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Please find a brief overview below on how an investment in solar power makes commercial sense.

By Investing in Solar Power Generation the landlord is provided with an Additional Revenue Stream.

Based on the Building Energy End-User Study (BEES) it is estimated that the Energy Performance Indicator (ENPI) for the average amount of energy used per square metre of floor area is 173kwh/m2/yr for electricity.

So for a 300m2 property it's assessed annual electricity consumption in KW's is estimated to be 300 x 173 = 51,900 KW per annum.

In dollar terms assuming a rate from the electricity provider (i.e. Mercury) is 0.18 cents per KW after discount then 51,900 x 0.18 = $9,342 is the approximate annual cost of electricity to the tenant.

Taking this example a step further.

For an investment of $29,984 excluding GST the landlord could purchase a 10KW system. This system would generate approximately 13,398 KW's per annum.

or 13,398/51,900 = 26% of required usage

13,398 x 0.18 = $2,411.64 per annum in billable revenue. less tax at 33% = $1,615.80 nett. The system has an IRD straight line depreciation annual rate of 10.5%, so $29,984 x 10.5% = $3,148.32 less allowable tax deduction at 33% = $1,038.95

So $1,615.80 + $1,038.95 = nett cash return of $2,654.75

Please note: It is assumed property is owned by a Family Trust so the Tax rate calculation used is the Trust Tax rate of 33%.

Summary

Invest in Solar            $29,984

Net Return                   $2,655

Effective return             8.85%

Leave money in bank $29,984

ASB Gross Rate 3.4%

less w/h Tax = 2.28% $684

Effective return 2.28%

There are a number of additional more substantial benefits than the ones explained above and we would be happy to discuss these with you, should you wish to further explore an investment in your own solar power generation.