More and more people are installing solar panels to reduce electricity costs and be more eco-friendly. In the past decade, solar energy has seen an average annual growth rate of 42%. While sales efforts have traditionally focused on homeowners, many businesses are now opting for solar as well. Large companies such as IKEA and Walmart have invested in solar, and now due to lower prices, financing options and government incentives, it is a realistic option for mid-size and small businesses as well.
Solar panel prices dropped over 6% from 2020 to 2021, and more than 70% from 2011. Tax incentives and rebates continue to be implemented along with fast depreciation to recoup capital investment costs more quickly. As companies and consumers push for reduced carbon footprints and more sustainable practices, the solar industry will continue to grow.
Installing solar panels can be beneficial for businesses of all sizes, especially in a time where cost-cutting and operational efficiency are top of mind. Let’s take a closer look at some of the potential benefits that solar power could provide for your business.
Going Solar Can Help Your Business Save Money
Many businesses are initially interested in solar panels because they want to save money on electricity costs. When you invest in solar, there will typically be an upfront expense for the cost of the panels and installation. It’s also possible to finance the cost of solar panels, so you can spread out the upfront cost over time. Once you have solar panels installed, your monthly electricity costs will typically decrease, and over time they could be non-existent. This is because with solar panels, you will technically “own” the energy they create. Without solar panels, you pay the electric company for the energy you use each month. With solar panels, you should be able to produce your own energy, leaving just your monthly solar loan payment if you financed the panels. You’ll typically also be responsible for any maintenance and repair costs not covered by your solar system’s warranty.
2019 data reveals that the average commercial property owner saw a 75% reduction in overall energy costs after investing in solar. The average monthly energy bill went from $1,950 to $500 after solar installation. With less money to pay in electricity costs, you could potentially use those funds to help cover your monthly solar loan payment. Down the road, you could expect greater long-term ROI once the loan is paid off.
In addition to seeing your utility bill decrease, there are other ways solar panels can help pay for themselves. These include:
• Selling Excess Power. Once you’ve hit the payback period, your business can start generating electricity for free. If you have excess electricity you do not use in a month, you can sell the surplus back to the grid, making extra money. This is known as “net metering” and many states, including Massachusetts and Rhode Island, have developed mandatory net metering rules to ensure electric companies will allow you to sell back excess power. If you have electricity costs in some months, your excess power in other months can help to offset the charges.
• Guard Against Increasing Power Costs. Becoming self-sufficient for your power needs means you won’t be negatively impacted by rising electricity prices. If you’re able to sell excess power, when rates go up you’ll actually benefit because you’ll be paid more for the energy you produce.
• Minimal Maintenance Costs. Solar panels don’t have moving parts, making them incredibly reliable. That’s why many solar panels carry a 25-year warranty and require almost no maintenance. Systems are projected to produce electricity both cleanly and quietly for between 25 and 40 years without the need for major maintenance. One thing to keep in mind however, is that solar panels are installed to fit their location, typically a roof. If you think you may relocate your business in the future, it can be difficult and costly to have them moved.
Going Solar Demonstrates a Commitment to Green Principles
Going green can potentially elevate your business to a “socially responsible” status, helping you make a positive impression in your community and allowing your business to stand out from your competition. Adopting solar energy can also make your business more attractive to potential employees and help you to retain existing ones. Some studies show that climate change and environmental concerns are important to Millennial and Gen Z workers, and could influence their employment decisions.
And it’s not just employees who care about how “green” a business is. Nearly 70% of consumers in 2020 said they actively consider whether a company is eco-friendly before they make a purchasing decision. Going solar shows a commitment to sustainable business practices and can attract customers, no matter what industry you are in. Unlike some business decisions that might be based around an industry or local trend, solar panels are universally applicable.
Commercial Solar Loans & Solar Incentives
One reason you may be see more businesses and homes with solar panels these days is because of lower interest rates and federal incentives, typically in the form of tax credits. The Solar Investment Tax Credit enacted in 2006 has pushed the solar industry in the U.S. to grow over 10,000% and has lowered interest rates for solar financing offered by financial institutions. Massachusetts and Rhode Island both offer state incentives for commercial installation of solar panels.
Businesses that are interested in financing solar panels have many options available to them. In some cases, financing can be obtained through the solar company itself. Many banks and credit unions also offer commercial solar loans. Ultimately, no matter how you choose to fund the project, upgrading to solar energy can help improve your business’s energy efficiency, reduce its carbon footprint, and save money through energy independence.
If you are a business owner in MA or RI who is interested in a commercial solar loan, schedule a consultation with our Business Banking Team today!