As businesses in Malaysia increasingly shift toward sustainable energy solutions, solar power has emerged as a popular option for reducing electricity costs and lowering environmental impact. When considering the switch to solar energy, businesses often face a crucial decision: should they lease or purchase their solar energy system?
Both options have distinct benefits and drawbacks, and choosing the right one depends on several factors, including your financial situation, long-term goals, and energy needs. In this blog, we’ll break down the differences between solar leasing and purchasing to help you decide which is best for your business.
Solar Leasing: What Is It?
Solar leasing allows businesses to install solar panels without the large upfront investment of purchasing a system. Instead, the business leases the solar system from a provider and pays a monthly fee, similar to leasing equipment or office space. The leasing company owns, maintains, and monitors the solar system, while the business enjoys lower energy costs without having to worry about upkeep.
Advantages of Solar Leasing
- Low Upfront Costs:
One of the biggest benefits of leasing is the minimal upfront cost. This makes solar energy accessible to businesses that might not have the capital to invest in a full solar system. - No Maintenance Hassles:
The leasing company is responsible for maintaining and repairing the system, so your business won’t have to worry about technical issues or upkeep. - Immediate Energy Savings:
With solar leasing, businesses can start saving on electricity bills from the day the system is installed, without the burden of large initial expenses. - Flexibility:
Leasing contracts can vary in length, typically ranging from 10 to 20 years. This flexibility allows businesses to benefit from solar energy without long-term ownership commitments.
Drawbacks of Solar Leasing
- No Ownership:
Since the leasing company owns the system, your business won’t benefit from the long-term financial advantages of ownership, such as adding value to your property. - Limited Savings:
While leasing provides savings, those savings may be smaller compared to owning the system, especially over the long term, since you will still be paying a monthly leasing fee. - Ineligibility for Incentives:
In many cases, businesses that lease solar systems cannot take advantage of government incentives, tax breaks, or grants designed for renewable energy investments, as those benefits often go to the owner of the system.
Purchasing Solar: What Does It Involve?
Purchasing a solar energy system involves making an upfront investment to buy the solar panels and other equipment outright. This gives the business full ownership of the system, as well as control over its energy production and usage.
Advantages of Purchasing Solar
- Full Ownership:
When you buy a solar system, your business owns the asset outright. This means you can benefit from increased property value, full energy savings, and tax incentives. - Higher Long-Term Savings:
Although the initial cost is higher, purchasing solar panels leads to greater long-term savings since you won’t have ongoing leasing payments. Once the system is paid off, your energy savings go straight to your bottom line. - Government Incentives:
Owning your solar system allows you to take advantage of Malaysian government incentives, such as tax deductions, the Net Energy Metering (NEM) scheme, and grants that can significantly reduce the cost of installation. - Return on Investment (ROI):
Businesses that purchase solar systems typically see a return on investment within five to seven years, after which the system provides free electricity for decades.
Drawbacks of Purchasing Solar
- High Upfront Costs:
Purchasing a solar system requires a significant upfront investment, which may be a barrier for businesses with limited capital. - Maintenance Responsibilities:
As the owner, your business will be responsible for maintaining and repairing the solar panels. However, solar systems are generally low maintenance, and most come with warranties that cover equipment and performance for up to 25 years. - Longer Payback Period:
It may take a few years to recover the initial cost of the system, depending on the size of the installation and your energy consumption.
Which Option is Best for Your Business?
The best choice for your business depends on your financial situation, long-term energy needs, and growth plans. If your business has the financial resources to make an upfront investment and you want to maximize long-term savings, purchasing solar panels may be the better option. On the other hand, if your business prefers lower upfront costs, flexibility, and the convenience of leaving system maintenance to someone else, solar leasing might be the ideal solution.
Conclusion
Both solar leasing and purchasing offer unique benefits for businesses in Malaysia. Solar leasing allows businesses to access clean energy with minimal upfront costs and maintenance responsibilities, while purchasing offers long-term savings, ownership benefits, and eligibility for government incentives. Understanding your business’s financial capacity, goals, and energy needs will help you make the right decision for your solar energy investment. Whether you choose to lease or purchase, transitioning to solar energy is a smart step toward reducing operational costs and achieving sustainability goals.