With the low price of photovoltaic installations, solar has proven to be a sound financial decision for many companies. Here are some insights and factors to consider when it comes to your own energy needs.
An investment in solar equipment can allow your company to:
- Save on electricity costs
- Achiever greater energy independence
- Become more sustainable
- Differentiate your products and services
Costs Are Low
Prices for solar energy installations dropped in recent years, due to industry development and supply in solar modules, which comprise approximately half of the system cost. Today a commercial installation may be priced under $4 per watt and for larger installs (over 500kW), the install cost may be priced under $3 per watt. Per-watt prices could be even lower for ideal sites.
Payback Times Are Shorter
Solar PV systems are viewed as long term investments due to their life expectancies that well exceed 25 years. Some companies may reach a cash-positive position in just four to seven years. That’s possible through a combination of financial drivers, such as:
- Lower utility bills
- Federal incentives, including the Solar Investment Tax Credit, which allows a company to take 30 percent of the system’s cost as a credit against federal taxes1 and accelerated depreciation (5 year MACRS schedule) to lower your company’s taxable income
- State incentives — typically includes rebates based on system production, the amount of the rebates vary by utility
- The sale of renewable energy certificates
- Exclusion of system from property tax basis
Of course, there are other factors that can impact your financial returns, as well as the effectiveness and efficiency of solar for your company. For instance:
- You may see the most benefit in terms of utility cost reductions and return on investment if your company has major energy needs and if traditional power is particularly costly in your area.
- The more sunny days your location receives, the more energy you’ll reap from solar. Also important is the positioning of your building rooftop(s) or the ground available for a solar installation, and any trees, overhangs or other objects that could obstruct the sun’s reach. Ideally, solar panels should get full sun exposure from 9 a.m. to 3 p.m.
Even with prices for solar panels down, investing in solar can take a sizeable chunk from your budget. If you’re interested in financing options, Rabobank can help. We are leaders in renewable energy equipment financing, with flexible and affordable options customized for your commercial, agribusiness or municipal operation. With the decreased cost of solar coupled with the current historically low interest rates, timing may not be better for your company to looking into solar. Rabobank can provide a list of preferred vendors to help facilitate the process of obtaining a solar quote for your facility. Contact your Rabobank Relationship Manager, or our Renewable Energy Finance Department at (805) 904-9463 to get started and discuss your renewable energy financing needs.
- Database of State Incentives for Renewables & Efficiency, http://dsireusa.org/incentives/incentive.cfm?Incentive_Code=US02F; accessed Aug. 19, 2012
The information contained in this article is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.