Cost management is a characteristic of healthy, successful companies. If you’re looking to reduce your business’ electricity costs, you may be considering the feasibility of installing solar panels. This blog examines several important areas that can help you make a more informed decision.
1. Your Cost of Electricity
An important factor in determining the viability of a solar project is the potential saving in electricity, the “avoided cost.” By generating your own electricity with solar, your utility avoids the cost of having to generate that electricity. They pass those savings on to you.
Read our blog, How Much Will You Save, to learn how to calculate your avoided cost.
2. Incentives to Go Solar
Through the solar Investment Tax Credit (ITC), the federal government promotes solar energy usage. For projects that start construction in 2021, the ITC will offer a 22 percent tax credit for solar systems on commercial (under Section 48) properties. The Section 48 commercial credit can be applied to both customer-sited commercial solar systems and large-scale utility solar farms. After 2021, the commercial credit will drop to 10 percent.
You may also earn credits through a Pennsylvania incentive program known as solar renewable energy certificates (SREC). For every megawatt hour (MWh) of electricity a solar installation produces, the owner earns an SREC, which can be sold back to utilities using the state’s SREC market.
Learn more about SRECs in our blog, Incentives for Generating Solar Energy.
3. Cost of Installing Solar Panels
The cost of commercial solar panels depends on the size of the system, type of equipment, and your electricity usage. The size of your system will depend on available space, electricity usage, and financial goals.
There are a variety of installation options, including solar panels attached to a standing seam metal roof, a ballasted system on a flat roof, solar carports, and ground mount systems. Some of these require additional structure and may need underground cabling.
All this is to say that, because there are so many options, it’s hard to provide an estimate without more information. Contact one of our solar consultants for a free solar assessment and a cost estimate.
4. Your Site’s Exposure to Sunlight
Because solar panels convert sunlight into electricity, their location is important to ensure they’re working as efficiently as possible. Although central Pennsylvania tends to have more cloudy days on average, solar panels still perform well and are growing in popularity around the state. There are a few factors to consider when locating a solar panel installation, so that you generate as much electricity as possible.
Read our blog, Selecting The Right Location For Your Solar Installation, to understand your options.
5. Return on Investment of Solar Panels
While the upfront costs of installing a commercial solar panel system may appear to be expensive, it’s important to bear in mind government incentives like the 22 percent federal investment tax credit (ITC) and Pennsylvania SRECs, which can reduce the initial investment.
Once your system is up and running, there are factors that can lower your overall cost of ownership, generate a positive return on investment, and produce significant long-term upside, including:
- Ongoing monthly energy savings
- Utility net metering programs that buy the excess energy you generate
- Price stability that protects your business against rising energy prices
- Property appreciation with no impact on your property taxes
6. How Will You Pay for Your Solar Panels?
There are a variety of options for funding a commercial and industrial (C&I) solar installation. The options primarily fall into two categories: direct ownership or third-party funding. Direct ownership is also referred to as a cash option. The organization directly funds the purchase using a debt instrument or retained earnings.
The third-party option typically requires no upfront capital from the organization. In most cases, solar developers build, own, and operate the solar array on the host organization’s property. The organization agrees to purchase the power produced from the solar array for a period. For more information on solar funding approaches, read our blog, How To Go Solar With No Capex.
Next Steps
There are many options to consider when thinking about locations for solar panel installations. We’re here to help you.
To learn if solar is the right move for your business, contact us for a free solar feasibility report.