As a small business owner, you‘re always looking for ways to maximize profits and minimize expenses. Could installing solar panels be a smart money-saving investment for your company? In this article, we‘ll take an in-depth look at the upfront costs, available incentives, energy savings, and financial benefits of going solar for small business owners.
Estimating Your Upfront Solar Costs
Going solar requires an upfront investment, but thanks to falling solar prices and financial incentives, you can drastically reduce your out-of-pocket expenses.
The average cost to install a 10 kW commercial solar PV system ranges from $15,000-$30,000 before accounting for any incentives. However, here is a breakdown of upfront solar panel system costs for small businesses:
Hardware
- Solar panels – $9,000-$15,000
- Inverters – $2,000-$3,500
- Racking – $2,000-$3,000
- Wiring, connectors, etc. – $1,000-$2,000
Soft Costs
- Permits & inspection fees – $500-$2,000
- Installation labor – $3,000-$8,000
- Design, engineering & project management – $1,500-$2,500
Total Upfront Cost: $15,000-$30,000
As you can see, installing a solar array is a significant investment. But when you account for the various solar incentives available today, your out-of-pocket costs can be much lower!
Federal & State Solar Incentives
The federal government and many state/local organizations offer generous incentives to spur small business adoption of renewable energy. Here are some of the main programs available:
- Federal Investment Tax Credit (ITC) – The ITC allows you to deduct 26% of your solar installation costs from your federal taxes. For a $20k system, that‘s a $5,200 credit!
- Modified Accelerated Cost Recovery System (MACRS) – The MACRS allows you to depreciate your solar system over 5 years to recapture costs. This provides additional tax credits every year post-installation.
- State/Utility Rebate Programs – Many states and utility companies offer additional rebates, performance incentives, and solar renewable energy certificates (SRECs) to reduce payback periods. Incentive amounts range from $500 per kW installed up to 50-100% of system costs depending on your location.
- Low-Interest Solar Loans – You can finance your solar panels at very low interest rates (3-7%) through banks/credit unions, spreading payments out over 10+ years.
Between the 30% federal tax credit, accelerated depreciation, state/utility incentives, and flexible financing, your out-of-pocket solar expenses can be very affordable as a small business owner.
How Much Money Can Your Business Save by Going Solar?
The main financial benefit of installing solar panels comes from offsetting your expensive grid-tied electricity usage. By generating your own clean power, you‘ll reduce monthly energy costs and stabilize expenses against utility rate hikes.
Most small businesses see a 10–30% drop in their energy bills post-solar installation. However, your potential savings depend largely on your specific electricity rate and the size of the solar array installed.
Here‘s a comparison of the energy bill savings across varying utility rates:
| Average Retail Electricity Rate | Est. Solar Savings/Year | Breakeven Period |
|---|---|---|
| 10¢/kWh | $1,300 | 14 years |
| 15¢/kWh | $1,950 | 9 years |
| 20¢/kWh | $2,600 | 6 years |
As you can see, the same 10 kW solar system generates over $1,300/year in extra savings for a small business on a higher 20¢ utility rate. And the system pays for itself through electricity savings twice as fast.
Most small solar installations reach breakeven in 6-9 years when accounting for all financial incentives and ongoing utility savings. And since commercial solar panels last 25-30 years, that leaves over two decades of free energy generation!
Additional Financial Benefits of Going Solar
Aside from slashing energy bills, installing solar panels can provide other monetary benefits:
- Increased property value – Commercial buildings with solar PV systems have higher property and resale value. This allows you to charge higher rents or boost profits if you decide to sell.
- Eco-conscious marketing appeal – You can advertise your business‘s sustainability efforts to attract eco-conscious consumers. This provides an edge over competitors.
- Energy independence & price stability – Locking in solar electricity rates shields you against unpredictable rising utility prices for decades.
When weighing all the current and future cost savings solar panels unlock, it‘s easy to see why going solar is such a smart investment for small business owners looking to bolster their bottom line.
Start Saving on Energy Costs Today
As you can see, making the switch to solar can generate considerable cost savings that directly benefit your bottom line year after year. If going solar sounds right for your small business, the next step is researching local solar incentives and installation companies.
Be sure to get multiple quotes and ask the right questions! As your solar consultant, I‘m happy to assess your business‘ electricity usage, provide custom savings estimates, and connect you with top-rated local installers. Investing in solar is investing in your business‘s future, so let‘s talk soon!
