How Commercial Solar Is Priced & the Best Ways To Finance It | EnergyLink
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How Commercial Solar Is Priced & the Best Ways To Finance It

Commercial Solar City Concept

Commercial solar is becoming an extremely viable option for companies of all scales. The cost of solar has become comparatively cheaper to electricity for the first time ever, which means it’s not just huge corporations who can now utilize solar as an energy source.

Pricing Commercial Solar

The pricing structure of solar is centered around a dollar per watt basis, meaning a set amount is charged per watt of energy used. Solar system sizes are measured in watts and depend on how much energy is needed for the business. According to Energy Sage, the average commercial system is priced at $2.87/Watt before any rebates or incentives. Since 2010, solar panel prices have fallen by roughly 90% while global solar deployment has grown by over 400%. This exponential growth rate throughout the entire global solar supply chain has led to drastically reduced prices.

The installation of solar is also becoming readily available with the expansion of companies like EnergyLink, who specialize in energy management products and installation services. There are multiple costs to consider when choosing commercial solar, for example: labor, engineering & design, permits, interconnection applications, and sales & marketing. 

Although it may be a surprise that the solar panels themselves aren’t the greatest share of the total project cost, it’s important to realize these other components are vital to a high-quality, well-functioning solar system.

Financing Commercial Solar

There are multiple ways to finance solar installation and each comes with different added benefits. Below we breakdown and explore the possibilities of these options:

Solar Investment Tax Credit

The solar investment tax credit is a tax credit that can be claimed on federal corporate income taxes for 26% of the cost of a solar photovoltaic (PV) system commencing construction on or before December, 31st 2020. Each year, the tax credit will decrease as shown below. 

  • 2020: 26% tax credit
  • 2021: 22% tax credit
  • 2022 onward: new commercial solar energy systems can deduct 10%. No federal credit for residential solar

A solar project is considered to have commenced construction if at least 5% of final qualifying project costs are incurred. Or, if “physical work of significant nature” is commenced on the project site or on project equipment at the factory. If you are concerned that your company may not be able to begin construction by the end of 2020, please reach out to us. We have a long history of working with companies who have received renewable energy tax credits and can walk you through the process. 

Accelerated Depreciation

Accelerated Depreciation allows businesses to deduct 85 percent of the value of the solar asset from their taxes, providing another significant offset to the upfront cost of a system array. By reducing the costs of solar installation through tax rebates, companies can receive return on investment much more quickly.

Performance Based Incentives

According to EnergySage, PBIs, including solar renewable energy certificates, are a great way for solar owners in certain industries to receive payment from their utility for the solar electricity that their system generates. These incentives can be significant and greatly enhance financial returns for system owners over the life of the system.

Benefits of Installing Commercial Solar

Outside of reducing operating costs, there are many benefits to a company having a solar array:

  • Save money on electricity bills – Energy costs add up for companies. The installation of solar leads to easily accessible cheaper energy, which can be utilized on average for up to 25 years.
  • Lock in an electricity price for decades – Installing commercial solar can help hedge against volatile electricity prices and reduce reliance on an unpredictable expense
  • Benefit from generous solar incentives – Businesses can take advantage of multiple incentives, such as the federal solar investment tax credit or the Modified Accelerated Cost Recovery System (M.A.C.R.S), both of which reduce taxes for companies.
  • Businesses can earn up to 30% returns on investment -Depending on the cost of the system, the area of installation and how the project is financed.
  • Corporate sustainability– By installing solar, companies become more social responsible, which is great for commitment to sustainability within communities
  • Supporting local economy – By choosing solar, you install local companies that contribute to solar installation.

At EnergyLink, we are extremely knowledgeable on installing solar arrays. Recently, we installed the largest interconnected solar array in Columbia, the case study for which, can be viewed here. If you have any questions about the benefits of installing solar, contact us today.

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