The main concern for many companies is finding ways to free up cash flow on an ongoing basis. Some common methods include switching to low-cost advertising and strategically negotiating with suppliers. These other methods can become exhausting and cause burnout very quickly.
The good news is that the mass adoption of solar presents another opportunity to save money. Installing and maintaining commercial solar panels requires minimal effort and is an effective way for businesses to free up monthly cash flow.
Fortunately, the benefits don’t end there. A business with a solar system can utilize tax incentives and hedge against energy price fluctuations, to name a few.
Energy bills reduced or eliminated
When all small businesses in the U.S. spend more than $60 billion on energy bills annually, it’s understandable to see increased interest in commercial solar panels.
A common belief is that installing a solar energy system can completely eliminate your energy bill. While this belief is true, the complete elimination of your energy bill depends on several factors.
These factors include:
- Installing a sufficient number of solar panels.
- Being energy efficient during business hours
- Total hours of direct sunlight
- The local electricity rate
- The angle of the panels.
In most cases, it is possible for a business to completely eliminate its energy bill as long as it is energy conscious and installs enough solar panels to match its usage.
Protection against fluctuating energy prices
After all, energy is a commodity, which means it is exposed to constant and sometimes severe price fluctuations. Fortunately, one of the advantages and disadvantages of solar energy is protection against constant fluctuation.
Regardless of the industry or niche your business serves, you’ll likely be using power distributed by your local utility company. That means that when the demand for electricity is high and the amount available is low, you will see a sudden spike in your monthly energy bill. Seasonality and demand are not the only variables to consider. In fact, electricity prices are expected to rise 3.8 percent next year.
By installing a system that can power your business with free renewable energy, fluctuating energy prices become less of a concern. The system allows business owners to predict their energy usage and monthly bill with greater certainty.
Commercial Taxes and Renewable Energy Incentives
The average cost to install a commercial solar array is high, but when federal and state incentives are factored in, the final price is drastically reduced. At the federal level, business owners can deduct the cost of installing a solar panel system.
Currently, this equates to a 26 percent investment tax credit. It is important to note that the investment tax credit will continue to decline in the coming years. It will drop to 22 percent in 2023 and 10 percent in 2024 for commercial installations.
In addition, businesses have a tax deduction incentive of $1.80 per square foot. However, this is only available for facilities that generate at least 50 percent of their heating and cooling system energy.
This is a great incentive for business owners to install a sufficient number of panels. The goal is to become completely self-sufficient over time. Of course, staying connected to the grid even if you have enough panels to power your business has its own set of advantages.
In addition, there is also accelerated depreciation. This allows a company to write off smart meters and other solar equipment much sooner rather than over the life of the product.
Reduced overhead costs
A company’s overhead costs go beyond supplies, salaries and insurance. One consistent but necessary overhead cost is the cost of your business’ electricity.
Maintaining a constant supply of power is essential for any business. In most cases, electricity is used for more than just keeping the lights on. It is also likely to be used to power heating and cooling systems and various other machines.
As mentioned above, installing a solar panel system is an efficient way to reduce your monthly bills without much effort. However, it will still connect to the grid at night and as needed. This is only if your system is still connected to the grid.
Generating free renewable energy reduces the need to draw it from the grid at constantly fluctuating prices. At the end of the day, the total amount of reduced overhead depends on the level of self-sufficiency and how much is invested in the system.
Improved consumer reputation
As global concern about climate change increases, consumers have taken action in their own way. One is by buying only from environmentally responsible companies.
Investing in these systems sends a message to consumers that your company is taking steps to become sustainable. This not only broadens your audience and customers, but also enhances your company’s overall reputation.
In a world where reviews and reputation are everything, converting to solar is an investment in building a strong brand image.
Maintaining a reliable power source
A power outage is unfortunate, but sometimes commonplace, depending on the location. It’s a costly mishap that comes with being 100 percent dependent on the grid and sometimes tens of thousands of dollars in wasted money.
By having a way to generate electricity yourself, the odds of experiencing a power outage become much slimmer.
Saving with solar energy
It is true that the cost of any solar panel may seem high at first. Ultimately, however, it is an investment that offers excellent short- and long-term benefits.
Depending on the size, a business can benefit by reducing or eliminating electricity bills and recouping the cost in a matter of years. In addition, installing a solar energy system attracts customers who buy from sustainable businesses.
The benefits of solar go beyond how much a business can save. Ultimately, it also helps a company’s bottom line.