Business and Commercial Solar Panels Return on Investment
For many businesses who want to install commercial solar panels, the major issue they first need to address and quantify is the potential return on investment. Of course, there is the initial cost of installation versus the consequent lowering of energy bills and greener credentials that could boost business. There is also the federal tax rebate and individual state incentives such as tax credits, exemptions and access to low interest loans.
Whether you have small or large business premises, investing in solar panels can have a number of wide ranging benefits, particularly if you are lucky to have a sizeable space available for the development. Solar panels can be placed on any building whether you are on in the industrial sector, have an office building in a city or are out in the country on a farm.
The size of space you have available will obviously depend on the approach you take to commercial solar panels. For instance, if you have a large piece of land, as many American farmers do, you may look to rent the space out to an energy company or solar panel installer / investment company, rather than undertake the responsibilities of construction yourself. If you share ownership of a building with other businesses, you might want to collaborate to bring down the costs and provide a more sustainable investment and resulting energy profile.
The return on investment for any business that chooses solar panels will depend largely on a few factors:
- The initial investment or cost of the solar panels.
- The size of the solar panel installation.
- The reduction in costs due to various tax credits and rebates, as well as savings on energy costs over the life of the installation if net metering is in place.
Small Business Solar Panels - Return on Investment
If you operate a small business, you may well have a limited space for a solar panel installation. The return on investment for such an array will probably be in line with most domestic installations of around 4-5 kW.
The cost and return on investment will obviously vary depending in which state you live. If you have paid for the installation yourself then you can expect to normally start receiving a profit after about 14 years (once the initial cost or loan has been paid back). An average 4 kW system will cost between $16,000 and $20,000 depending on location. Other factors will be the type PV cells you decide to use and associated equipment you choose as well as the price of installation and commissioning. Once the initial cost has been assessed, you can start taking advantage of your reductions such as the federal tax credit. Your return on investment will largely be determined on a number of factors – the amount of electricity you use, the amount you produce with solar panels, the cost and the discounts through federal and state incentives as well as net metering.
For example, if you live in California you could have a ROI as follows:
- Estimated cost of panels (including labor and installation): $20,000
- State incentives and rebates: $3,750
- Federal tax credit of 30%: $4,875
- Total cost: $11,375
- Payback time: About 14 years on average
- Return on investment after 25 years: $26,000
These are ball park figures of course because issues such as net metering and how much electricity you actually use will need to be taken into account as well as the state you live in.
Medium/Large Business Solar Panels - Return on Investment
If you have a larger business, then the chances are you could have a lot more space and a more flexible budget in which to install a solar panel array. If you have available land or a substantial section of roof space (for example on an industrial or factory building or plenty of farmland), the return on investment starts to become significant.
An installation like the one at Solar Energy World in Maryland is 40.7 kW and produces some 52,000 kWh a year. Because Maryland is one of the few states that has a feed-in-tariff where the utility company pays for excess generated power, the company earns $16,000 per year. That doesn’t take into account the 36.7 metric tonnes of carbon emissions saved each year. The return on investment for large solar panels that have the right net metering arrangement in place is pretty quick and a good way to save energy and make money for many businesses.
For other commercial premises, the benefit is in the offset of electricity charges. A 50 kW array installed for Benerofe Properties in White Plains NY comprised 240 panels and saved the company 25% of their electricity bills, a reduction in their operating costs of some $11,000 a year.
The Benefits of Commercial Solar Panels
Apart from the obvious benefit of reducing energy bills and providing a guaranteed income over the next 20 years or so, installing solar panels for your business also increase your green credentials. Many people are in favor of the government and business taking on new eco-friendly technologies and often look to support them.
In addition to this, power companies in many states are starting to look at opportunities to boost the grid and help meet renewable portfolio standard targets with local producers. It provides a good deal of future security for what is, initially, a large investment by any company. Of course, this all depends on which state you live in. Some like California or Arizona have a comprehensive provision of incentives while others like Alabama are more cautious in their approach.
Finding the Right Installation Company
When undertaking such a big investment such as installing commercial solar panels you want to be sure that you are choosing the right company to do the job. They will need to have the right credentials and install your solar panels at a competitive price. To find out who in your area can install your solar panels then pay a visit to our online database.