Solar panels are becoming a top investment for Fortune 500 companies. The top 10 businesses that use solar generate between 80 and over 390 megawatts of solar power each. Solar panels are a cost-effective way for companies to power their operations, save money, pay lower taxes, and meet environmental goals. Given the benefits of going solar, it’s not only for large corporations.
Today, businesses can go solar for a fraction of the cost of doing so 10 years ago. Today’s panels will also be significantly more efficient than they once were. That means businesses can recoup their investments sooner, transition with a lower upfront cost, and wavering fuel costs will no longer impact the bottom line.
No matter why you make the switch, going solar is a smart business decision. Here are the top four reasons businesses like yours are adopting solar energy.
1. To Reduce Energy Consumption in Commercial Buildings
At the current commercial building electricity rate, commercial buildings are responsible for 18% of energy consumption in the U.S. They use 35% of our nation’s electricity and produce 18% of our carbon dioxide emissions. Indeed, office buildings, manufacturing plants, stores, industrial facilities, and other commercial buildings consume a lot of energy.
When that energy source is the traditional electric grid, it often comes from nonrenewable sources, like coal plants. Solar power can reduce your building’s reliance on the grid and reduce the impact of harmful energy generation methods. It can also be done without expanding your building’s footprint by utilizing your unused roof space. If roof space is not available, they can be ground-mounted or you can integrate a parking canopy structure and give your employees the additional benefit of covered parking. It’s a 100% green and renewable energy source. Solar panels don’t release greenhouse gases or chemicals into the air, instead, they draw their energy from sunlight, which is in infinite supply.
With the growing demand for businesses to promote corporate responsibility and environmental protection, solar power lets you reduce your carbon emissions and improve your brand reputation.
2. To Offset Energy Costs for an Empty Building
This year, more businesses than ever are operating remotely. With so many people working from home, office spaces from coast to coast are empty. Many people would expect a vacant building’s energy consumption to decrease significantly. If you’re the one paying the bill for one of these operations, you know that isn’t quite the case. Empty buildings still use a lot of energy. Indeed, an unoccupied office’s energy consumption is almost on par with an occupied one.
While you can save money by keeping the lights off, empty buildings can incur steep bills for other reasons. For example, facilities managers know they can’t completely shut down the HVAC system because they risk creating unsafe air and harming heating and cooling equipment. These businesses also need to keep their on-site servers operational. Since more people are logging into the virtual network, these servers are more crucial than ever. Further, buildings still need their emergency lights, and any appliances or machinery that remain plugged in are sapping energy.
In the commercial sector, total electricity sales were only 10% lower in April 2020 than in April 2019. With all these factors at play, as businesses have more people working from home, they are still paying approximately 80% of their previous electric costs. Small businesses are finding it hard to justify the costs of energy for buildings that are mostly empty. An investment in solar can dramatically reduce these energy costs now and continue to produce savings as employees return. Solar is a smart decision for all businesses, not just large Fortune 500 companies.
3. To Reduce Costs
One of the most notable reasons your business should go solar is the significant cost reduction and other economic benefits. By investing in solar panels, you can offset most or all of your electricity consumption for years to come. Once you have the system installed, you don’t have to pay for any electricity you generate, which can shave quite the chunk off your energy bills. While solar helps you to reduce costs, in several states, you can also sell any excess solar energy produced back to your utility company via Net-metering laws that require the power companies to buy back the net amount of power produced and sent back to the grid. In some states, additional income can be generated by selling Solar Renewable Energy Credits (SRECs) back to the power company in addition to using the power generated. Imagine your electric bill going to zero with an ROI of 7 years and selling your excess solar energy to your utility company.
Further, the cost to install solar panels has decreased by over 70% in the last decade. With lower starting investments and consistent savings to your energy bill, there’s never been a better time to achieve cost savings from your commercial solar panels.
4. To Receive a Tax Credit
In 2006, the federal government enacted the solar Investment Tax Credit, also known as the federal solar tax credit. In 2015, legislators extended the credit for several years, allowing companies to earn tax credits for installing solar panels. In 2020, the credit is 26% of the total cost of the project. At the end of 2020, tax credits will begin to drop off. Businesses will receive a 22% credit in 2021 and only 10% in 2022 and beyond.
Any business weighing its options about when to go solar should consider fast-tracking their investment. Installing solar panels now, during 2020, allows companies to deduct the full 26%. You won’t receive the same return when investing next year or the year after.
To qualify for the 2020 tax deduction rate, you must begin your solar project by Dec. 31. What does that mean? The IRS defines the beginning of construction for energy tax deductions in two ways. The first way to qualify is if significant physical work is underway by the deadline. In solar’s case, that might look like the beginning of panel installation or preparing a roof to bear new panels.
The other way to prove construction has commenced is if the taxpayer completes the “Five Percent Safe Harbor,” meaning they have put 5% down toward their solar panels. If using physical work or a 5% down payment, you will need to continue making steady progress on construction. Either way, this rule makes it incredibly easy to take advantage of the 26% deduction before the end of the year.
Besides this federal tax credit, the tax reform passed by Congress allows commercial property owners to upgrade their roofing systems while deducting up to 100% of the cost from their taxes immediately with 100% depreciation in the first year. In addition, you might also qualify for grants and other local and state tax credits, so it’s crucial to investigate those to find out how much you can deduct or add as a tax credit in your area. If your business can’t use all the tax credit and depreciation this year, they can carry it forward into future years. Given all the benefits and the continuous return, now is the time to go solar.
Solar for Business With KC Green
The time for solar is now. It’s never been more affordable or more efficient to generate your energy using solar panels. You’ll gain a host of benefits, from slashing your energy bill to earning tax credits. At KC Green, we are experts in buildings and energy consumption. We specialize in designing custom solar solutions for businesses that can maximize your investment. During our free site assessment, our engineers will determine the optimal system that meets your energy requirements and budget. We’ll also calculate your energy savings based on your electric bills. When it’s time to get your solar panels up and running, we’ll provide expert installation.