Solar Business Valuations
Independent valuations for solar and battery installation businesses across Australia.
Green Standard values residential solar and battery installers, commercial and industrial solar contractors, and operations and maintenance providers. Two solar businesses with the same profit can be worth very different amounts, because profit that depends on a government incentive, a paid lead source or a single strong year is worth less to a buyer than profit that would be earned in any conditions.
A business with a steady flow of installs from referrals and its own brand, an installer team that has worked together for years, a sensible warranty provision and a base of commercial systems under paid maintenance is a different asset from one whose sales depend on a lead aggregator, an incentive deadline and an owner who sells every job.
We examine the revenue mix, the incentive exposure, the cost of winning customers, the warranty obligations and the people who install, then form a view on the earnings a new owner could reasonably expect to keep.
How much is a solar business worth?
A solar business is worth the earnings it could keep making in ordinary conditions, after a market wage for the owner and a realistic cost for warranties, not the earnings of its best year. Demand and margins in the sector swing with government incentives, equipment prices and the cost of winning customers, so a valuer asks how much of the profit would survive a change in any of them. The worked example below uses illustrative figures.
Solar businesses we value
What affects the value of a solar business?
These are the questions we work through when we value a solar business. Earnings in this sector can swing with policy and pricing, so the focus is on what would be maintainable rather than on the best recent year.
Revenue and policy exposure
Residential and commercial mix
Residential work is high volume, price competitive and sensitive to household incentives and consumer confidence. Commercial work is lumpier, with longer sales cycles and larger contracts, but it can lead to ongoing maintenance. We separate the two because a buyer will price them differently.
Certificate and rebate dependency
Small-scale technology certificates under the Small-scale Renewable Energy Scheme, and state or other government solar and battery programs, lower what customers pay and so support demand. We look at how much of each sale depends on them, how the business creates and sells certificates, and what earnings would look like if an incentive were reduced or removed.
Policy change risk
Incentive rules have changed over time and can change again, sometimes with little notice. A rush of orders ahead of a change, or a pause after it, can distort a single year, so we look at several years of installs and at what the pipeline says about the months ahead.
Sales backlog and deposits
Signed jobs that are not yet installed show demand, but they also carry obligations and customer deposits held. We look at the size and age of the backlog, delays caused by stock or network approvals, and how deposits are accounted for.
Operations and maintenance revenue
Maintenance, monitoring and cleaning agreements on commercial systems repeat each year and tend to be steadier than installation margin. We look at the number and age of systems under agreement, the terms and renewal history, and whether the business holds the monitoring relationship or the customer could move it elsewhere.
Winning customers
Lead generation cost
Many residential installers buy leads from aggregators or through advertising, and the same lead is often sold to several competitors. We look at spend, leads, conversion and cost per sale by channel, and at how much work arrives through referrals, repeat customers and the business’s own search visibility.
Sales model and commissions
Some businesses sell through in-house staff, some through commission-only representatives or third-party marketers. We look at how sellers are paid, who owns the customer relationship, and the exposure to cancellations and consumer law complaints arising from sales practices.
Reputation and referral sources
Reviews, referrals and repeat customers keep the cost of winning work down. We look at which of them belong to the business and would pass to a new owner, and whether the brand has a history of complaints or regulator attention.
People, accreditation and warranty
Accredited installers and electrical licences
Solar installation involves electrical work, so it needs appropriately licensed people, and installers and designers of systems that create certificates generally need accreditation, which Solar Accreditation Australia now administers after the Clean Energy Council previously did so. The requirements are set by regulators and differ by state, so we check what applies, who holds it and what the business does if they leave.
Subcontracted install crews
Many installers use subcontracted crews paid per system or per kilowatt. We look at the rates, whether crews also work for competitors, how quality and rework are managed, and whether the arrangements are genuine contracting that would continue under a new owner.
Owner involvement
In smaller solar businesses the owner often sells, designs and manages crews, and holds the supplier relationships. We deduct a market cost for those roles before any multiple is considered and ask who else could do them.
Warranty and service obligations
The installer usually gives a workmanship warranty and handles faults long after the job is done, while product warranties sit with manufacturers who may no longer be operating. We look at the claims history, the warranty provision in the accounts and the cost of attending older systems, which a buyer inherits.
Suppliers and sector risk
Inventory and supplier terms
Panels, inverters and batteries are largely imported and prices can fall quickly, leaving stock bought earlier worth less. We look at stock levels, supplier credit terms, deposits paid and exposure to a distributor failing.
Network approvals and installation timing
Systems need connection approval from the local network operator, and delays or export limits can hold up installs and the cash that follows. We look at how the business manages applications and what delays do to its working capital.
Sector history and volatile earnings
The sector has a record of businesses that grew quickly when incentives or prices were favourable and then failed when conditions changed, often leaving customers without warranty support. Buyers know this history and discount earnings that look volatile, so we look at several years and at how the business behaved when conditions turned.
How a buyer reads a solar business
Buyers of solar businesses include larger solar and electrical groups expanding into a region, commercial electrical contractors adding solar and maintenance, and installers or managers buying into ownership. They are asking whether this profit would survive a change in incentives and a rise in the cost of winning customers.
