4 Key Elements of a High-ROI Commercial Solar System
Commercial solar installation is a wise financial decision that can not only help your company but also the neighborhood. By switching to solar energy, you may lower your company’s electricity expenses and show that you care about the environment and the health of future generations. When substantial state and federal tax incentives are included, making the choice becomes obvious.
Commercial solar has been expanding for decades due to these attractive reasons. The amount of operational costs that can be reduced by installing a commercial solar energy system astounds many business owners. But given its unique energy profile and goals, how much does your organisation stand to gain?
We won’t be able to completely respond to this essential question in the form of a brief blog post. But to get you thinking about your potential solar advantages, we’ve outlined the four key components of a commercial solar system that have the biggest effects on your company’s return on investment.
1. Options for payment and financing
In general, cash, loans, and power purchase agreements (PPAs) are the three most popular ways to pay for a business solar energy installation. When it is financially possible for the owner, we advise making cash acquisitions because they guarantee the best returns, simplify ownership, and maximise local and federal tax breaks, ensuring that the entire purchase price benefits the company rather than your lender.
Traditional finance programmed are the next best payment method to increase your ROI. Outside of an all-cash purchase, low-interest loans or lines of credit with an established banking relationship typically offer the fastest and most lucrative return. In order to secure the best payback, we often advise merely financing the necessary percentage of the net cost.
Finally, there are PPAs, or Power Purchase Agreements, also called Solar Service Agreements. These have long been used by utilities to finance the purchase of electrical generating facilities. PPAs are a common way to finance solar installations at commercial and institutional facilities in certain states.
A qualified solar installation company will be able to assess your organisation’s financial situation and help you decide which payment method would be best.
2. Type of Roof and System Design
Despite the fact that for the majority of business owners, roofs are out of sight and out of mind, they actually play a significant part in determining your potential solar ROI. The most prevalent kinds of business roofs are those atop flat, factory-style structures, which offer plenty of room for a solar energy system’s design. These structures typically include an open roof space as well, which increases the amount of sunlight they can capture. To best meet your objectives and structure, there are both ballasted (zero penetrations) and penetrative racking systems available.
Some businesses decide to install solar carports alone, or just the solar carports, without a rooftop solar system. For organisations who might not have a lot of roof space, this full solar array, or for those who want to provide some shade to employees and visitors alike. We recommend speaking to a qualified commercial solar company to see what system design and size would maximise your return on your solar investment.
3. Solar incentives in your area
There may be local incentives that will help increase your business solar ROI depending on where your company is located. These might be supplied by your utility or the local government. What is accessible for your company will be explained to you by a competent local installer. It’s also crucial to speak with an installer who has solid contacts with the AHJ and the local utility. Because of these established contacts, the installer occasionally has inside knowledge about potential incentives that haven’t yet been made public. This is a significant advantage of purchasing your commercial solar system locally.
4. Federal Tax Credits for Solar Energy
The 30% federal solar tax credit is the most advantageous solar incentive for businesses. This incentive provides a federal incentive tax credit that can offset up to 30% of a commercial solar purchase. The group must have a tax liability at the time of filing in order to be eligible. In other words, the credit will not be applied for that year and will simply roll over if the business owner expects to earn money back from their tax return.
Every commercial solar system is also qualified for the Modified Accelerated Cost Recovery System (MACRS), a type of depreciation first developed in 1986 that permits businesses to recoup their investments for tax purposes over a defined period of time through yearly deductions. Qualifying For solar-powered equipment, the cost-recovery period could continue up to five years.
Is Solar Right for My Organisation? can be downloaded for free. if you’re uncertain about whether solar energy makes sense for your company. You’ll learn about the various factors that influence a business solar acquisition. If you’re ready, you may also visit this page to get a free business solar consultation & checklist for commercial solar maintenance .