Is solar power worth it? As the green energy for business movement continues to grow, business owners and operators around the country are asking themselves: Is it a good idea to install solar panels? You may even be asking, “What is solar power, and how does solar power work?”
In this article, we’ll provide information on the basics of how solar power works and list the benefits of solar power for business to help you answer the overarching question: Is solar energy cost effective?
We hope you find this article helpful and please be sure to reach out to learn more about how Aggressive Energy can help your business become more energy efficient!
How Solar Power for Business Works: FAQs
In order to determine if solar power’s worth the cost, it’s helpful to have a decent understanding of the basics. You need to know a little bit about how solar energy works so that you can decide if it’s a fit for your business. We’ve gathered the answers to some frequently asked questions (FAQs) on using solar power for buildings below to serve as a quick reference guide.
Why is Solar Power for Business Worth It?
It’s true that solar panels are expensive to install. However, the benefits of solar power for business are incredibly fruitful in both the short-term and long-term. While the upfront cost may seem intimidating, these advantages show solar energy is cost effective. Here’s why solar energy is a good thing for your business.
Shrink electricity expenses
If you pay an average of $600 on your monthly electricity bill, you’ll save about $164,805 over the course of 30 years. This is because solar panel systems reduce, or even remove, demand and delivery charges include in your utility bill. These charges are for energy providers to recover the costs of purchasing energy during peak season, maintaining power lines, and any lost energy. Having a solar panel power source moves your source of energy onsite, which is how businesses avoid the added expenses from demand and delivery charges. More and more business owners are switching from electricity and natural gas to green energy in record numbers. This includes both huge corporations like Walmart and General Motors and small businesses alike. Regardless of how large the upfront cost was, businesses are choosing to install commercial solar panels because they realize the cost savings of doing so offers a substantial ROI.
Erase energy price volatility
Thanks to electricity price volatility and inflation, energy bills can be a bit unpredictable. Installing commercial solar panels allows your business to lock in electricity prices. Fluctuating energy costs can be a huge inconvenience for business owners who closely manage their available means and profitability. This stability is one reason business owners find solar panels are better than electricity – because it allows them to create an accurate budget and plan for the future.
The cost benefit of solar panels isn’t just long-term. There are several ways businesses can profit in the short-term as well.
Federal Investment Tax Credit
The biggest financial benefit is the Federal Investment Tax Credit (ITC), which is a 26% tax credit for commercial properties using solar panel systems. You’ll also get a federal tax credit for 30% of the commercial solar panels installation cost. Some states offer additional tax credits, so be sure to do your research before filing your taxes for the year you install.
Modified Accelerated Cost-Recovery Systems
Maximize the benefits of solar power for business by utilizing the Modified Accelerated Cost Recovery System (MACRS) method of depreciation. Doing so allows business owners to profit from the depreciation aspect of the tax code. This is because depreciation streamlines a greater investment into renewable energy, leading to lower costs and making solar energy economical.
Performance-based incentives and other rebates
Some states and providers offer performance-based incentives (PBIs). PBIs pay solar panel system owners a per kWh credit for the energy that their systems generate. This and other solar incentives such as net metering can skyrocket your ROI in both the short-term and long-term.
Increased reliability with decreased maintenance
By hosting your solar panel power source onsite, you increase the reliability of your electricity. Research from the Energy Department’s National Renewable Energy Laboratory (NREL) shows that just 5 out of 10,000 panels failed, giving them a 0.05% failure rate. This study was conducted between 2000 and 2015, so that number is probably even smaller now as the evolution of technology continues to benefit energy production. Solar panels also require little to no effort to maintain.
Supports local community, environment, and economy
There are plenty of ways energy efficiency can reduce business expenses, but it’s important to note the benefits of solar power for business other than financial gain. The call for green energy for business grows more significant each year. People prefer socially responsible businesses now more than ever. Making it a priority to switch to renewable sources of energy sooner rather than later shows people your business cares about its contributions to society.