Why Consider Commercial Solar Installation?
As the technology for solar energy continues to advance, commercial solar power has the potential to save businesses and building owners more money each year. Unfortunately, many businesses have yet to take the time to truly study the operational and financial benefits of solar power. Below we have compiled some of the top reasons for businesses to invest in solar power from both a monetary and operational standpoint.
Financial Benefits of Going Solar
- The out-right purchase of a commercial solar system can be greatly alleviated with financial incentives from both Federal and state governments. The first credit to be aware of is a federal tax credit. The solar Investment Tax Credit (ITC), offered by the federal government, allows businesses who install a photovoltaic power system a 30% tax credit on the cost of the system. There is no cap amount to the ITC. So whether the system you install is a $100,000 system or a $1,000,000 system, the same percentage can still be claimed. Additionally, the unused portion of the Investment Tax Credit may be rolled into the following tax year. As if that weren’t enough, states and local utilities offer their own rebate systems to reduce the overall costs of having a solar energy system installed for your business. In many instances, the amount of the rebate increases as the size of the system increases.
- Many states also have net metering policy. Net metering essentially means that a customer only pays for the net amount of electricity that you use. By leveraging the net metering option, businesses that have a solar panel system installed are able to “bank” the excess electricity their solar system generates as “credits”. They can then receive credit up to 100% of their electric use bill at the full retail electricity price. Then in turn, they can use credits at a later point in time to offset their bill even further. Interestingly enough, many states have even gone so far as to exempt the value of a renewable energy source from a building owner’s property taxes. Unlike other improvements, which are likely to increase a property's assessed value, businesses would not have to pay increased property taxes even though the value of your building could very well increase the addition of a solar power system.
Federal Tax Credits for Solar
- In addition to the government incentives, businesses have the option to be able to take an accelerated five (5) year depreciation on the cost of the system under the federal Modified Accelerated Cost-Recovery System’s (“MARCS”). So while your company will receive cash flows from a solar power system for upwards of 20 or 25 years, the total value of that system (in terms of upfront costs) will be taken out of gross income over the five-year period allowed by MARCS resulting in a lower tax liability over the initial five years the system is installed.
Operating Advantages With Solar
- Installing a solar system can dramatically reduce a business’ operating expenses and therefore, improve the bottom line. In virtually every case we have installed, the corporate utility costs have significantly declined to the point where the savings can pay for the solar system. According to an environmental report released in 2003, the financial investment in a solar power system will not only cover the initial costs, but it can even pay for itself 10 times over.
Reduce Your Building’s Operating Costs
- On top of lowering operating expenses, solar power can help a business guard against fluctuations in the power markets. Aside from seasonal swings in utility rates due to high consumption (ie. summer and winter months), electricity rates generally seem to increase on an average 5.5% a year. Investing in solar power allows a business to insulate themselves from these increases by cheaply producing their own electricity. By guaranteeing themselves a certain electricity rate with solar, businesses can take the variable nature out of their utility costs and begin to categorize their utility costs as more of a fixed expense, providing for a more predictable and stable balance sheet in which to work.
Hedge Against Rising Utility Rates
- When Big Dog installs a commercial solar energy system virtually no maintenance is required and the system operates without adding additional noise. Depending on the roof structure of a business, access to the system is easy and if anything should need to be checked on after installation, this process can be done quickly and efficiently. Individual solar cells tend to be rather fragile. However, they are encased in a protective case of tempered glass and non-corrosive aluminum. Due to the nature of the elements that solar panels are regularly exposed to, manufacturers build very sturdy panels aimed to withstand such environments. Because the panels are built to withstand rain, hail and other weather-related threats, most solar panel manufacturers offer a full warranty over their solar panels for 20-25 years. What this means to you is that once you make the move to solar, you will experience clean electricity for at least 25 years from a system that is just as functional and more reliable than standard electrical utility.