A Guide to Going Solar For Businesses

SHAIVI CHAPALGAONKAR | March 17, 2021 | 567 views

Earth has become increasingly warmer every year with rising temperatures. The burning of fossil fuels in the past 150 years for electricity, heat, transportation, and any other human activity has increased greenhouse emissions. Other natural resources are also rapidly depleting, thus giving us a cause of worry.

Several homeowners and mainly businesses are, therefore, turning to renewable energy sources to become self-sustainable and self-reliant. Costs of commercial electricity are rising day by day with no end in sight. By turning to green energy, businesses can reduce operational costs and reinvest that amount back into their businesses.

If your business uses electricity for lighting, HAVC, computing, or production, opting solar for businesses will significantly reduce the cost. Installing these solar panels and combining them with an appropriate energy storage system, your business can save up to 20 to 25% energy and move towards energy independence.

Eligibility for Going Solar

One of the major factors to consider when going solar is whether it makes sense for your business to do so. Apart from this, going solar would be ideal for organizations that:
  • Work in states like California, Hawaii, or any state that either has expensive energy or massive Federal incentives
  • Have enough land, rooftops, or parking lots adjoining their businesses where the solar panels can Be set up
  • Have prioritized sustainability
  • Have massive energy demands
  • Market themselves as an environmentally friendly business


Reasons to Use Solar Power for Businesses

Growing businesses opt for investing in commercial solar power mainly to aid in offsetting additional expenses. With the expansion of the business, electricity consumption will also increase. You can also time your roof repairs or new constructions to coincide with installing new solar panels. Transforming into a business that chooses to become carbon-neutral by utilizing solar energy will enhance your business image in the community.

Implementing commercial solar panels cuts down your energy consumption and helps increase your savings. Excess energy generated by these solar panels can be stored with the help of off-grid batteries. Solar energy has a major drawback. Your company won't be powered at night or in severe weather conditions as solar only works during the day. Solar energy cannot handle the sudden power surges required to handle heavy machinery. Businesses are then forced to purchase and use commercial electricity to manage these spikes. However, these spikes can prove to be expensive. Merging photovoltaic systems with storage solutions can ease these spikes. This is vital during the "shoulder" hours when the sudden surge spikes can lead to demand charges.

Benefits of Going Solar

Reduction in Costs

The single biggest advantage of going solar is a massive reduction in electricity bills. Locations where 'net metering' is available can become another source of revenue for your business as the excess power produced can be sold to your local utility. Businesses, and companies that rely on out of date energy sources like coal, could be paying 7 to 30 cents per kilowatt-hour (kWh), whereas those using solar energy were paying between 2 to 12 cents per kWh.

The benefits of switching to solar depend on several factors- locations, industry, and business size. The most advantageous enterprises would be the ones who have built an appropriately sized system to cover all energy requirements and enough power to fall back on during peak consumption hours.

Businesses can incur additional charges due to demand and delivery. Utility services apply these charges to recover costs of purchasing energy and maintaining power lines and energy lost in the transmission system. Moving power sources closer to your business will help you avoidsuch preventable expenses.

There are possibilities of ascension in solar energy projects. You can start with a smaller set of solar panels that would contribute to your daily energy needs and build it over time. You can always sell the excess energy produced to your local utility provider as a source of additional revenue.


Federal Tax Incentives

As of 2021, the investment tax credit (ITC) allows businesses to deduct 22 percent of the cost of installing solar energy systems from their federal tax with no cap on its value. These businesses are eligible for the tax incentive as long as they have their energy system. I'f youdon't have enough tax liability to claim the credit that year, the outstanding credits would roll over to the next year, so long the tax credit is in effect.


Durability

Like every other power source, solar has its limitations too. The infrastructure that can consume excess solar power is not yet up to the mark. Since solar is tied to the grid, they are interdependent. If the grid fails, solar goes down too. Therefore, it is important to add a microgrid to the energy system.

Adding a micro-grid detaches your business from the utility providers and makes it independent of their services. It makes your organization what is known as an 'energy island'. The existence of these energy islands only protects your enterprise from power cuts due to natural disasters or any physical or hacking attacks. Your energy islands may also provide electricity to your local community during emergencies.


