Solar For Your Business
We are often asked by business owners of all sizes, why does it make sense for my business to invest in solar? If you have a large flat sunny roof, own the property or are a long-term lessor, the answer is most likely yes.
The reasons are many and I hope to distill the main financial drivers in this post that apply to businesses of all sizes and most industries.
The most compelling financial rationale is the ability of the business to control your electric costs at a level less than what the utility charges. Fixing these charges enables more exact financial planning given the reliability of panels and the negligible O&M costs.
The return on investment is quite good, typically between 5 and 8 years. This is due to a combination of lower solar panel and inverter prices, more efficient installation best practices, the federal tax credit (30% through 2019, then 26% next year), state rebates, and accelerated depreciation of the solar system cost. Most panels are warrantied for 25 years, some 30 years, but the IRS allows entire balance of plant depreciation over 5 years with the option to take 100% in year of installation if that makes financial sense.
Finally, the inclusion of solar into your business model should result in an increase in your Net Operating Income that can increase your fixed charge coverage ratios and therefore a commensurate ability to add leverage to help enable facility expansion or other capital expenditures.
