Methods and Pros/Cons of Financing Commercial Solar Panels

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Solar energy is a great way for commercial property owners to save on overhead expenses and utility bills. In a recent report, the Solar Energy Industries Association reported that more companies are installing solar panels at their facilities. Solar is being enhanced by those that already use it. Solar installations for the business sector can be made with the help of this guide. A guide to commercial solar systems, pros and cons, different types of systems, step-by-step instructions, and financing options are discussed.

The Pros & Cons for Commercial Solar Panels

 

Commercial Solar Panel PROS

 

Improve operations by reducing operating costs

Commercial solar panel installations can significantly lower annual energy bills. A lot of solar companies, like Green Solar Roofers, strive to design systems that produce enough electricity to "zero out" an organization's electricity consumption.

Make sure your carbon footprint is reduced

 

It has been estimated that nearly a third of U.S. greenhouse gas emissions are caused by burning fossil fuels for residential and commercial electricity production. In addition to producing electricity that is pollution-free, solar power has a beneficial effect.

Opportunities for sustainable branding and marketing

Corporate social responsibility demonstrates a company's dedication to the people and communities that it serves. Few things are more effective than investing in solar energy to demonstrate this responsibility. Business commitments to reducing carbon emissions and pollution are enhanced by using clean, renewable energy. Public relations and marketing efforts are improved by helping the environment.

A reduction in energy costs for years to come

Natural gas prices fluctuate, and what might be financially smart today might not necessarily make sense in the future. The fixed price of solar improves cash flow predictability for a company and improves its ability to plan.

Energy system that requires little maintenance

Solar energy systems only require cleaning and debris removal to be maintained. With no moving parts, they require minimal maintenance. Typically, commercial solar systems come with a 15- to 25-year warranty on parts and installation, which would enable business owners to prevent the need for repairs. Most solar companies offer 15- to 25-year warranties on parts and installation, which would protect the business owner against repair costs.

Acceleration of depreciation

Modified Accelerated Cost Recovery Systems (MACRS) establishes an annual deduction for business expenditures on certain tangible assets in order to recover and recoup their tax deductible value. Cost-recovery periods of up to five years may be applicable to solar energy equipment.

 Commercial Solar Panel CONS

 

Roof and electrical system may need to be upgraded

During the site audit, it may become clear that the roof or electrical system needs upgrading or might even need to be replaced. For business owners who are looking to save money, the high upfront costs may make solar energy an unattractive option.

Up-front expenses

In the event the business owner opts to finance the system, she or he may need to shell out a significant amount of money right away for installation. Buying a system outright can be very expensive. Other options can be achieved with little or no upfront expenses.

Unpredictability of the weather

Electricity generation increases as the sun increases. Although solar power installation will still benefit companies even in unpredictable or cloudy weather, it will still be a worthwhile investment. They may simply need to use more panels to generate the same amount of energy compared to someone in a sunny state.

Decisions by the PUC are unpredictable

In a number of states across the nation, legislative restrictions on net metering are halting the increase of solar energy installations.

The regulatory restrictions on net metering that currently exist in a number of states are likely to cause solar energy installations to decline. A solar system can connect to the utility grid through net metering, making it economically viable. In addition to the power produced on site, surplus energy is transferred to the grid. This helps offset the costs of electricity drawn from the utility. The Los Angeles PUC instituted stricter eligibility guidelines and caps on net metering for commercial projects, which may make solar less attractive for business owners.

7 Types of Commercial Solar Systems

Throughout the past 60 years, solar technology has developed rapidly, which means solar installation and design companies can now work with a wide variety of projects to help them generate cost savings through solar electricity.

Utility-scale systems

utility scale solar

Electric utilities buy clean energy generated by utility-scale solar projects and sell it to customers; they are not marketed to individual consumers. Government policies support these clean energy projects. U.S. utility-scale solar projects currently total 37,000 MW, with another 74,000 MW currently under development, according to the Solar Energy Industries Association. It lowers carbon emissions rapidly and is a relatively cost-effective manner to generate electricity on a large scale. Utility-scale solar also has significant environmental benefits. Solar plants also generate electricity at a fixed price, whereas fossil fuels fluctuate constantly in price.

Artistic systems

Artist Solar

Artistic systems are a great choice for businesses that want to stand out. In addition to energy production, solar arrays can also convey a message without sacrificing beauty. The rooftop of a business in North Carolina named CEI featured solar panels arranged to spell out the company's name. The Disney Solar Farm in Florida, whose fun Mickey Mouse design offers strong brand messaging, can now be viewed from space. Typically, these large arrays are used for large-scale branding, however smaller arrays can also be designed for on-point branding. Nonetheless, the more individualized and specialized a system is, the more likely it is that its design or installation costs will increase.

Systems for tracking

Solar tracker

The panels are moved by motors when motorized trackers will track the sun. This will improve energy production. Systems with x- and y-axes track the panels in one direction, while those with single-axes move them east to west. By tracking panels, consumers should be able to get more kilowatt-hours per panel. The development of these systems is more expensive, and the installation and maintenance are more expensive as compared to a typical solar system that is mounted straight up and cannot be moved. Despite their lower popularity and often questionable reliability, tracked systems may become less expensive and more reliable as technology advances in the near future.

Ground systems

Solar ground 1

Companies whose rooftops are not suitable for solar panel installation or whose electricity needs are not sufficient can opt for ground-mounted systems. A ground-mounted system can be designed to fit an individual's electricity consumption and be as productive as possible if the business owner has the land available. A ground mount has two main types: conventional and inverter. Conventional ground mounts rely on metal framing driven into the ground to hold solar panels steady at a fixed angle. Panels mounted on poles are often tilted toward the sun by tracking systems, so they are located higher off the ground.

