September 27, 2022
What time of year is ideal for business solar investments? Is waiting advantageous for businesses?
It’s no secret that solar energy is fast gaining favor among businesspeople. The recent trend toward solar energy is evident in both large and small enterprises in the United States. In the United States, more than half of all commercial and industrial solar capacity has been built in the previous four years, which may be even more astonishing given its growth rate.
If you are aware of this trend, the accompanying energy cost savings, and the sustainability advantages, you might be starting to consider whether or not investing in solar for your business would be a wise move. You may be thinking the following when you attempt to contrast solar with other potential capital investments:
“What is causing solar’s quick growth?”
In a few years, may solar technology advance?”
Is there an advantage (or cost) to waiting?”
These questions can be addressed, and your business can be ready to make an informed and timely decision about solar by taking a closer look at some of the important facts presented below.
The recent growth in commercial installations is closely related to solar’s acceptance and achievement elsewhere. Many large industrialized countries, like Germany, Japan, and Italy, have switched to a power generating model that significantly favors renewable energy, particularly solar energy, over the previous 20 years.
Foreign government incentives, like Germany’s feed-in tariffs, encouraged the adoption of solar power throughout the nation and opened the path for module manufacturers around the world to improve their capabilities and efficiency to meet demand.
Solar module costs fell as quality production grew more and more nimble. Only between 2006 and 2011, a five-year period, did the cost of solar PV systems drop by more than 50%. Over the past ten years, improvements have led to solar material costs that are stable and advantageous for commercial applications.
Similar to Germany and other nations that offered financial incentives to encourage investment in renewable energy, the federal government of the United States likewise launched a short-term tax credit opportunity for companies going solar. Businesses can receive a 26% tax credit from the Investment Tax Credit (ITC) on the total system cost of solar systems they commit to before the end of 2022. In the foreseeable future, the value of these tax credits will decline, winding down to 22% in 2023 and falling even further to 10% in 2024.
The reason solar has become so popular so quickly can therefore be explained by the fact that businesses currently have the chance to benefit from excellent financial incentives, low-cost, high-quality products, and accelerated depreciation. Businesses are coming to the exciting realization that generating even a small portion of their own power onsite with solar provides sustained cost savings benefits over purchasing the equivalent amount of power from their utility. This realization is made possible by the fact that solar locks in a very low Levelized cost of electricity (net cost per kilowatt hour after investment costs are taken into account) for a period of three decades.
Of course, and possibly most importantly, the investment has been a win-win for long-term cost reduction, improved employee/customer interactions, and brand-building initiatives due to the environmental sustainability benefits and related marketing potential.
Despite appealing pricing, one must always consider whether a technology-based investment for their company might be on the verge of significant efficiency gains that would boost the return on investment. Again, it’s crucial to keep in mind that solar has already profited from decades of application and invention, even though the U.S. market is currently going through the “early adoption” curve sometimes associated with new technologies. Consider the early years of contemporary solar use in the 1950s and 1960s, when solar panels had an efficiency of about 6%, as an example.
Today, solar modules for commercial applications have an average efficiency of about 18% and have more than 500 gigawatts of installed capacity worldwide. Despite being noticeable, this jump is extremely small when you consider how much time and money has already been invested globally. Current efficiency gains amount to a meager 2% improvement each year when calculated on a yearly basis.
Will solar change forever? Absolutely. Although no one can forecast the future, the opportunity cost of waiting is high due to the favorable economics that solar presently enjoys, as well as the short-and long-term cost savings and sustainability advantages.
How can you know if investing in solar is the correct move for your company, even though there has never been a better time for businesses to do so? After all, each business has different energy needs, utility costs and regulations, facility requirements, and financial concerns that must be taken into account. Figuring it out can seem like a difficult task.
If your business is considering going solar, get advice from a seasoned solar provider who can assist you assess the infrastructure and energy consumption metrics of your facility while also offering you a consultative approach to successfully achieving your objectives.
Every step of the way, our solar company’s comprehensive in-house team provides education, project leadership, and ongoing support. This includes assisting your company with navigating and applying for available incentives, designing and building the system, and providing assistance with ongoing solar maintenance and system operation as needed. If solar is a good option for you, we can help you decide, and if it is, we’ll work with you to make sure the investment pays off in the long run.