Your company and commercial property will always need electricity to run. The majority of companies rely on their utility company like SCE (Southern California Edison), PG&E (Pacific Gas & Electric), SDG&E (San Diego Gas & Electric), and LADWP (Los Angeles Department of Water & Power) to power their business through coal, natural gas, or oil. By utilizing solar energy, you can draw on the sun’s energy to reduce your businesses’ annual maintenance costs and create a backup power source to ensure your business operations aren’t interrupted during the event of a blackout. The best way to lower your commercial solar costs is to take advantage of all of the existing rebates and incentives that exist to get commercial solar panels.
Businesses and commercial property owners can gain substantial benefits from installing solar energy on their facilities. When considering going solar, commercial property owners should consider their goals for the project. We typically utilize the primary strategy when sizing the solar energy system to maximize the available roof space with solar modules to accumulate maximum savings and profitability. Every business has various reasons for going solar, from being green-friendly to having backup power to ensure their business can continue to run. Regardless of the motivation to go solar, every company wants to know its cost and the current rebates.
While the cost of installing solar panels is an expensive investment, so is paying your ever-increasing electricity bills. Plus, with the currently existing tax credits, incentives, and grants, you will offset a substantial amount of the overall costs. These savings added to reducing utility costs lead to a concise return on investment period. Most see a payback of less than three (3) years when choosing to go solar for commercial properties. This makes solar energy one of the best investments for commercial property owners to maximize their property’s valuation. Plus, they get the added value of being able to reduce their carbon footprint while improving their bottom line.
Solar power provides the ability to reduce or eliminate your electricity bill as your solar panel system’s power produces electricity to offset the power you pull from the grid. In order to create an accurate assessment of how to best meet your electricity goals, it is important to analyze your commercial property’s electricity consumption and costs. The more energy your system generates, the less you or your business pays towards utility costs.
Let’s start by exploring the most substantial and readily available Commercial Solar Tax Credit available for California customers in 2021. The Federal Investment Tax Credit (ITC), commonly referred to as the Solar Tax Credit is the best way to reduce your commercial solar panel cost when investing in a complete Solar Energy System that includes a battery backup or just commercial solar panels. The tax credit is an extremely beneficial way for the customer to receive the benefits for all aspects of solar energy that provides Material and Labor.
The customer can benefit from using 100% Accelerated Depreciation while investing in a complete solar energy system. Our goal is to provide the customer the benefit of taking advantage of significant cost reduction when adopting solar. This will have a considerable impact on the solar project regarding payback and the Net Present Value (NPV) of the solar energy project.
The SGIP program applies to the battery energy storage system. For most commercial properties, a battery backup system is an excellent consideration because it allows them to shave off expensive Peak Demand Charges from the utility company. Suppose your current energy consumption means paying expensive Peak Demand charges and expensive rates during specific times. In that case, a battery backup is most likely going to improve your ROI.
The SGIP program is tiered in Steps. These steps are measured by tiers of how much funding is available. For example, there is a surplus of money that projects will have access to in Step 1. The more limited the budget is available, the less money will be allocated per project. There are five (5) steps to the commercial SGIP program, and California is currently in Step 3.
The SGIP battery backup incentive is eligible to be claimed in conjunction with the Federal Incentive Tax Credit for the entire material list for the battery storage project if combined with solar. This tax credit allows the business to deduct that percentage off the selling price and apply it to reduce their annual taxes.
Helpful Resources: https://www.selfgenca.com
The benefits of solar energy have a positive effect on the Battery Energy Storage System’s investment and significantly reduce the payback for an investment into a Battery Energy System. This can reduce your investment costs to the maximum extent possible.
There is another Tax Benefit that is available for Battery Energy Storage Systems (BEES) called MACRS. MACRS stands for Modified Accelerated Cost Recovery System. The benefits of solar energy have a positive effect on the Battery Energy Storage System’s investment. While significantly reduce the payback for an investment into a Battery Energy System. This can reduce your investment costs to the maximum extent possible. The benefits of MACRS include:
There are two (2) structures in the MACRS that a Battery Energy Storage System can be applied towards two options:
Solar makes sense for many businesses that consume a lot of energy, have high Peak Demand Charges, or require a backup energy system to ensure their business continues to run. Solar power works well for retail stores, warehouses, manufacturing facilities, and hotels. These four factors will help determine if solar energy would work well for your commercial property or business.
The higher your electricity costs, the more you will be able to save—additionally, utility companies like LADWP charge a high 12.5% City of Los Angeles utility tax rate. Simply put, the higher the electricity bills, the more taxes that you need to pay. Plus, the cost of electricity has been increasing every year. The average rate of increase for the cost of electricity for utilities in California is a 4-7% increase. That is why businesses that require heating and cooling of large spaces like crypto mining facilities, warehouses, greenhouses, and hotels see a fantastic benefit from solar energy.
Your business consumes most of its electricity can impact how beneficial solar energy may be for you. If most of your energy consumption is during the day, your solar energy system will offset most of the electricity consumed. If your business consumes a substantial amount of electricity at night, solar may not be a great fit unless coupled with a battery backup system. With a battery backup, you will be able to shave off expensive Demand Charges, allowing you to collect more profit throughout the year.
Another essential consideration to how beneficial solar can be is the number of solar panels you can use and the amount of sunlight your solar panels can be exposed to. If you have the available roof space, you may be able to offset a tremendous amount of electricity costs by ensuring you have enough solar panels to offset your electricity costs fully. Besides, it is also essential to consider any shading that may occur as well. We typically try to avoid installing near large HVAC systems that are on top of roofs because of the shade they bring. Besides, the roof planes make a substantial difference. The optimal direction is a roof facing South, then West or East facing and unshaded. For flat roofs or carports, special equipment and setup are required to add to the overall cost.
Have a conversation with one of our Commercial Solar Consultants to explore whether solar is a good fit for your business. Forme Solar can also perform Energy Efficiency and Clean Green Energy Production Solutions for Battery Storage, Solar, Carports, EV Charging Stations, Generators, HVAC Equipment, LED Lighting, Transformer Upgrades, Smart Building Software, and Solar Financing Solutions. Get a quote for commercial solar panels today or call 714-694-2262!