Businesses with commercial work, maintenance agreements, a manageable warranty book and customers who arrive through referrals and their own brand tend to attract the most interest. Businesses that depend on one incentive, a paid lead source or the owner’s selling are usually priced more cautiously, even in a strong year.
Because warranty and service obligations stay with the business, buyers also ask what they would be taking on. A valuation works through the same questions, independently and with the reasoning written down.
Adjustments we often make in solar businesses
Reported profit is restated to what the business earns on a commercial footing before any method is applied. Every adjustment is listed in the report.
Owner wages
Replacing drawings, or a salary set for tax reasons, with a market cost for the selling, design and crew management the owner actually does.
Incentive-driven peaks
A year lifted by a rush ahead of an incentive change or by a short-term program, restated to a level that could be maintained.
Certificate price and timing
Unusually high or low prices received for certificates, or differences in when they were sold, that distort one year’s margin.
Lead and advertising spend
A temporary cut or increase in marketing spend that makes one year’s profit unrepresentative of the real cost of winning work.
Warranty provisions
Warranty costs that have been under-provided, or paid out unusually in the period, restated to a realistic annual cost.
Inventory write-downs and rebates
Stock written down after a price fall, or volume rebates from suppliers that may not continue.
One-off commercial projects
A single large commercial system that lifted revenue and would not recur at the same level.
Related-party crews and premises
Install crews, a warehouse or vehicles supplied by the owner’s family or related entities at other than market rates.
Information we typically review
You upload documents through the secure client portal after the engagement is confirmed. We send a list specific to your business; nothing needs to be gathered before the intake.
The financial pack
- Profit and loss statements, usually the last three years and the current year to date
- Balance sheets for the same periods
- Tax returns where relevant
- Payroll summary and employee information
- Vehicle, plant and equipment schedules
- Major customer information
- Recurring contracts and service agreements
- Revenue breakdown by service line
- Owner remuneration and drawings
- Unusual or non-recurring income and expenses
For a solar business, also
- Revenue split: residential solar, battery, commercial and industrial, and operations and maintenance
- Certificate records: certificates created, assigned and sold, proceeds received, and any rejected, audited or queried
- Installer and designer accreditations and electrical licences, with holders, classes and expiry dates
- Lead source report: spend, leads, appointments and sales by channel for the last three years
- Sales backlog: signed jobs not yet installed, deposits held and expected install dates
- Subcontracted install crew agreements, rates and annual spend
- Warranty register, claims history and the basis of any warranty provision
- Inventory listing, supplier and distributor terms, and any deposits or credit held
- Operations and maintenance contract schedule: systems, term, price and renewal history
- Manufacturer and distributor warranty terms, including any suppliers that have ceased trading
- Customer complaints, regulator correspondence and cancellations in the last three years
What a solar business valuation costs
Fixed fees, confirmed in writing before work begins. The standard fee applies to most established solar businesses.
Independent Business Valuation
$1,995+ GST
For established trade and field-service businesses requiring an independent valuation.
- Review of financial information
- Normalisation of earnings
- Valuation methodology selected for the business and purpose
- Industry and business risk assessment
- Consideration of plant, vehicles and equipment
- Owner dependency assessment
- Goodwill analysis
- Valuation range and conclusion
- Professionally prepared valuation report
- Draft provided before finalisation
Accountant and Adviser Partner
$1,495+ GST
For accountants and professional advisers who refer valuation matters regularly.
- Streamlined client onboarding
- Adviser kept informed with client authority
- Independent report addressed to the client
- Secure document portal for the client
- Repeat-client workflow
- Partner pricing on every referred matter
Complex Valuations
From$2,995+ GST
For matters with more moving parts. Quoted as a fixed fee in writing before work begins.
- Multiple entities or divisions
- Significant plant and equipment
- Unusual ownership structures
- Partnership and shareholder disputes
- Complex normalisations
- Significant customer concentration
- Historical valuation dates
Fees are fixed and confirmed in writing before work begins.
Solar valuations: common questions
How much is a solar business worth?
A solar business is generally worth what its maintainable earnings support after a market wage is paid for the owner’s own work, adjusted for how much of those earnings depend on incentives, paid leads and the owner. Commercial work, maintenance agreements and referral-driven sales support a higher value; incentive-driven peaks and heavy dependence on bought leads reduce it. Our guide on how trade businesses are valued sets out the approach.
Does a change to a government rebate affect my valuation?
Yes, to the extent your earnings depend on it. We do not forecast policy, but we test how earnings would look with demand, certificate income or margin reduced, and weigh recent years that were lifted or held back by a change. The valuation reflects what was known at the valuation date.
Are the warranties I have given a liability that reduces value?
They can be. Workmanship warranties and the obligation to service older systems are real costs that continue after a sale, so we look at the claims history, the age of the installed base and whether the accounts hold a reasonable provision. A business with a clean claims record and a sensible provision is easier to value than one with an unquantified warranty book.
Does maintenance revenue on commercial systems add much value?
It can, because it recurs and is less exposed to incentives than installation. We look at how many systems are under agreement, the price and term of each, and the renewal history, and weigh it as a separate and steadier stream. Our guide on recurring maintenance contracts and business value explains how this is treated.
Related industries and guides
Valuing a solar business? Start with a short intake.
An Independent Business Valuation is $1,995 + GST, with a draft before the report is finalised. Typical turnaround is 3 to 7 business days once all required information has been received.