A commercial solar energy system consists of solar panels strategically installed on the rooftop or grounds of your commercial property. Contact online >>
A commercial solar energy system consists of solar panels strategically installed on the rooftop or grounds of your commercial property.
The solar panels comprise of photovoltaic (PV) cells, which convert sunlight into direct current (DC) electricity. The generated electricity flows through the solar inverter, which converts DC into alternating current (AC) electricity needed to power your business.
Electricity flows from the inverters to a distribution panel, which allocates it to power your facility. If your system produces more than your facility needs, it will be sent to the utility grid, and you''ll be compensated through net metering. Your electric meter will track the electricity flowing to and from the utility grid.
There are three main types of commercial installations. The most common is a roof mount, but ground mounts and carports are also popular.
Roof mounts can be installed on many types of roofs, including shingle, corrugated metal, standing-seam metal, and flat rubber roofs where a weighted ballast mount is used. Special attachments are designed for attaching panels to metal roofs.
Net metering is, more or less, free energy storage via the utility grid. It''s a billing mechanism that''s invaluable for your system''s payback.
When your solar panels are overproducing, that extra electricity is sent to the utility grid. You are given credit for that electricity that can be used to offset electricity pulled from the grid when your panels aren''t producing enough electricity to run your business.
Most states mandate that utility companies provide net metering, but states are trending away from the traditional method. For example, New York offers a value stack program, and many co-ops in Ohio use a net billing system.
You may be eligible for aggregate or virtual net metering if you have multiple electric meters. This lets you offset electricity usage on any meter or building with the power generated from a solar system connected to another meter. However, policies vary by utility and by state.
Solar is not a one-size-fits-all solution. Therefore it''s difficult to provide an exact cost for a commercial solar system without first knowing how much electricity you use, where the panels will be installed, and other important data points. Your system will be custom-designed for your needs, goals, and budget.
These are the site-specific factors that will impact the system''s cost:
The following chart provides an approximate estimate of the projected installation costs according to average monthly electric bill amounts.
The commercial solar tax credit is an incredible incentive for businesses to take advantage of a solar investment.
Businesses can take advantage of accelerated depreciation for their solar investment. 60% of the cost basis can be depreciated in year one on your federal taxes. The remaining 40% follows the five-year MACRS schedule.
State depreciation follows the five-year MACRS schedule.
Apart from the tax savings, two main benefits are the USDA REAP grant and Solar Renewable Energy Credits (SRECs). Certain states and utility companies also provide additional incentives for solar investments.
The USDA REAP grant is a fantastic opportunity for eligible rural businesses and farmers. This competitive grant has the potential to cover up to 50% of your installation cost, with a maximum funding amount of $1 million.
Solar Renewable Energy Credits (SRECs) provide an additional opportunity to generate income from your solar system. Each 1,000 kWh of energy produced by your system earns you one credit, which can be sold. The market for SRECs is influenced by supply and demand, resulting in fluctuating credit prices. It''s important to note that SRECs are not available in all states.
A significant portion of the return on investment for a commercial solar project is front-loaded, with the tax credit, depreciation, and USDA grant being received during the first year or two of the system''s energization. This immediately provides you with extra capital to invest in other areas of your business.
What does that mean for the ROI and payback period?We have gathered data from over 300 of our commercial installations to offer insights into the average return on investment (ROI) and payback period in 2024.
There are several financing options available for commercial solar panels. The main options are cash, solar loans, Power Purchase Agreements (PPAs), and solar leases.
Solar loans function similarly to traditional business loans and are typically most easily obtained from your bank.
By entering into a PPA, you authorize another entity to cover the costs of installing and maintaining a solar system on your property. In return, you will enter into a contractual agreement to purchase the electricity generated by the system at a predetermined rate. These agreements typically span from 10 to 25 years and may offer options for extensions.
Solar leases are available as capital leases and operating leases.
With a capital lease, the solar system will be listed as an asset on your balance sheet, and you will assume ownership responsibilities. This type of lease also allows you to take advantage of tax incentives.
Operating leases are similar to rental agreements. In this arrangement, the solar system will still be listed as an asset on your balance sheet. However, the lessor will retain ownership of the system, receive the tax credit, and be responsible for maintenance duties.
Unless you receive bad parts, your system was installed incorrectly, or outside factors damage the system, you can expect solar to be a low-maintenance investment that requires minimal upkeep. However, it''s important to note that, like any piece of machinery or electronic device, your solar system could occasionally encounter issues that require a professional service provider.
Inverters are complex electronic devices that convert the DC electricity into the AC electricity needed to power your business. Some potential challenges that may occur include communication problems between the inverters and the monitoring portal, faults related to wire damage or loose connections, and damage caused by rodents.
The good news is that solar panels and inverters come with lengthy warranties. Leading inverter brands have warranties that cover the first 10 - 25 years, and solar panels from leading brands are guaranteed for25 or 30 years.
Furthermore, it is important to partner with a solar installer who offers a comprehensive workmanship warranty and guarantees the production of your solar system. Paradise Energy is proud to offer a Triple Ten Guarantee, providing a ten-year workmanship warranty and ensuring the production of your system for the first ten years. In the unlikely event that there is a difference, we will write you a check for the difference.
You''ve decided to invest in solar energy. Now comes an important step: selecting the best solar panels and inverters. Don''t sweat too much. A reputable installation company will recommend equipment for your system. However, it''s still important to be aware of what''s available.
About Solar panels for business
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