Sustainability 

Solar energy has a massive role to play in the future of sustainability and environmental protection. By converting your business into a solar-powered business, you ensure the protection of the environment and reduce your company's carbon footprint on the planet. Studies also indicate that using solar energy for a long time also reduces utility costs. You can then invest the saved amount back into your business to promote advancements and innovations.

Being a solar-powered business could be an alluring prospect for your potential business partners. Environment-inclined customers tend to turn to prefer "responsibly green" businesses, and these businesses also appease local and state regulators, governments, and hedge funds.


Lower Maintenance Cost

Another major reason solar power is beneficial for your business is low to zero maintenance of the installed solar panels. Agencies that provide solar panels offer a warranty of 20 to 25 years on them. Since solar panels have fewer movable parts, the chances of these parts disintegrating or rusting are highly unlikely as opposed to technology that relies on movable parts. Thus, switching to solar energy would be the appropriate step to take for your business.


Things to Keep in Mind when Switching to Solar

When investing in solar energy, there are a few imperatives that businesses must follow. No matter the size, your business must be located where there is adequate sunlight, a roof strong enough to sustain the panels, and be inclined to reduce the cost of all operations.

There are various simple 'do-it-'yourself' kits launched in the market to entice small business owners to try and build these solar systems themselves.

However, it is essential to work with a solar provider when installing solar panels to get the best outcome—as in any industrial field, consulting with a solar power expert would help you optimize costs and gain maximum benefits.


Points to Explore Before Going Solar

Amount of Electricity Consumed

There are two main points to ponder over; "enough for one day" and "future years to come”. You could either sell excess energy produced to your local electricity supplier, which would add to your savings, or it could be stored with the help of li-ion batteries and utilized in the time of little to no sunshine.


Financing Solar Power for Businesses

Commercial solar power providers offer multiple business plans that would be best suited to the scale of your business. You can choose the better alternative for your business depending on how much discretionary cash you have and your solar infrastructure size. The size of the infrastructure will also depend on whether you want to gain dramatic results in terms of cost-saving or opt for low-cost start-ups and gain a more extended return on investment.

Some enterprises buy solar equipment with cash or loans. This method would give you tax credits and incentives, thus offering you a higher return on investment (ROI).

Another direction you could choose is going into a Power Purchase Agreement (PPA) with a solar energy provider and purchasing electricity from them at a lesser commercial cost. In a PPA, the developer looks after designing, permissions, financing, and installing the system for a meager amount.

Details of your precise business requirements are vital to analyze the cost and time of ROI of the solar energy system. It would depend on the place you are at and the size of your system. To get these exact details, hire the best solar energy consultant for your exact needs.


Important Steps to Remember

Step 1:

Outline your goals for a stable, sustainable, and financially sound future. Make sure that going solar is beneficial for your business. Calculate whether your region's utility costs are higher and hurt your business financially; whether there is ample storage space around your business to keep all the equipment. And whether adopting a  green  profile improves your goodwill in your local community.

Step 2:

Collect data on your electricity usage of at least one year to analyze the operating cost, energy spikes, and consumption patterns. Calculating business losses will aid in understanding the need to switch to solar energy.

Step 3:

Tie up with a commercial solar specialist when making the switch to solar energy. Often, customers fail to recognize the importance of this step. Avoid contractors who set up solar panels as a side business as they would not understand the intricacies of the job. Check all the references before you partner up with a specialist.

Step 4:

Last thing to keep in mind is thatgetting a solutions provider would make things easier for you. The provider will take care of everything- designing the system, finances, grid connection, and system maintenance. Ensure that you have a provider with sound support and has a portfolio of proven experience in solar infrastructure per your business needs.


Frequently Asked Questions

How much does solar cost?

Ten years ago, the cost of a residential solar system was upwards of $50,000 for an average of 6 kilowatt-hour. Now, with a 62% average annual decrease, it ranges anywhere between $16,200 to $21,000.

How does commercial solar work?

Solar panels are made up of photovoltaic (PV) panels in a grid-like pattern that captures sunlight and converts it into electricity. The PV cells are made up of silicon with a positive and negative field that creates an electric field.

Are commercial solar panels worth it?

Commercial solar panels have a lifespan of 25-30 years. Although solar panels cost a lot initially, over the years, utility cost of your business will go down. There are also tax credits and incentives that the government offers when installing solar panels.

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