Solar panels are hot, but why?

Many agricultural companies invest in solar panels. In recent years, technology has progressed rapidly and thanks to innovation and cost reduction, the competitive position of solar energy is improving every year. But why do solar panels make the farmer shine?

The prices of panels are stable and the investment conditions are favourable. Most solar energy projects are carried out by entrepreneurs on their own buildings. Investing in and financing solar is relatively easy and the cash flow is quite secure. The return is acceptable and combined with making the property more sustainable, it is a meaningful investment.

1. SDE subsidy
If you are a major energy consumer, you can make use of the SDE subsidy. The solar panels offer you a way to immediately save on your energy costs. In the longer term, after the payback of the installation, you will even be in the position of only earning money on the installation. You no longer have to pay for your energy, but you have already paid for the energy.

2. Tax deduction options
When you install solar panels as a small consumer, you can make use of the investment deduction scheme EIA (Energy investment deduction) and also the KIA (Small-scale investment deduction). The EIA allows you to deduct 55% of the investment costs from your taxable profit, on top of the normal depreciation. The KIA allows you to deduct 28% of the investment amount from your taxable profit.

3. Cheap interest
Since solar energy qualifies for the green scheme, an interest discount on the financing is also possible. In any case, Rabobank, ABN Amro and Triodos bank have options. In addition, there are also alternative financing options for certain projects, such as selling the project to an investor, renting out the roof or crowdfunding. Operational lease is also a frequently used option.

4. Low realization costs
Farms have quite a bit of space available for solar panels, for example on stables, sheds or on a brackish piece of land. Normally, for large installations, the available space is the biggest problem and the biggest expense. You don't have that and so your competitive position is very good.

5. Flexible depreciation
With the 'Random depreciation of environmental investments (VAMIL)' you can determine yourself when you depreciate your investment. By depreciating faster, your taxable profit decreases. As a result, you pay less tax in that year. If you make less profit in a year, you can choose to depreciate a smaller part of your investment that year by using the VAMIL. Unfortunately, this arrangement is no longer possible.

Trees Rijpkema

Senior Relationship Manager at Farmers Funding

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