Energy costs constitute a sizeable part of operational costs for any commercial establishment, whether it is a public or a private enterprise. If a firm invests in solar energy, it not only contributes towards decreasing carbon footprint, but also helps create a better world for forthcoming generations. Though, in the initial years, an investment in setting up a solar power plant would seem an expensive proposition; after a few years, the reduction in the operating costs will not only make up for this expense, but prove to be a one of the best financial decisions made for a business. A commercial unit, be it a large manufacturing operation, a shopping mall or even a hospital, with an efficiently set up solar power system with proper solar panel installation, can help meet electricity for non critical areas like maintaining lights in the parking area or warming up water.
Advantage of Tax Incentives
To encourage the use of solar power and reduce consumption of fossil fuels and conventional energy resources, governments, all over the world, are providing tax incentives to commercial establishments. Governments of states like California and Texas give between 30 - 80 percent of tax credit on solar equipment cost. Besides this incentive, states also have a net metering policy for commercial establishments, which use solar power to meet some of their energy needs. Through this system, companies bank excess solar energy and receive credit for their electricity usage bill. Some states also exempt the value of solar power plant from the commercial building owner’s property taxes.
Reduction in Operating Costs
Setting up a separate solar power system or installing solar panels on a factory roof, leads to the reduction in the utility costs over a period of time. Whether a firm is buying or leasing the solar power system, the savings generated from it will eventually pay for itself and also reduce maintenance costs. Studies conducted about the financial viability of solar powered buildings have shown that these have lower operational and maintenance costs, which is around 10 times lesser than buildings, using conventional energy sources. Commercial buildings powered by solar energy offer competitive rental rates to their tenants, which help in keeping 100 percent occupancy, while increasing profits.
Protection against Y-O-Y increase in utility rates
The installation of solar panels can help protect business from the rising utility prices, which are rising in direct proportion to the prices of conventional fossil fuels like coal and oil. Utility rates also fluctuate due to seasonal changes like summer and winter when the demand for electricity is at its highest. Investment in solar power unit gives long term protection against turbulent utility rates and business units can also be assured of steady power at a fixed rate.
Low Maintenance with Reliability
All solar energy systems are set up after a detailed study of a firm’s current and future requirements. Therefore, they perform ceaselessly for years with very little maintenance and are soundless. Solar panels are built to withstand weather onslaughts, making them reliable and durable. Solar manufacturers offer long term warranties for their solar panels of nearly 20-25 years, assuring buyers of the longevity of their investment.
All businesses provide for depreciation of their fixed assets and the solar power machinery will also be written off as depreciation within 5 – 10 years. However, the cash flows from this power plant will last for around 20-25 years, which will help reduce tax liability within 5-10 years of installation.
In view of the several advantages stated above, commercial firms should get an evaluation done about the savings they are likely to make over a period with this technology. Solar power machinery providers have case studies on their websites about completed commercial projects, which will give any organization details about the viability of a technology like that for their organization. Since these projects are expensive, it is best to take all situations into consideration before investing in solar power.