Should your company be going solar now or solar later?
Most people go solar primarily for financial reasons. Others go solar for environmental benefits. Choosing the right time for solar can make or break the positive outcomes, especially on the commercial side. Besides the financial payback, many other hidden gems are discovered when going solar. Tax credits can be applied when purchasing a solar system, and overall economic savings can be earned.
Going Solar Now
The Environment
When transitioning to solar, companies can reduce their carbon footprint by preventing greenhouse gases from entering the atmosphere. Installing onsite solar energy has an enormous impact since most commercial buildings emit a plentiful amount. By eliminating brown sources of energy and transitioning to green sources, onsite solar energy could appeal to the consumers that a business is vending to. Companies may be required to meet certain environmental standards or sustainability goals. Going solar now would be a good course of action if these standards are on the horizon for your company.
Brand Reputation
Solar panels on top of a large commercial building make a large statement; they are not easily hidden and therefore are visible to many. This can positively impact brand reputation and attract talented customers and employees. More and more employees are searching for potential work with the environment in mind. According to a recent Gallup poll, 69% note whether a company actively cares for the environment and 1 of 4 describe protecting the environment to be a major factor when considering employers.
The Technology
Since solar panel performance is stable, there won’t be any drastic change regarding the efficiency or technology of the panels. How they are now is how they will be in the future. Solar panels today are highly efficient and degrade at .5% year over year. Like the iPhone, every new model that comes out is only slightly different than the year before. Waiting to go solar because there may be a better solution is not a feasible argument. The technology is here now!
Start Investing Today
“Time is money,” and solar is costly. It is an investment; however traditional energy is an even greater expense for commercial companies. The average payback period for solar is between 6-12 years. Even less so when the incentives are as good as they are today.
Energy Bills on the Rise
Rates for commercial energy in the Midwest continue to rise as an increase in large commercial users put increase demand on the energy market. Within the past 25 years, the cost of utilities has risen annually by 3-6% and continues to grow parallel with global issues today. By going solar now, companies can avoid increased energy bills and save for other investments.
Stabilize Cashflow
As electric bills flow in, the energy is rented rather than owned. When installing a solar system, the energy is now owned by the building to which the solar is flowing to. Solar is a constant cash flow; the bill stays constant month to month when solar energy is incorporated. On the other hand, electricity rented from the utility is ever-changing and a variable in a company budget. No commercial business wants to overpay for energy when an abundant resource is available; especially if that energy was never theirs.
Incentives are dropping as Solar grows in popularity
As of now, there is still a 30% tax credit to be earned when going solar. For example, if an installation costs $100,000, there would be a $30,000 credit that would apply to a tax bill. For commercial solar whose bill would be well over $30,000, this would be a huge discount and create a large amount of savings. However, within the year of 2033, the tax credit is scheduled to drop down to 26% percent tax credit.
Going Solar Later
Whether the company has a huge tax bill in future years, or unrestricted space for solar isn’t yet available for a commercial business; other reasons to wait for solar include the position a company may be in.
Available Space
Solar panels take up a lot of space and if the roof is not sustainable to carry a heavy load, it would need to be reinforced or replaced. If a roof replacement is not in budget, extra space would be needed to install the panels. Not every company has that kind of real estate sitting around, or they could be renting the building, or moving buildings soon.
Thinking About the Tax Incentive
Is there an upcoming year where it would be useful to have the companies’ taxes lowered by 30-40%? The Solar Tax Credit allows you to take 30% of the cost of the system from taxes that are owed. There are additional 10% “bonus” adders based on various factors. If there is not that much tax liability this year, but rather an anticipation of having that tax liability in future years, it may make sense to wait to go solar in that tax year.
Conclusion
Overall, deciding whether to solar now or later is up to the company itself. There are arguments for both sides and it truly depends on where financially the business stands and what their goals are in the near future.
