“Solar, solar, solar. All I hear is solar. It sounds good! But, I’ll get around to it in a few years. What’s the rush?”
Sound familiar? I know we might be a little biased in saying this, but it is time to stop waiting. Solar panel prices have fallen 60% in the last 6 months. Businesses across the country are turning to solar to reduce operating expenses and reinvest that savings in their business. If you haven’t considered solar to reduce your operating costs, you are throwing money out the window. Changes in utility net metering or the available Federal ITC tax credits are never guaranteed. It is like what your grandmother always told you; “A bird in hand is better than a bird in flight”.
An actual load profile over a one day period from an REC Solar customer who invested in solar and battery storage.
REC Solar has built hundreds of large-scale solar systems across the United States. Here are some of the lessons we have learned and items to consider to help pinpoint whether now is the time to invest.
Current Energy Usage
Keep track of important metrics to understand your energy usage over time. Start by looking at these numbers on your bills:
• Kilowatt hours per month
• Price paid per kWh
• Demand charges (kW)
• Energy peaks at certain times of the year
Future Energy Needs
When your business is expanding a facility, getting new equipment or making other improvements, it is smart to model out the impact those investments will have on energy usage. To avoid being surprised by massive electricity bill spikes, confirm in advance if you are on a rate structure that increases your costs after you reach a certain threshold, or if there are any other scenarios you should be aware of. Many expanding businesses simultaneously invest in solar to help offset the added expenses resulting from their growth-related investments. It is possible to model the energy requirements of new investments to optimize the amount of solar installed. Some customers also do phased solar installations as they grow, to keep solar energy production up with usage, but also keep cash available for investment in growth activities.
The curve created by the up and down movement of your monthly energy bills is called the load profile. Businesses with a lot of fluctuation have a “spiky” load associated with drastic shifts throughout the day in how much energy they are consuming. During the peak of these spikes throughout a given time of the day or season of the year, businesses often get charged a higher rate for their energy. These fluctuations create uncertainty from month to month in a utility bill. Business with this sort of energy consumption can lower overall monthly bills with solar, but also can shave off the peak demand times through battery storage solutions that store excess energy from the solar array and release it when the business has higher energy requirements.
Older facilities that need major roof repair or a new roof in the next few years will want to time their solar investment with those repairs, since the life of the solar system can be 20-30+ years. Our solutions resolve this by partnering with a roofing company to fix any existing roof issues and guarantee the workmanship through their warranty.
Beyond the proven money-saving benefits of solar, many businesses make a strategic decision to invest in efforts that give them a foundation for promoting sustainability. To determine whether this should be a driver in your decision to invest in solar, questions to consider include:
• Can an investment in sustainability help you differentiate your product amongst consumers, retailers or other partners?
• Do you have a mechanism (such as a good website, social media or a PR firm) to promote your sustainability investments?
• Do you have a long-term appetite for sustainability initiatives for your business?
• These initiatives are a long-term investment and require planning. Waiting to make this a priority can become a significant competitive disadvantage over time.
Taxes and Financing Options
When weighing the cost and benefits of solar, it is important to calculate in the tax benefits if you are paying in cash or getting a loan. These tax credits can represent 50% of your costs with the 30% federal tax credit plus the Modified Accelerated Cost-Recovery Systems (MACRS) that can save you another 20% (assuming 25% tax bracket, 5-year depreciation schedule). In certain sectors, many businesses can access operating leases or PPAs that make solar a positive cash flow investment in the first year.