Is Solar Right for Your Business?

Many companies and organizations are considering, or will consider, future solar power options as a means of reducing electricity costs. While many will benefit financially from investing in a solar system, some will not. The way large energy users consume electricity varies across industries and electricity usage alone may not be a good indicator of whether or not your organization can expect a positive return on investment.

Since solar power reduces the amount of energy your business buys from the local utility, a solar installation will lower your delivery costs on your utility bill. When you contract for your solar array, you also set your energy charge, creating a hedge against potential increases in the cost of electricity. In addition, you help the environment by replacing power traditionally provided by non-renewable sources of generation (such as oil or coal) with a renewable option.

Federal and local governments recognize the benefits of adopting more renewable energy sources, so incentives such as a 30% Federal tax credit is currently available and your state will most likely have other incentives to improve the ROI.  If you plan to explore purchasing a solar system by use of an accelerated MACRS depreciation versus leasing from a solar company, an Investment Tax Credit should be factored into the equation.

Below are some things to consider when evaluating solar for your business:

  • Physical location of your company or campus; some areas get more sunlight than others.
  • Where the solar array will be placed; roof or land-mount .
  • If a roof system is preferred, what is its age and condition? Solar panels are generally rated up to 30 years and most lease agreements are for 20 years.
  • Local incentives available to help reduce costs.
  • The optimal size of the array in order to meet your energy needs and your payback requirements.
  • The risks and benefits of leasing or buying a system.

With the overall cost of a solar array greatly reduced over the last several years, and the incentive programs available at the state and federal level, it would be prudent for any large energy user to review solar options. Usource recommends its clients conduct a feasibility study as a first-step in the evaluation process to best understand the company’s options and ROI. To get started with your own feasibility study, contact us.

About the Author

Scott MacDonald is Usource's Managing Director. Scott has 25 years of experience in the energy industry and is a recognized expert in energy economics and consulting. He has a MS from MIT and a BA in economics from the University of New Hampshire.

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