Slanted rooftop systems

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The technology has advanced so much that solar panels can be installed on slanted roofs. Even if the roof is sloped and made of metal, composition shingles, wood shingles, or even Spanish tile, solar suppliers and installers can work with business owners to benefit from solar power. Ballasted mounting systems are not suitable for slanted rooftops, so penetrations are necessary to hold the panel to the roof.

Rooftop systems with flat surfaces

rooftop flat solar panel

For flat rooftop systems, business owners have several choices: attached, ballasted or a combination of the two. Roof structure, how the building is constructed, and structural engineering analysis will influence the choice of roofing system. A roof-mounted system is attached to the framing through penetrations in the roof surface. Ballasted arrays are supported by the weight of the modules, racks and other materials, rather than the weight of the ballast. The hybrid system requires penetrations along with ballasting and is considered a minimally attached system.

Carports

carport

Carports that use solar energy can maximize parking areas. These systems can produce electricity while also providing shading and covered parking. The use of carports as solar power generators is an economical and straightforward choice for businesses who cannot install roof-mounted panels. Moreover, they are a useful addition to existing rooftop solar systems that wish to amplify their energy production. In addition to offering easy cleaning and maintenance, carport panels are also convenient.

Solar plan stumbling blocks: 3 things to avoid

Structures of buildings have limitations

Solar may not be a good choice for roofs constructed before 1970, or that need repairs or replacement. It is necessary to have a structural engineer evaluate the limitations of a roof if its rafters are questionable in thickness.

Net metering policies that are unfavorable

Incentives, rebates, and tax credits for solar systems in Florida* Home solar systems that are installed by December 31, 2022 are eligible for a 22% federal tax credit. Solar panels add value to a house, so the property tax is exempted. Sales tax exemption of 6% for solar panels attached to a home. It is always wise too double check for changes.

Limitations on interconnection requirements

Utility companies have interconnectivity standards which help protect both consumers and the utility system. Before an installation can be connected to the grid, certain standards need to be met, depending on the location. A business owner might not be able to install a grid-tied solar energy system due to certain restrictions.

Step-By-Step Guide to Commercial Solar

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Planning of a Site Audit

Your utility bills will be examined during the audit to determine utility consumption and costs. An inspection of the building and grounds will be completed. The system engineer gathers information on the facility, including beam measurements and structural walls, to assist with the system design. Following installation, the installer submits a proposal with specific details of where, how, and how much energy the system is expected to produce, as well as its size and positioning. Also included are detailed descriptions of the types of solar panels and inverters, as well as the wiring. This will include the projected energy costs and savings, as well as warranty information. It will also include the cost of equipment and labor, minus rebates, exemptions, and other incentives.

Analyze the plan prepared by the engineer

During solar audits, engineers send collected information to planners and designers who then plan, design, and sometimes implement solar energy projects. A project's cost, efficiency, or safety may be reported by the engineer during this phase. If the solar company requires an engineer as part of the site audit, therefore, the engineer may also be present.

Complete the Permitting process

All permitting requirements need to be completed once the plans are complete. Permitting is a unique process that varies considerably from state to state, local government to size and complexity of the system. Depending on the state and local government, this process can be either quick or time-consuming. Green solar roofers has its own staff members that can help with permitting. This is when the installing company or the system owner will begin submitting paperwork for rebates and incentives.

Installing your panels - watch the process

Depending on the size of the system, the process can take anywhere from two days to two weeks or longer. Solar panels are usually mounted on the roof by drilling holes in the rafters aligned with the solar panel mounts. The mounts are then covered with thin pieces of metal to prevent leakage. A rail connects the panels for a complete system. A solar inverter connects the panels to the inverter.

Schedule the Final Inspection

An inspection by the city or utility department is required before it can be used. A building inspector evaluates whether the structural and landscaping modifications conform to building codes and if the proper permits were obtained.

Fill out a request for utility interconnection

Interconnection requests are submitted to utilities by system owners. It will depend on where you live what kind of interconnection you will need, how much it will cost, and how to submit an application. In many parts of the country, the process of interconnection to the grid can be very complex and costly. This varies according to state regulations.

Activate Monitoring Plan

Typical grid-connected systems require minimal maintenance because they have no moving parts. Remove stubborn bird droppings or dust with gentle soap and a mop or squeegee, and keep the system free of dust and debris. Additionally, monitoring devices and services are available for system owners to develop valuable insights into the performance of a system, including the savings in money and CO2.

How to Finance Commercial Solar Panels


Purchase

In order to start saving money on energy costs quickly without having to cover the costs of a loan, business owners can purchase their solar system outright. There are, however, significant upfront costs associated with this option.

Loan

Business owners maintain the array and take advantage of tax and rebate incentives that came along with solar installations. Most businesses obtain a bank loan using the equity in their business or building.

Lease or PPA

Leased solar systems are rented by businesses from a third-party owner, through a Power Purchase Agreement (PPA). Having minimal to no upfront costs means lessors can realize immediate cost savings. If there are any financial incentives associated with the system, the owner will take advantage of them. The limited availability of solar PPAs is due to the fact that only 24 states and Washington, D.C. allow for them.

PACE

Solar PV energy systems are financed through a program called property assessed clean energy (PACE). PACE provides financing for the upfront cost of the installation to business owners through a local government. Property tax assessments are used to recoup the costs for the owner. Generally, liens are placed on the property to secure the loan.

SRECs

A majority of the states, as well as Washington, D.C., have renewable portfolio standards (RPS), which require utilities to buy or produce a certain amount of green electricity. For utilities to comply with these standards, they can obtain Solar Renewable Energy Credits (SREC) by purchasing renewable energy from individuals with solar arrays.

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