Its 2018, yet business owners still look at the concept of solar energy for their business with weary eyes and confusion because of the complex and confusing market. Companies large and small have been switching to solar. From major Fortune 500 companies to the coffee shop around the corner. Our own Denver self-storage facilities are topped with sleek and shiny solar panels. Still, the sentiment in many industries is that solar might not be feasible for your organization, or at least not in your current financial situation.
Maybe you’re considering installing solar panels at some point, when your organization can afford to make a major investment in something that seems like an environmental “good” rather than a strategic financial decision.
This is the old way of thinking. Shake that thought from your head and we’ll get down to the facts. Solar isn’t just for Apple and Tesla anymore. Businesses of all sizes are capitalizing on the financial opportunities of installing solar, proving that a solar energy system is a key strategic decision that guarantees a gleaming financial return for your business.
Taking a Look at the Numbers
According to EnergySage marketplace data, the average commercial property owner paid $1,950 in monthly electricity bills before going solar. After their installation, their electricity bill was reduced to approximately $500 – a 75% reduction.
All signs point to solar as being a smart business decision. Businesses with solar panel systems result in average monthly savings of $1,433. Businesses generally opt to pay off their solar panel systems in 3 to 7 years, which means they enjoy free electricity for the remaining life of the system (25-35 years!).
What are the Actual Costs?
The price of installing solar panels has dropped considerably over the last five years while electricity prices continue to skyrocket, making the switch to solar even more attractive.
Your system size depends on how much electricity you need for your business. (For your reference, an average residential home typically installs a 7 kilowatt, or 7,000 Watt, solar panel system to cover their electricity needs.) The cost of a solar panel system is usually measured in dollars per watt. According to EnergySage, the average commercial system was priced at $2.95/Watt before any rebates or incentives, with most quotes ranging from $2.27/Watt to $3.63/Watt. Take a look at the table below for price information about different solar system sizes. These prices have already incorporated the solar tax credit.
Decreased equipment and installation costs aren’t the only reason for your business to go solar. There are other factors that can reduce your business’s out-of-pocket cost for a solar panel system, including:
· Federal Investment Tax Credit (ITC): This one is huge. Owners of newly installed solar panel systems get a federal tax credit for 30 percent of the cost of the system. (Some states also offer additional tax credits.) On December 18, 2015, Congress extended the solar tax credit for homeowners through 2021.
· Accelerated depreciation: Businesses can deduct 85 percent of the value of the solar asset from their taxes, providing another significant offset to the upfront cost of a system array.
· Performance-based incentives (PBIs): PBIs, including solar renewable energy certificates, are a way for solar owners in some markets to receive payment from their utility for the solar electricity that their system generates. These incentives can significantly enhance financial returns for system owners over the life of the system.
Beyond the direct short-term financial benefits, installing solar panels can also help your business to hedge against electricity price volatility and inflation. In many states, the price of electricity can fluctuate significantly due to demand, creating a headache for business owners who are closely managing their cash flow. By installing solar, your business will be able to lock in electricity prices and reduce reliance on an unpredictable expense. Going solar makes it easier for companies to budget and plan for the future.
In total, the ITC and depreciation benefit can reduce the system price by as much as 60 percent. Add that to savings from a reduced utility bill and other incentives like PBIs, and business owners are looking at an investment that’s hard to pass up. If paying up front isn’t an option for your business, not to worry – there are many financing options available to businesses with good credit, including solar loans and solar leases/power purchase agreements (PPAs).
More Solar Benefits
Let’s not forget that the financial incentives mentioned above aren’t the only things that contribute to the bottom line. There are other commercial solar benefits for business, including:
· Winning more customers: Many current and potential customers are attracted to businesses with a commitment to sustainability. Businesses are winning large contracts due to their solar investments – buyers love products and services that are powered by clean energy! A solar installation is a great opportunity to promote your organization and raise awareness of your offering in the community. See how our Centennial self storage facility did it here!
· Supporting the local economy: Businesses going solar contract local workers for installation. Greater demand for solar projects increases the availability of high quality, good paying jobs. Those workers could become your future customers, too.
The numbers don’t lie – solar panel systems are a smart capital investment for businesses. They have short payback periods, provide steady financial returns, and help business owners hedge against rising energy prices. Do your homework and get quotes from multiple solar installers and brands. The process is straight forward. Lose the old-school idea of solar power and pull the trigger on a smart business investment and do your part to save the planet.