What Makes for a Good Commercial Solar Investment
What makes for a good commercial solar investment? In recent years, the use of commercial solar power has increased rapidly as more and more businesses recognize the many benefits of commercial solar investments. There are many benefits of commercial solar, not only is solar energy better for the environment, but it can also lead to significant cost savings for businesses. In fact, with electricity prices on the rise across the United States, installing a commercial solar system can help offset the impact of rising energy costs.
Over the last year, almost every state in the US has seen drastic increases in electricity prices, for both residential and commercial, over the past year. In 2022 to 2023, New Hampshire saw a 49% increase in electricity prices. Massachusetts saw a 25% increase, Connecticut saw a 35% increase, and Pennsylvania experienced a 26% increase. These figures demonstrate the importance of finding alternative sources of energy, such as solar power, which can provide businesses with more stable and predictable energy costs over time.
So, what makes for a good commercial solar investment? Let’s take a closer look at some of the factors that can help ensure a strong return on investment for businesses considering solar energy.
High Energy Usage
How much energy does your business need to operate? One of the most important factors in determining whether a commercial solar investment is worthwhile is the amount of energy a business uses. In general, businesses that use a lot of energy are more likely to see significant cost savings by investing in solar power. As a rule of thumb, businesses that use at least 120,000 kWh of electricity per year are good candidates for a commercial solar system.
If a business uses less than 120,000 kWh per year, it may still be worth considering solar power, but the savings may not be as substantial. In addition, it’s important to consider the size of the business’s roof, as this can affect the size of the solar system that can be installed.
High Energy Costs
Are you in a state with high electricity rates? This is a key factor to consider Some states, such as New Hampshire, Massachusetts, Connecticut, Maine, and New York, have some of the highest electricity costs in the country, with rates ranging from 23.57 cents/kWh to 31.72 cents/kWh. Businesses in these states can benefit greatly from commercial solar installations, which can help offset the high cost of traditional electricity sources.
As mentioned above, energy rates are on the rise. Not only will a commercial solar system reduce the already high costs, but it will prevent the unpredictable costs of your energy usage. Once your solar system is operational, you’ll have consistent and predictable operational costs.
Roof & Land Space Availability
The amount of space available for a commercial solar installation is an important factor to consider. While the ideal roof size for a commercial solar system is around 12,000 square feet, businesses with smaller roofs can still benefit from solar power, as there are many different system sizes available to suit a variety of needs. In addition to roof space, businesses can also consider using available land to install solar panels, especially if the roof is not ideal for a solar installation. A solar installation on open land requires enough space to accommodate the panels, the inverters, and other equipment necessary for the system to function.
In addition to the size of the roof, it’s important to consider the orientation and shading of the roof. A south-facing roof with minimal shading is ideal for solar power, as it allows for maximum exposure to the sun throughout the day.
State and Federal Policy & Tax Incentives
If your business meets the three criteria above, the next thing to consider is what state or federal tax incentives are available to you. Some states offer tax credits or rebates for commercial solar installations, while others have net metering policies that allow businesses to earn credits for excess solar energy they generate and feed back into the grid.
Net metering allows businesses to sell excess energy back to the grid, which can help offset the cost of electricity when the sun isn’t shining. States like Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, and Pennsylvania all have net metering programs in place, making solar energy an even more attractive option for businesses in these areas.
The federal government also offers the Investment Tax Credit (ITC), which can provide businesses with a credit of up to 30% of the total cost of their solar installation.
Another important incentive for businesses to consider is the USDA’s Rural Energy for America Program (REAP) grant, which provides grants of up to 40% of the total project cost for renewable energy and energy efficiency projects in rural areas.
Solar Renewable Energy Certificates (SRECs) are another great incentive for commercial solar projects. These certificates are created for every 1,000 kWh of solar energy that a system produces and can be sold to utilities to help them meet state-mandated renewable energy goals. The value of SRECs varies by state, and some states have SREC markets that allow businesses to sell their SRECs to third-party aggregators or brokers. For businesses in states with SREC programs, these certificates can provide an additional source of revenue that can help offset the cost of the solar system and provide an even greater return on investment over time.
Does Your Business Meet This Criteria?
If your business meets some of the criteria listed above then you’re perfect for a commercial solar system.
Investing in a commercial solar system can be a smart financial decision for businesses looking to save money on energy costs while also reducing their carbon footprint. By considering factors like energy usage, energy costs, roof size, solar panel efficiency, installation and maintenance costs, and available financing options, businesses can make informed decisions about their solar investments and maximize their return on investment over time. With electricity prices on the rise across the country, now is a great time for businesses to explore the benefits of solar power and take advantage of the many incentives and financing options available for commercial solar installations.
Contact Genie Solar Energy today and we’ll creative the perfect commercial solar system for your business.