After a turbulent 2021 characterised by lockdowns and supply chain issues, Australia’s PV industry still managed to achieve a record year. 

Despite this growth in the smaller STC market (<100kW systems) slowed to about 10% yearly while larger systems grew rather impressively especially in the 1-5MW range.

So as we dive into 2022, what are the commercial solar insights – the big trends, challenges and opportunities – as we see them?

Commercial solar insights

Big trends

Everything costs more – inflation is impacting everything – commodities, shipping, labour and interest rates.

Sustainability is here – momentum around climate change and net zero commitments is hitting all-time highs and so is the pressure on companies to demonstrate their actions.

Big challenges

Solar project returns are declining – as the costs of solar systems increase and grid power prices decrease, businesses may have less financial incentive to transition to solar. There are however signs that power prices will increase with Queensland spot prices up 242% in January 2022.

Big opportunities

Bundling and retrofitting – instances of adding further capacity to existing solar systems or storage to allow for EVs and replacing diesel generators with solar and storage are increasing.

Payment options – in challenging times cash flow is more important than ever. Finding ways to fund new solar equipment with $0 upfront and that’s cash flow positive are being readily embraced by commercial sector. This includes the uptake of both PPAs and payment plans (loans or rentals).

Having a handle on the latest commercial solar insights and trends is key to scaling your solar business. Your Smart Ease Sales Director is a great source of information, or sign up for our newsletter via the form on our contact page to make sure you’re always in the loop.

Back in October we wrote about China’s energy crisis and supply chain constraints resulting in rising prices for the local solar industry. Now, with inflation and cost of living increasing, banks are starting to raise interest rates.  

Your customers may ask about rising interest rates and their impact on commercial solar projects. Here are some quick explanations.

What’s happening with interest rates?

While interest rates plummeted to help economies rebuild from the impact of COVID, in many cases they’ve now been ‘over-corrected’ resulting in inflation. As a result, interest rates need adjusting and many financial institutions are expecting rates to rise, to control inflation and slow growth.

The Reserve Bank of NZ (RBNZ) has increased interest rates twice already in 2021 but the Reserve Bank of Australia (RBA) is not predicted to increase interest rates in the short term.

What impact does this have on businesses that want to purchase equipment?

For most financial institutions that borrow funds from both local and international markets, rates are already increasing. At Smart Ease, we anticipate that banks will raise their fixed interest rates by around 0.5% in 2022, meaning the cost of funding equipment (like solar panels) will rise.

How will Smart Ease payment plans be affected?

Just as the cost of solar panels has gone up, the price of commercial funding will go up. But in the vast majority of cases, projects that were deemed to be cash-flow positive will remain so – even under the revised rates.  

Example: On a $30,000 payment plan, the monthly repayments on your customer’s payment plan will increase $8/month (over both 5 and 7 year term periods).

The bottom line

Inflation is inevitable. We are seeing this every day in the cost of petrol, for example, and consumer goods. 

So for businesses, while monthly payments may increase slightly, the advantages of reductions in energy bills and the consistency of regular payments (much like regular car repayments) remain.

At the end of the day, the environmental and commercial benefits of new technologies will continue to outweigh any potential obstacles. The Smart Ease team is here to help you – and your customers – achieve those. 

Want to know more about Smart Ease payment plans and rising interests rates? Let’s talk.

Coal shortages, increased power demand leading into the Northern hemisphere Winter and carbon emission reduction targets have led to Chinese authorities mandating energy rationing. In the past week this has triggered immediate restrictions on manufacturers across China, including many of those servicing the global solar industry. 

Manufacturers have been forced to significantly reduce their output, and in some cases shut down altogether, effective immediately. This has been deemed a force majeure event which has already seen some panel manufacturers renegotiate existing pricing and agreements.

This will significantly impact the availability of stock and lead to price rises in Australia and New Zealand.

What impact will this have on pricing?

Given that China is the world’s biggest supplier of solar technology and equipment, these disruptions are driving supply shortages and rapid price increases.

Some scheduled shipments to Australia and New Zealand have already been delayed, or even cancelled.

We are anticipating that the combination of raw material constraints, production stoppages and logistics challenges will cause a rise of up to 10% to the installed cost of solar systems from this week onwards.

How can a payment plan help a business absorb this price increase?

As the price of equipment is rising rapidly, this may mean solar is less affordable to businesses and organisations right now. In certain cases where a proposal has been submitted, pricing may need to be renegotiated and upfront payment may no longer be an option for some customers.

That’s where the role of a payment plan becomes even more critical. Smart Ease Payment plans enable customers to pay for projects over time, in smaller affordable instalments, without having to bear the full upfront impact of price increases.

By doing so customers can also often be cash flow positive sooner because their instalments are less than their energy bill before solar was installed. A silver lining despite these unprecedented circumstances.

If you want to discuss any projects needing a payment plan option, please get in touch with our team on 1300 795 695 or enquiries@smartease.com.au