient roof space existed for a larger installation, analysis of the client’s half-hourly electricity data showed that a smaller system would significantly increase self-consumption, reduce export and improve overall financial performance.”

Financial Assessment

The financial appraisal was based on:

• Current electricity costs.
• Historic energy consumption.
• Future electricity price assumptions.
• Solar generation modelling.
• System degradation.
• Maintenance assumptions.

Energy Gain produced a detailed cashflow model showing projected savings throughout the operational life of the system.

Key Financial Measures

Return on Investment (ROI)

The investment generates measurable savings from the first year of operation and continues producing financial benefits throughout the life of the system.

The ROI after 5 years is £59k including the asset value of £128k

Over the lifetime of the project the return on investment is £901k

Payback

The projected payback period was 3.1 years.

Following this period, the system continues generating electricity and reducing operating costs for the remainder of its operational life.

Net Present Value

The financial model demonstrated a positive Net Present Value of approximately £320,327k, indicating that the investment is expected to create significant value after allowing for the time value of money.

Internal Rate of Return

The projected Internal Rate of Return of 30% compared favourably with the client’s investment criteria for capital projects.

Levelised Cost of Energy

The financial model estimated a levelised Cost of Energy (LCOE) of approximately 2.2p/kWh over the life of the system. This represents the average cost of generating each unit of electricity, taking into account the initial investment, operating costs and expected energy generation.

Compared with current grid electricity prices, this provides long-term cost certainty and demonstrates the value of generating electricity on site.

High Level Risk Assessment Example

Carbon Benefits

In addition to delivering significant financial returns, the proposed commercial solar PV system provides substantial environmental benefits. The installation is expected to reduce carbon emissions by approximately 28 tonnes of CO₂ in the first year of operation and around 648 tonnes of CO₂ over the system’s operational lifetime. These reductions support the organisation’s sustainability and ESG objectives, contribute towards Scope 2 emissions reduction and demonstrate a long-term commitment to decarbonisation. For many businesses, these carbon savings also provide valuable evidence for environmental reporting, customer requirements and manufacturer sustainability programmes.

Strategic Benefits

The proposed investment supports the client’s wider business objectives by:

• Reducing operating expenditure.
• Improving cash flow.
• Creating a productive business asset.
• Supporting ESG objectives for the organisation and supply chain.
• Reducing carbon emissions.
• Increasing resilience against future energy price increases.

Why Choose Energy Gain UK as the Supplier

• Experience – Over 2,600 commercial solar projects completed.
• Bespoke financial modelling using half-hourly electricity consumption data.
• Consultancy-led design focused on investment performance.
• In-house engineering expertise.
• RC62-aligned system design.
• Full turnkey project delivery.
• Long-term monitoring and maintenance support.

Recommendation

Based on the technical assessment, engineering design, commercial solar financial modelling and investment appraisal, Energy Gain recommends approval of the proposed commercial solar PV investment.

The project demonstrated strong financial returns, acceptable investment risk and a positive contribution towards the client’s long-term business strategy.

Energy Gain’s recommendation is based on engineering analysis, detailed financial modelling and long-term operational performance rather than maximising installed capacity. The proposed commercial solar PV system delivers an attractive return on investment, creates a productive business asset and provides the organisation with long-term protection against rising electricity costs.

Outcome

The dealership chose to purchase the system through a capital investment to maximise its return on investment. During the financial modelling process, a conservative approach was adopted when estimating the system’s energy yield (solar performance). Following installation, the system exceeded the forecast generation figures, reducing the projected payback period and delivering greater financial returns than originally anticipated.

The system is fully monitored online, and the client elected to receive monthly forecast versus actual generation reports. These reports supported both internal performance reporting and external carbon reporting requirements, providing ongoing visibility of the system’s operational and environmental benefits.

This example demonstrates how a well-prepared commercial solar investment business case can provide Boards and Finance Directors with the information required to make an informed investment decision.