The upfront cost of installing solar panels can be a barrier for many businesses, which is where third party financing comes in. In this article, we will take a closer look at the options available for third party financing of solar panel installations in Belgium.
What is Third Party Financing?
Third party financing is a way for businesses to pay for the installation of solar panels without incurring any upfront costs. Instead, the financing is provided by a third party, such as a bank or financing company, and the business pays back the loan over time. This can be an attractive option for businesses that do not have the upfront capital to pay for the installation of solar panels or that want to conserve their capital for other investments.
Types of Third Party Financing Options
There are several options available for third party financing of solar panel installations in Belgium. These include:
- Leasing: An option is to lease the solar panel system from a third party. This option can be attractive to companies that do not want to take the risk of ownership or do not have the capital to purchase the system. Under a lease agreement, the company pays a fixed monthly fee to the third party for the supply and maintenance of the solar system in exchange for the free electricity produced (self-consumed or fed back into the grid). The fixed price is particularly interesting in periods when the price of electricity is rising, as the return on investment is even higher than initially calculated. Moreover, in most cases, you become the owner at the end of the contract of the installation (+25 years).
- Power purchase agreements (PPAs): A power purchase agreement is a type of financing option in which a third party owns and operates the solar panel system and sells the electricity generated back to the business. The business pays a fixed price for the electricity, which is typically lower than the price of electricity from the grid. This can be a good option for businesses that do not have the space or capital to install their own solar panel system.
Benefits of Third Party Financing
There are several benefits to using third party financing for the installation of solar panels. These include:
- No upfront costs: The most obvious benefit of third party financing is that it allows businesses to pay for the installation of solar panels without incurring any upfront costs. This can be especially appealing for businesses that do not have the capital to pay for the installation outright.
- Flexibility: Another benefit of third party financing is that it offers a range of options to suit different business needs. For example, a bank loan may be a good option for businesses that want to own the solar panel system outright, while a lease or PPA may be a good option for businesses that want to conserve their capital or that do not have the space to install the system themselves.
- Reduced risk: In both cases described above, a third party invests and therefore takes the operational and financial risk.
Third party financing is a powerful tool for businesses that are looking to adopt solar energy but don’t have the upfront capital to pay for the installation outright. If you are considering third party financing for your solar panel installation, don’t hesitate to reach out to us for guidance in selecting the best option for you. Our team of experts is here to help you navigate the process and ensure a successful transition to sustainable energy.
Find out more about third party financing in our extensive White Paper.