Rising energy costs create uncertainty about future electricity rates, making planning difficult. This is especially true for businesses that use a lot of electricity. However, solar panels for commercial buildings can drastically reduce energy costs while helping the environment. There are currently two tax credits available for solar panels for commercial buildings, which significantly reduce the overall cost of the system.
Understanding the commercial solar panel market is crucial to growing your solar business and reaching new potential customers. So let’s take a look at this important segment of the industry to better capitalize on this business opportunity.
Solar collectors for commercial buildings provide green marketing.
Consumer demand for green products and services has increased dramatically in recent years. As a result, many large corporations have created carbon-neutral targets to help curb climate change by reducing greenhouse gas emissions and fossil fuel consumption. Typically, switching to renewable energy is a key step toward reducing carbon footprints.
Despite the lack of formal environmental targets, many small and medium-sized companies want to use more sustainable energy sources. In addition to helping the environment, this can increase customer loyalty, help attract talented employees and promote brand reputation.
Commercial solar systems can be highly visible and make a bold statement about supporting the clean energy movement. Communicating about solar systems for commercial buildings can be a smart marketing strategy. Some companies even include information about solar systems to customers to highlight the benefits, such as a plaque on the wall, a press release or a page on their website.
How solar panels for commercial buildings reduce operating costs.
Companies have to pay for electricity, but then have nothing to show for it. This is because most companies basically rent their power instead of owning it. Solar panels can be installed on the company’s premises or elsewhere. When switching to solar power, companies enter into a power purchase agreement (PPA) or buy commercial solar panels.
Solar PPAs for companies.
With PPAs, companies often save significantly on their electricity bills each month, as solar power is usually cheaper than grid power. However, a third party owns the solar panels, not the company using the energy. As a result, companies can often go solar without paying a down payment, which can be a great selling point. In addition, the solar company is not responsible for the maintenance and upkeep of the panels, but also does not receive tax credits.
Purchasing commercial solar panels.
By owning a solar energy system, a company can enjoy “free” energy for many years after the system pays for itself in savings. Your customer will then be eligible for a federal tax credit and additional depreciation if they have sufficient tax appetite, which is a fantastic opportunity. It is important to ask clients to speak with a tax expert to determine if they qualify for the solar investment tax credit (ITC) and depreciation, and be careful not to offer tax advice.
Advantages of having solar panels for commercial buildings:
- Significant cost savings by reducing operating costs from energy bills
- High initial installation costs
- Environmental sustainability and reduced carbon footprint
- Dependence on sunlight to generate energy, so better suited to sunny climates
- Potential to generate revenue by selling surplus energy
- Space requirements for larger solar panel installations on commercial buildings
- Positive public relations and brand image
- Aesthetic issues for some businesses
- Energy independence and resilience
- Need for ongoing maintenance and occasional panel replacement
- Eligibility for tax incentives and rebates
- Complexity of regulations and permits
- Long-term financial stability and predictability of energy costs
Potential increase in property value with solar panels for commercial buildings.
Numerous studies have shown that solar energy systems increase the value of homes, so the same is likely to be true for commercial property owners with photovoltaic systems. This is because properties with solar panels are cheaper to maintain due to lower energy bills. Keep in mind that in order for a building owner to benefit from the increase in property value, it is necessary for your client to own photovoltaic panels on commercial buildings.
Calculating the payback period for solar panels on commercial buildings.
Solar panel design software often estimates the payback period, but it is also possible to calculate the payback period yourself.
Payback period in years = (total cost of solar system minus incentives and rebates) / annual cost savings
Estimating the payback period for solar panels on commercial buildings involves several steps.
Determine the total cost of installation:
- Add up all costs associated with the purchase and installation of the solar panels, including equipment, labor, permits and any additional expenses.
- Please take into account federal and local incentives, such as tax credits, rebates and grants, which can significantly reduce upfront costs.
- Please estimate the expected energy production of the solar panels based on factors such as system size, location and efficiency. Multiply this figure by the local electricity rate to estimate annual savings.
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What are the disadvantages of solar panels for commercial buildings?
There aren’t many drawbacks to commercial solar if quality equipment is properly installed by a reputable solar company. However, there can be challenges in implementing the project.
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Solar panels for commercial buildings – frequently asked questions.
Let’s review some frequently asked questions about commercial solar panel installations.
What is the payback period for a commercial building photovoltaic system?
The payback period for a commercial photovoltaic system varies depending on factors such as system size, installation costs, energy savings and available incentives. The average payback period for commercial photovoltaic systems is 5 to 10 years, with a return on investment (ROI) of 10 to 20%. However, special circumstances and local conditions can affect the ROI of commercial solar panels.
Solar energy savings, which are influenced by local solar resources, electricity rates and building energy consumption, play a key role. Financial incentives, such as commercial solar tax credits and rebates, can significantly shorten the payback period. Careful consideration of these variables, along with effective system design and maintenance, is essential to accurately assess and optimize the payback period of a commercial solar panel investment.
What is the lifespan of solar panels on commercial buildings?
Commercial solar panels typically operate effectively for about 25 to 30 years, and many continue to generate electricity beyond that period. The life of the panels is influenced by factors such as the quality of materials, manufacturing standards and site operating conditions. Regular maintenance and proper care can help extend the effective life of commercial solar panels.
Do solar panels for commercial buildings require permits?
Yes, commercial photovoltaic systems typically require permits. The process of obtaining a permit for a photovoltaic installation ensures compliance with local building codes, zoning regulations and electrical safety standards. Permits may also be required for various aspects of a photovoltaic installation, including structural integrity, electrical connections and environmental impact.
Before installing a commercial photovoltaic system, local authorities with jurisdiction should be contacted to obtain the necessary permits. Commercial photovoltaic systems often require solar engineering reviews and a PE seal from a licensed engineer.
Do I need to replace my roof before installing PV on commercial buildings?
We recommend assessing the condition of the roof before installing photovoltaic panels on a commercial building. If the roof is in poor condition and nearing the end of its useful life, it is wise to replace or repair it before installing photovoltaic panels.
This will provide a solid base for the solar panels and prevent potential complications when performing work on the roof. Consulting with a roofing professional can provide a comprehensive assessment and guidance on performing roof work before installing commercial solar panels.
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Solar panels for commercial buildings can benefit businesses.
Knowing the answers to common questions and being able to describe the key benefits of commercial solar panels will help installation companies capture an important – and fast-growing – market sector.