Historically, solar PV system costs have been steadily declining over the last decade. However, with recent supply chain challenges, labor cost increases, and greater demand for solar, prices across the industry have jumped. (Perhaps you read “Why is the Cost of Solar Increasing?”) Despite this, solar is still a valuable investment for many businesses. Consistent energy savings, various financial incentives, and long term sustainability benefits quickly counter increased costs.
Energy Offset & Independence
The immediate benefit of an on-site solar system is the direct energy offset seen on the utility bill. Many facilities immediately consume any energy produced by the system which consequently reduces the total amount of energy purchased from the utility. This is particularly helpful if a facility is subject to peak demand charges. Peak demand is billed at a higher rate than regular usage, so even a small decrease in the peak will result in a noticeable reduction in the final cost to the customer. As a bonus, some utilities even have programs that will buy your excess solar production or credit your next bill.
Additionally, with a solar PV system, a facility has more energy independence and can be protected from utility grid power outages. With the right sized system, solar can provide critical power to keep important operations running and avoid costly downtime. Since most commercial and industrial businesses operate during the day, this can be a good backup source of energy. If your facility also operates at night, you may want to consider battery energy storage or a different type of backup system.
Tax Credits & Incentives
There are a number of tax credits and financial incentives available for businesses to encourage solar adoption. The federal government recently passed the Inflation Reduction Act in August which increased the Investment Tax Credit (ITC) to 30% until 2032 and expanded eligibility for non-taxed entities. This opens up the possibility of solar for many cities, counties, and non-profits that may have not been able to afford it before. Commercial and industrial customers can also take part in the Modified Accelerated Cost-Recovery System (MACRS) to recover investments in solar with depreciation deductions.
Individual government agencies offer special provisions for renewable energy as well. The US Department of Agriculture offers the Rural Energy for America Program (REAP) which provides grants and loans to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements. The Small Business Administration offers 504 Grow loans that allow for an extra half million dollars of debenture if the building offsets energy consumption by 10% with renewable energy.
On top of the federal incentives, many states have their own tax credits and programs that can offer further savings on the initial investment. South Carolina specifically has a 25% corporate tax credit for solar energy systems that is paid out over ten years. Select utilities also have solar programs that buy excess electricity from the customer at a predetermined rate.
Depending on the type of business and financing structure, you can find numerous incentives that apply to your project. Many of these can also be combined for maximum savings. Work together with your project contact and your finance team to take advantage of every available incentive – you will be surprised by just how many there are.
Long System Life & Sustainable Reputation
An investment in solar is a long-term cost savings strategy. A solar EPC, like Colite Technologies, will select equipment and components that meet efficiency, durability, and reliability standards to ensure your system operates as expected. A typical system life is 25 years, meaning the system will produce the rated amount of electricity for 25 years. Each component has its own warranty ranging from 10 to 30 years, so the first major equipment replacement would likely occur in year 10. Many companies also offer long-term operations and maintenance services that take care of the maintenance and repairs for you.
Furthermore, solar panels are one of the most easily recognized renewable energy equipment. Customers and visitors can quickly identify a solar system and know that your business is using green energy. We have seen that Millennials and younger Gen Z are more likely to buy from and work for companies that have sustainability and/or climate goals; as they move into the workforce and take on decision-making roles, their influence will continue to increase.
It is also becoming more common to see large corporations extend sustainability requirements to their suppliers and partners. Whether from governments or board members, many companies are facing pressure to become carbon free, carbon neutral, or even carbon negative. These companies’ spheres of influence are wide; as a result, Tier 2 and 3 suppliers along the supply chain are also seeing the need to reduce their environmental footprint to continue working with them.
Solar remains a cost-effective alternative to energy sources that produce carbon emissions and is easy to implement. Onsite generation directly offsets a facility’s energy usage while increasing independence from the utility and supports a sustainable reputation for years to come. With various tax credits, grants, and loan programs for renewable energy, total project costs can be significantly decreased. As investment in solar technology continues in the future, projects will see more efficiencies, cost less, and take less time.
Take a look at one of our solar projects in Atlanta, GA. What could solar do for your facility?