The benefits of going solar come from a combination of reduced costs, tax incentives and how much sunlight your panels collect. So, no matter where you are, the benefits are easy to see.
It’s a startling fact: For as high as inflation is throughout the US economy, electricity prices have risen at an even quicker pace. In fact, the price of power surged 14.3 percent in 2022 – double the year-over-year rate of inflation.
According to the World Economic Forum, such significant increases are due in large part to the war in Ukraine; and of course, climate change continues to negatively impact worldwide energy security.
Even a cursory look at such economic pressures makes it easy to see why forward-thinking businesses recognize now is the time to shift to renewable energy. In fact, with long-term tailwinds forecasted for clean energy, conditions might just be forming a perfect storm.
Here’s what businesses need to know about transitioning to solar energy.
Economic incentives help make it a breeze
The economic turbulence of the past year has led many businesses to tighten up on expenses. So, even the most interested in solar energy might balk at adding any new up-front costs. Federal tax incentives, however, make going solar a breeze.
The Investment Tax Credit (ITC), for example, allows businesses to deduct a percentage of their investment in solar power systems from their federal income taxes immediately. For 2023, the deduction is 30 percent of the cost to install the system; businesses that meet certain criteria can be eligible for an even higher percentage. And though the ITC only offers a one-time deduction, programs such as the Modified Accelerated Cost Recovery System (MACRS) extend the tax breaks for years.
Any business considering the benefits of solar should consult with tax, legal and accounting professionals before entering any transaction; but MACRS generally allows businesses to depreciate the cost of their solar system over an accelerated time frame. This depreciation benefit makes the tax benefits available to businesses that go solar even more robust.
But federal tax incentives aren’t the only economic benefits of going solar — state and municipal governments often offer localized incentives, as well. And the biggest cost saver is, of course, the reduced utility bill businesses pay when they are generating their own clean, renewable energy from a solar system; companies can eventually offset their electricity costs up to 100 percent per month with solar.
Next, let’s look at two simple steps your business can take to easily transition to solar energy.
#1: Research reputable local solar installers
This suggestion sounds simple, and it is. But we all know how easy it is to put off doing our homework — and how much easier life is when we stay on top of our to-do list. So, make research a priority to work with a reputable local company that can help make installing — and benefiting from — your solar panels stress free.
Here are three questions to keep in mind as you evaluate potential solar installation companies:
How long has the installer been in business? Combined with the next two points, the best answer to this question is, “The longer, the better.” But in any case, look for an established company with ties to local contractors and vendors.
How many commercial projects have they completed? Again, the answer here is, “The more, the better.” At the very least, demonstrated success in the commercial space is paramount. Residential-focused installers may not have the capacity to meet the demands and scale of commercial projects.
Are public reviews positive? Dig deep into reputable review sites such as Google Reviews, Yelp and Angi. Assuming the reviews are positive overall, look into any negative outliers — and, whenever possible, reach out to previous customers to ask about their experiences.
Finding a reputable installer at the outset is a boon, but you’ll also benefit from their overall expertise — so, you won’t have to worry about the quality of materials such as panels and inverters. And you’ll be less likely to have service issues down the road.
#2: Consider how you’re going to pay
To ensure you see the financial benefits as quickly as possible, consider how you’re going to pay for going solar from the get-go. And to be sure: While businesses are always smart to consider the pros and cons of taking on additional debt, financing your transition to solar power offers some particular advantages.
Say you are currently paying $500 per month for your utility bill, but your solar loan payment would be $400 per month. By financing your system with no money down, you are saving money immediately — while paying for it upfront could take several years before the transaction is cash-flow positive.
A system might cost, say, a half-million dollars. And though you’ll receive tax benefits almost immediately in most cases; paying that much up front gives many business owners pause.
With all that in mind, financing a solar system helps …
Secure fixed monthly payments to hedge against unpredictable energy costs.
Keep cash for priorities from increasing payroll to maintaining reserves.
Use money saved on monthly bills to focus on additional projects.
Financing your solar system allows you to start seeing savings on day one. And it empowers you to make more choices about how, and when, you spend your cash.
Saving more than money
Considering how to lower costs is always on business owners’ minds. But beyond finances, your energy goals may stem from a deep commitment to sustainability or just a personal investment in supporting a better world; and your customers, investors and lenders likely have environmental concerns on their mind, as well.
Interested in getting started but worried your area doesn’t get enough sun to take full advantage of solar power? Remember, the benefits of going solar come from a combination of how much power costs, the incentives there are to make it even more cost-effective, and how much sunlight your panels collect. So, no matter where you are, the benefits are easy to see.