We believe that aside from the political hype, solar technology as an energy alternative is a fiscally healthy change for many businesses. Solar is a proven technology, and business should understand how they can take advantage of the long-term energy solutions that solar can provide.
When it comes to energy efficiency, reducing expenses, or planning for the future of your company, solar power is an option that should be investigated. Here are a few questions businesses should consider asking:
- Is my building energy efficient?
- Is solar an economical solution?
- What are the advantages of becoming green?
The cost of energy increases every year, and utility expenses we see on profit and loss statements are substantial. The average 2,300-square-foot household in Phoenix pays 11 cents a kilowatt for energy. Seems like pennies, but after 12-months this amounts to $2,530 dollars. A business, by comparison, with 25,000 to 100,000 square feet of combined office and warehouse space, could be spending as much as $90,000 a year with the utility company. That’s a lot of pennies.
The number of companies converting to green technology is fast becoming commonplace. In fact, the Arizona Corporation Commission requires regulated utilities to generate 15 percent of its energy from renewable resources by 2025.
A solar cell is a device that directly converts the energy in light into electrical energy through the process of photovoltaic or what’s commonly called solar PV. Throughout the southwest, federal, state, municipal and city governments — as well as most of the Fortune 1000 — are converting to solar as a means to reduce utility costs.
Commercial solar is most commonly installed on the roof but more and more solar installations are being built as solar-shaded parking structures. Businesses are benefiting from the energy production while providing the dual benefit of shaded parking for their clients and employees.
- A typical silicon cell solar module will have a life in excess of 20 years.
- Each hour of each day, more energy from the sun reaches our planet than is used by the entire global population in an entire year.
- Historically, public utilities in Arizona have increased utility rates an average of five percent a year.
- More than 3,500 square miles of federal land is currently awaiting permits for solar power development.
State and Federal Tax Rebate Program Highlights
Business Energy Investment Tax Credit: This is a Federal ITC of 30 percent based on the cost of the system installed. There is no cap to the amount of the ITC credit. In addition, solar qualifies for bonus depreciation as well as accelerated depreciation on 85 percent of the system cost.
Performance-Based Incentive (PBI): This is a quarterly rebate paid by the public utility. The rebate is paid as a cash incentive for 20 years based on the amount of solar energy produced. The PBI is used to help offset the cost of installing solar.
Arizona State Corporate Tax Credit: This is a state tax credit of 10 percent of the cost of the system not to exceed $25,000 per building/structure or $50,000 annually per business.
Questions to Ask
First, the business owner should meet with a qualified solar expert and have them complete comprehensive energy efficiency and cost analysis that includes:
- Review of state, federal tax and cash incentives
- Utility incentives and cash rebates
- Cost savings analysis
Second, thoroughly review the tax benefits associated with installing solar. The tax benefits as you will see can be significant, so take some time reviewing all the benefits of the tax and incentives offered through the public utilities. Keep in mind that SRP incentives are structured differently from APS and TEP. The utilities have very comprehensive websites to help you understand the options available. Alternatively, you can contact a solar integrator or installation company as they have a good handle on all rebate and incentive options.
Finally, evaluate financing the hard cost of installing solar. If the out-of-pocket costs to install solar combined with the cost to finance is less than the historical energy costs, then seriously consider going green.