So you’re considering having your business go solar? Perhaps, you’ve heard of other businesses going green and are wondering what the benefits of solar are. One shining example is Microsoft. The company gets all of its energy from renewable sources! If it works for Microsoft, it can work for your business, too!
After all, overhead is a huge expense and one of the most costly components of overhead is electricity. Completely eliminating your monthly electricity bills can do a lot for your business expenses. However, with the high installation costs, is it completely worth it? We’ll explain.
The Economic Factors
Tax and Incentives
When considering an investment in your business, it has to make sense financially. Your business is going to have its own unique circumstances of course. Luckily, there are a lot of benefits available to all businesses that help make it a good investment for most companies. The main incentive is the Federal Solar Incentive Tax Credit or ITC which is currently at 26%. This means you’ll get a tax credit equal to 26% of the installation cost regardless of how small or large that cost is.
It’s important to realize that this ITC credit is scheduled to expire at the end of 2021. In preparation for that, the percentage of the tax credit has been lowering over the past few years and will be lower in 2021. Now is the time to strike and secure the largest potential credit for your installation.
Additionally, the Tax Cut and Jobs Act allows for a 100 percent bonus depreciation in the first year as an additional incentive. Normally, the depreciation tax deduction is spread out over the lifetime of the product. Getting that depreciation benefit in the first year will improve your immediate cash flow and makes the installation even more financially viable. Some states and local jurisdictions have their own legislation on top of that as well, which can help with costs, so make sure you do your full research.
So, where does all this leave us? Your business’s unique situation may alter this, but generally, these incentives can cover over half the cost of installation. This is huge because installation cost is the largest barrier inhibiting businesses from making the decision to go solar.
When considering upgrades to your business’ infrastructure, we want to look at the payback period. This is the time it takes for an investment to “pay for itself” in savings. It depends on the size of your system, but you’re likely to reduce your electricity bill by at least 60%. It varies, but we typically see payback periods of less than 18 months. After that, you’ll have a system that can last for decades.
Unlike other overhead improvements, solar panels can stay effective for years and years. There are no moving parts in a solar cell. There are essentially no maintenance costs associated with solar panels because of this. Even after decades of use, we only see at most a 15% drop in effectiveness. You can rest assured that your system will last long with great results.
The amazing thing about solar energy is that there is more than one great reason to get on board with it. Solar energy exists at the intersection of sustainability, financial self-sufficiency, and eco-friendliness. Electricity isn’t a fossil fuel, but it is often generated from burning fossil fuels. We know that the majority of electricity generated in the United States every year is made from burning coal and natural gas. We can’t wait for large scale wind and solar farms to generate our electricity and create environmental sustainability. Personal solar systems are a way for people to make their own choices about their own carbon footprint. We can make a big impact on the environment this way right now without setting far off goals at the government level.
Solar is becoming more and more popular every year. The general public views it positively and realizes it is the future of energy. The newer generations love sustainability and it can have an impact on their purchasing decisions.
Adding solar panels to your business and reminding your potential customers that you care about sustainability and the environment can add credibility to your brand especially among millennials and gen z. The same can be said about employees in those age brackets who want to work for a company that is doing their part to fight against climate change. The truth is that the “green” label will help your your brand amongst the younger generation, which can be an invaluable new aspect of your business.
Solar energy has been continually refined over the years. Innovation has continually pushed the industry forward especially in the last decade or two. Solar panels are very efficient at capturing the sun’s energy when compared to older models. This is the perfect time to take advantage of this because improvements are starting to slow down and we don’t know how long federal tax breaks will remain in effect.
Another system to consider for your business is the emerging field of solar battery and electricity storage. New products like the Tesla PowerWall are making commercial solar batteries more feasible. This is something to think about because it’s unlikely that your business can become fully self-sufficient from solar panels alone. You will likely still need to rely on the grid to fill in the gaps. This means you will still be adversely impacted by issues with the grid.
Electricity on the grid is bought and sold as a commodity. The price is impacted by market fluctuations. When demand is high, prices will rise to meet it. Additionally, power outages are becoming increasingly common as years of putting off infrastructure improvements are catching up with us.
The only way to mitigate this is to either go with a generator or battery-based system. You can speak with your solar installer about what option might be best for you and your business.
Overall, we’ve seen businesses time and time again go green with solar. It makes all the sense in the world. Solar panels are one of the best ways to eliminate a huge part of your overhead expenses. While installation certainly isn’t cheap, the incentives offered by the government make it much easier to handle. Additionally, there is almost no risk because of the long track record of solar panels paying for themselves and providing years of free energy without significant issues due to wear and tear.
Businesses of every size are starting to realize the benefits of solar power as well as solar batteries for the future of their business. We see boosts in sustainability, economics, and brand strength emerging from a solar installation. If your business is ready to make a strong investment in its future, give your local solar pro a call.
If you want to lower your utility costs significantly by installing solar panels or a battery system for your business, give us at Energy Concepts a call at (559) 377-7080 or fill out an online contact form. Our team is taking extra precautions to ensure the health and safety of our customers and employees during this time.