Why Should Businesses Switch to Solar?
As electricity prices have increased and the cost of going solar has simultaneously decreased, many U.S. businesses have begun making the switch to this renewable energy source for a host of short- and long-term benefits. In fact, commercial usage has surged so significantly in recent years that more than half of the country’s corporate solar energy has been installed since 2016.
Many household names like Walmart, Target, Apple, Amazon, and IKEA have invested in solar energy and reaped significant rewards. However, solar energy is not just for big business. Many small to medium-sized companies have also adopted solar energy as a smart financial opportunity to reduce costs while creating community impact. According to a recent report, the payoff of businesses utilizing solar energy is impressive enough to generate electricity to power 1.4 million homes annually.
What Businesses Should Go Solar?
If your business is looking for ways to reduce operating expenses (and let’s be honest, what company isn’t?), a good place to start is by analyzing your electricity consumption. It’s likely that you’ve uncovered substantial increases in your bills as commercial electricity rates continue to soar. But how do you know if going solar is the right investment for your business?
Generally, the leading considerations that make a business a quality candidate for solar energy include:
- Having large electricity requirements to power your operations, such as lighting, HVAC, production, and computing needs.
- Operating in an area with expensive electricity costs (Missouri currently ranks as the 14th highest in energy prices nationwide).
- Being located in a state with compelling solar energy incentives (more on Missouri’s vast offerings to come later in the blog).
- Managing a facility with a generous rooftop or an adjacent space conducive for installing a solar energy system.
- Having a commitment to decreasing your company’s environmental footprint.
Now that you’ve established that installing a solar energy system is a strong fit for your business, let’s dive into the primary benefits it can bring to your bottom line.
Top 4 Solar Energy Benefits for Businesses
Electricity costs are a leading expense for businesses, and it only continues to skyrocket the larger the facility and the more robust the power needs. The number one benefit of going solar is the dramatic reduction in your monthly electricity bill (and thus, overall operating costs). For instance, businesses that utilize energy sources such as coal or gas can pay anywhere from 7 to 30 cents per kilowatt hour (kWh). Those that utilize solar, however, can see reduced costs between 2 to 12 cents per kWh. This can lead to a staggering electricity bill reduction of up to 89%.
In addition to the savings that are virtually guaranteed by simply going solar, there are also opportunities to reduce your monthly electricity bill even more. Specifically, net metering allows you to store the excess solar energy your business produces to earn a dollar-for-dollar credit with your utility company. Thanks to Missouri’s Easy Connection Act, utility companies within the state must offer net metering to its solar customers for free. In essence, this can offset your electrical bills even further to put money back in your pocket so you can reinvest your savings in your company.
Finally, installing a solar energy system can not only provide short-term cost reductions, but it can allow your company to better plan for the future. According to recent data from the U.S. Energy Information Administration, Missouri commercial businesses were among the most impacted by increased electricity rates. Specifically, rates increased 18.1 percent to an average of 10.5 cents per kWh (or $631 for one month). By going solar, owners can lock in a steady, predictable electricity rate that is not subject to fickle increases and inflation, which will allow you to accurately budget for the future.
Unlocking Incentive Advantages
In addition to reducing electricity bills, going solar opens the door to a multitude of unique federal and local incentives that can positively impact your bottom line. For instance:
- Federal Solar Investment Tax Credit: The Federal Solar Investment Tax Credit, also known as the ITC, is the most significant industry incentive available. Since its introduction in 2006, it has contributed to a 52% increase in average annual solar growth. Beginning in 2021, the ITC will cover 22% of the system costs for businesses to go solar. In 2022, the rate will decrease permanently to 10% for commercial usage (making 2021 a compelling year to make the switch).
- Modified Accelerated Cost Recovery System: Known as MACRS, this is a tax depreciation system that allows companies to recoup their solar energy equipment investment. Through it, organizations can receive a deduction on their taxable income over the course of five years. If pairing with the ITC, businesses can reduce depreciation by half of the tax credit. Say you installed your system in 2021 at the rate of 22%, that means you could deduct 89%. To sweeten the deal even more, the Tax Cut and Jobs Act of 2017 grants organizations a 100% bonus depreciation on qualifying solar equipment installed between Sept. 27, 2017 and Jan. 1, 2023.
- Utility Rebates: In 2008, state voters approved the Missouri Clean Energy Act. This created mandatory renewable portfolio standards (RPS) that require state utility companies to source a certain amount of energy from sustainable methods. Specifically, the number for Missouri utility companies to reach is 15% by 2021. Thus, many offer compelling solar rebates to help meet their goal (versus running the risk of not reaching the threshold and paying high fines). This includes Ameren ($0.25 per watt), Columbia Water and Light (rebate tier), and Empire/Liberty Electric ($0.25 per watt).
- Innovative State Programs: The state of Missouri offers loans and grants to provide even more reason to go solar. These programs can alleviate upfront costs associated with installation or eliminate them altogether. For example, PACE (Property Assessed Clean Energy Program) offers 100% financing to companies installing a solar energy system for up to 20 years. Meanwhile, REAP (Rural Energy for America Program) provides grants specifically for agriculture and rural businesses going solar. Funding can cover up to 75% of project expenses. Additionally, there are other financing options to explore (such as solar loans and leases) to assist with upfront costs.
- Property Tax Exemptions: In addition to discounts and rebates, Missouri offers property tax exemptions for solar system installations on the state, local, and county level.
Building Socially Responsible Operation
Beyond the undeniable solar energy financial returns and incentives, there are a plethora of additional benefits that make it a smart business decision as you build a socially responsible operation. Specifically, more and more customers are seeking companies that place a strong emphasis on corporate social responsibility. For example, a recent study showed that 88% of Americans will be more loyal to a company that values social or environmental causes. The fact of the matter is that customers are attracted to companies that support sustainable efforts, and your decision to go solar can win business.
Additionally, your decision to invest in solar energy could not only retain employees, but also attract new ones. Like customers, employees are increasingly interested in working for companies that value being good environmental stewards. In fact, 2019 survey findings reported that more than 70% of people would be more likely to work for a business with a strong emphasis on environmental impact. Even more eye opening, half of the respondents said they would accept a decreased salary to work at a sustainable-minded organization.
Supporting Local Economy
By investing in solar energy, your business will create a positive ripple effect that will benefit the local economy. As companies (and thus workers) in your area complete your job, that will boost Missouri’s solar industry. According to 2019 data from The Solar Foundation, Missouri is ranked number 27 in the nation in terms of solar jobs (or 2,647 per year). Your decision to make the switch will contribute to increased demand, leading to additional work for solar equipment manufacturers, installers, and suppliers to contribute to state industry growth.
In addition to boosting the local economy, investing in solar energy could also provide community support in times of need. For example, in the unfortunate event of a natural disaster resulting in a power outage, a solar energy-reliant company would not be impacted as it is not dependent on the grid. A solar energy system coupled with a battery backup can ensure a constant power source (even in the event of a blackout). In addition to allowing your business to continue operations in the face of widespread power loss, this also provides the opportunity to offer shelter and emergency support to other community members to further cement your company as a good local steward.
How to Get Started
Now that we’ve learned how going green can be a strategic investment for your business resulting in a strong ROI, it’s important to partner a reliable solar energy installer with a proven history in commercial properties. Sun Solar has been specializing in commercial solar installation for nearly a decade with clients such as Best Western PLUS, A&B Cycle, Farmers Park, and more. To learn more about what going solar can do for your business, click here or contact Sun Solar experts at 417-413-1786 or email@example.com.