Businesses have faced many challenges in the years since the Great Recession, a stormy time of economic crisis that necessitated a tightening of belts and fostered a general uncertainty about the future. The decision to make large investments in their businesses were postponed for years while business owners waited for the clouds to clear and the waters to calm. During the latter part of those intervening years, though, a curious thing happened: the cost of solar power came down. There are several factors that contributed to the lower cost of solar, but I'll direct you to this article from SEIA about recent growth in the solar industry in the United States. Needless to say, this is an exciting development!
The cost of going solar has decreased substantially over the past few years, making solar an increasingly attractive solution for businesses who are seeking to reduce their overhead costs over the long term in order to experience greater profitability while reducing their carbon footprint. The installation of a solar electric generating station for your business is a known factor in the valuation of your business, increasing the value of your business to creditors and a perhaps a future buyer.
Fortunately, the economy has slowly grown and recovered in the years since the Great Recession subsided. The stock markets are soaring (as of this writing) and business owners are feeling much more confident that investments in their businesses are beginning to become more feasible and, for those who may have entertained the thought of going solar, there's no better time in years than now to take advantage of historically low costs, rebates, and incentives that make solar a viable energy strategy for business owners and offer the promise of substantially reducing or completely eliminating your electric bill.
Solar energy now has the potential to come in at a cost that will allow business owners the opportunity of reducing or eliminating their monthly electric bill and at some point in the future, owning an electric generating facility that will continue to produce power for years after it pays for itself. With solar, businesses are now to offset future costs by hedging against future utility price increases. That is a clear, positive return on investment that will go right to the bottom line.
Solar Brings Benefits
Once a solar power system is installed, there is little overhead cost on the front end. Depending on what percentage of a business' electric bill the solar system is designed to displace from the grid, solar can reduce expenses in a significant way and can potentially eliminate all of a business’s electric bill. Granting the up-front cost, removing a monthly cost of doing business not only makes paying the bills each month easier, the system will be working towards paying itself off. Pay off times vary too much to say how that will take here in this article, but before you sign the dotted line, you will have a very good estimation how long it will take for the system to pay for itself. But, once it does, your solar power system will, with warranties and expected life of system components and nominal maintenance and care, continue to produce power that is essentially free for years thereafter.
Solar Can Reduce Tax Obligation
One of the most important considerations when researching the possibility of taking your business solar is the tax implications. Many states and local governments, as well as electric utility companies, have various ways to provide incentives to home and business owners to encourage the growth of solar power. However, nearly all solar and renewable energy projects in the United States are eligible for a 30% Investment tax credit currently offered by the federal government. Here's how it works:
When you install a solar power system for your business, for every dollar you spend on that project you will receive $0.30 of credit toward any taxes you owe when you file at the end of the year. Businesses that owe less tax than what the credit covers can expect to be able to apply the balance of their credit to the following year's filing, either carrying back one year or carrying forward up to 20 years. Businesses may also opt to take the credit on quarterly filings to reduce quarterly tax commitments. Finally, business owners can experience additional savings by claiming system depreciation over a 5 year period.
Solar Is A Great Investment
As with any investment, the return needs to justify the cost. Pre-tax returns for most solar projects in the Northeast US can range from 5% to 25% with paybacks typically ranging from 3 – 10 years. A payback can be also viewed as the “end date” to an electric bill, as all electricity after the system is paid back is free electricity.
What About Maintenance?
The great thing about owning a solar power system is that maintenance is very easy. Solar has no moving parts so there is no premature wearing of system components. Many system owners will go years before they see any significant maintenance costs. The industry standard estimate of maintenance costs after 10 years is calculated to be around 2 pennies per kilowatt hour (kWh). Older solar power systems may continue working properly beyond 10 years but the primary concern will be the inverter. The solar panels that form the system array, though, will continue to operate for 25-40 years with little need for maintenance, unless the system is damaged in some way.
Yes, Solar Can Help Your Business Succeed!
If you're a business owner who is looking to hedge the future cost of energy while reducing or eliminating your monthly electric bill and reducing your carbon footprint, then should consider going solar. Solar energy can provide your business with a long term strategy to reduce costs, increase the value of your business, and eventually producing years of free and clear, clean, renewable solar electricity for your business, adding profits to your bottom line and helping your business succeed!