Solar energy is on the ascent, reaching record growth in both 2020 and 2021. With the low cost of solar and fossil fuel-based energy costs expected to increase indefinitely, the rise of solar will likely continue into the future.
Switching to solar energy might be seen as a “risky” investment by some. What’s important to understand is that installing solar can release a business from the cycle of constant utility rate increases while also saving money on every future energy bill.
Solar power is surging within the commercial market as more business owners learn about solar energy’s many benefits. These advantages include but are no limited to reduced operating costs, generous upfront tax incentives, ample depreciation tax credits, reduced carbon footprint, even enhanced brand awareness and reputation.
A solar energy system can be a valuable asset for small, medium, and large businesses alike. Take a closer look at these and other benefits of commercial solar installation, starting with why right now just might be the perfect time for organizations to go solar.
Solar incentives and financing for busines
The Federal government supports businesses that choose to invest in solar energy through a variety of generous incentives.
Federal Solar Investment Tax Credit (ITC)
Since the authorization of the ITC in 2006, hundreds of thousands of businesses have made the switch to solar power. The ITC is available to businesses in the first year after system activation. Though this dollar-for-dollar reduction in owed income tax was scheduled to drop in 2021, an economic stimulus bill has kept it steady at 26% for the rest of 2022. However, in 2023 that will drop to a 22% tax credit. By 2024, the residential market rate will drop to 0%, while the commercial market will sit at a permanent 10% credit. This 16% drop in tax credits between now and January 2024 is significant, making solar even more attractive to take advantage of now!
Capital Investment / Capital Improvement Depreciation
Commercial entities can take accelerated depreciation on their capital investment in a solar system. Depending on an individual business’s Federal and State tax rates, this depreciation component can also return upwards of 30% of project costs. When combined with the solar ITC, these tax incentives can equate to nearly 60% of the system’s total cost and installation before even considering the ongoing savings on electric bills.
Maximize solar's low energy cost and high incentives
Get control of your energy costs in 2022. Get started today by requesting a free virtual solar consultation from All Energy Solar!
Financing options for clean energy projects
Financing a solar project can lead to significant savings without the upfront cost. The type of financing mechanism used should be determined on a case-by-case basis, but aside from a traditional bank loan, there are many ways to get solar projects financed. A solar professional should guide solar customers through options available for the specific project in the area.
Minnesota PACE Financing
One of the most common ways businesses look to finance solar projects in Minnesota is through PACE financing (Property Assessed Clean Energy). This program makes energy efficiency upgrades and renewable energy investments more attainable to commercial building owners nationwide.
In Minnesota, most PACE loans are managed through MinnPACE. MinnPACE can cover up to 100 percent of all project costs for qualifying properties. Payments are repaid through a special assessment charge assessed semiannually on the parcel’s property tax payments with terms of 10 to 20 years. As a result, projects can be funded for $0 down and become cash positive faster, with cost savings outweighing the financial burden. MinnPACE is a fit for most industries, from commercial office buildings to farms, multi-tenant residential buildings to nonprofit organizations (including places of worship).
Reduction in monthly electric bills
With a solar photovoltaic system up and running, the business will enjoy an immediate reduction in electricity costs. It’s similar to the difference between renting and owning a building, only in this case the asset is the means of energy production. Each payment to the utility company is like paying rent on electricity: that money just goes away as an expense and is never heard from again. When solar electricity is generated onsite, every dollar saved equals another dollar reduction in the overall cost of the system. In other words, simply using the system helps it to pay for itself over time.
Peak Shaving during high demand
Businesses that add a solar photovoltaic system, coupled with an onsite battery backup system, can directly meet peak energy demands when rates are typically at their highest. They can use the energy produced from their solar panels to charge their batteries and use that stored energy during peak demand periods when grid load and prices are at their highest. The advantage of a solar photovoltaic and battery storage system over a traditional fossil-fueled generator is that the primary source of energy generated used to replenish the generator comes at no additional costs to the business.
The little-known power of net metering
Net metering is a process that allows solar energy users to send excess energy produced by their systems back to their utility company’s power grid for a full retail credit. If at any time during system production there is more electricity being generated than the property is using at the time, the excess energy is sent back to the utility’s power grid and credited to the solar system owner for future use. Most (but not all) Minnesota utility providers offer net metering.
Solar as a marketing tool
Financial incentives, economic prosperity, and environmental attributes are enough to entice many business owners to switch to solar. However, fitting a business with renewable solar energy may also present an opportunity to attract new customers and build brand advocates.
A 2018 Edelman Earned Brand Study found that 59% of U.S. consumers are “belief-driven” buyers who think brands should take a stand on important issues. These values, in turn, influence their decision to work with or buy from those companies. Another study conducted in 2020 found that a corporate social mindset is now the expectation.
The decision to install solar panels for a business provides a unique marketing and communication opportunity to help drive both purchases and advocacy. It shows current and prospective customers, as well as employees and job candidates, that the business values clean, renewable solar energy.
Is solar a viable option for every type of commercial facility?
The majority of commercial facility types – though not all – are ideal for producing solar power. Some of the factors a solar provider will take into account during an initial site assessment at the property include the size and configuration of the facility, age and condition of the roof, current energy requirements, and more.
Additional factors in solar suitability
What are the conditions around the property? Most business facilities don’t face significant shade issues like many residential homes, but office park complexes and densely populated areas may be accompanied by several trees and obstructive buildings nearby.
Are there large, open spaces for rows of solar panels? Are there multiple obstructions to work around? These are essential questions when determining the estimated output of a solar panel installation.
Custom commercial installation
An experienced solar installer will go over every aspect of the facility and each component that can affect energy production to give the best, most accurate price for a project and make sure the system is customized for optimal production. Solar system engineering, design, and installation for commercial projects can take longer to execute than residential installs due to various factors, including navigating the customer’s approval process, the complexity of the installation, utility requirements, permitting, and other technical components that may arise.
Clean, reliable solar energy makes sense everywhere the sun shines. For businesses that could benefit from making the switch to solar, talk with a local solar provider and schedule a free site assessment. This evaluation will determine the viability of installing solar on the property and the size and configuration of an optimal system. An experienced solar professional will walk through the process, answer all questions, and demonstrate the many reasons why now is the right time to go solar!
A trusted name in solar energy
As a top-rated solar power provider in Minnesota, All Energy Solar makes switching to solar energy easy for property owners of all kinds — residential, commercial, agricultural, municipal, and more. Our solar professionals have the knowledge and experience to reveal the programs accessible in your area and every other aspect of your project, from initial property and energy analysis through design, construction, and beyond.
Now is the time to take control of your energy costs for2022 and every year after that. Get started today by requesting a free virtual solar consultation from All Energy Solar!