A Guide to Going Solar for Your Business
Today, installing a solar power system is a priority for many successful businesses. The transition to renewable energy is an increasingly urgent goal at a global level. US federal and state governments are jointly encouraging and supporting the installation of solar panels for both residential and commercial use. Year after year, new regulations and financial incentives are emerging to encourage the implementation of more solar generation and the adoption of more efficient solar solutions.
The best way to evaluate whether a solar power system is the right path for your business is to look at the top reasons commercial solar customers choose to go solar. If you are unsure about advantages of solar or have questions about the process of installing solar panels for your business, read on.
Reasons to install a solar power system for your business
1. Rising fossil energy prices
Some companies are driven by the desire to be independent from rising energy prices and commercial utility companies. No wonder! In the US electricity prices rose by almost 8 percent in 2021, while the price of natural gas and heating oil increased by 37 and 43 percent respectively. Adding to these increases the global energy supply uncertainties, and there is no way of knowing how much the operating costs of a business will be affected by high energy prices in the coming years.
2. Reducing overhead costs / operational expenses
Some organizations want to focus on increasing their profitability and competitive edge by reducing their overhead costs and making them predictable. Careful planning and covering as much of your energy needs as possible by installing a solar power system can give you an unbeatable advantage over your procrastinating competitors within a few years. And as for savings, they start right on day one after installation.
3. Tax incentives
Businesses who choose to install solar say that current favourable tax credits and financial incentives played a significant role in their decision (see more about the topic below). Federal, state, and local tax credits and other incentives can reduce total project costs by as much as 50% to 70%. Such huge savings can greatly accelerate the payback on a new solar power system.
4. Excellent return on investment
It is after calculating return on investment that decision makers realize the financial benefits of solar panels for their business. Both project costs and payback period depend on a variety of factors such as system type, project size and location, local energy prices, etc., so it is not possible to say what the average savings and return is for a commercial solar installation. It is safe to say, however, that for most businesses, investing in a solar power system will quickly turn a profit. So, it is best to engage an experienced commercial solar installer or solar EPC (Engineering, Procurement, Construction) firm that could design and quote the most suitable solar power system to meet your company’s needs.
5. Tremendous PR value
More and more businesses are faced with the fact that their customers and partners expect them to be environmentally friendly in their use of energy and resources. Moreover, the communities in which they operate also prefer companies deploying sustainable solutions. Whether your focus is business-to-business or business-to-consumer marketing and operations, installing a solar solution will have a significant PR value.
6. Protection against power outages
Adding a solar panel solution to the energy mix of your business can significantly reduce the financial damage caused by power outages. Even if the grid goes down, your own solar power source will provide your business with the energy it needs for essential operations until the system is restored. For example, you can keep your computer network, key production equipment, lighting and air conditioning in your store or offices running.
7. Increasing the value of your business property
Having your property equipped with a solar power solution will increase both its value and its marketability. In the future, it is likely to be very difficult to sell properties that do not have some form of solar solution.
The most important things to know before installing a commercial solar power system
A solar installation is one of the best investments in the future for forward-thinking businesses looking to grow. If you are reading this article, you may not need any further convincing on this point. But how do you get started? How is the installation of a residential solar panel system different from that of a commercial solar power system? What are the main steps in a commercial solar project? What are the key technical, financial, legal, and administrative aspects you need to consider when deciding on a new solar installation?
How to choose a reliable commercial solar company
Let's face it, most businesses don't have an in-house solar expert who can single-handedly manage the design, procurement, and installation of a solar power system. That's why it's crucial to find a trusted solar company during the consideration phase, who will guide you through the decision-making process and manage the whole solar project from the design of your solar panel system to procurement, installation, and years of maintenance after deployment. Commercial solar companies often have resources or partners for financing as well.
1. Study the projects and references of several potential solar companies
Contacting previous customers of your potential solar installer and asking them about their experience offers valuable insights not just on project performance and installation quality but also other important aspects of solar project management such as collaboration, timeliness, communication, and support. Talking to solar companies with various types of commercial solar projects in their portfolio (such as rooftop solar, ground-mount/carport systems, solar trackers) are more likely to have the expertise to design and install a solution that best fits your unique needs.
2. Find out how long the solar company has been on the market
In the world of solar, just like in many other sectors, experience matters a lot. If the company's professionals have been designing and building various types of solar energy solutions for businesses for a reasonably long time and have many satisfied commercial customers that are similar to your company, you can trust that they know their trade.
3. Prefer local solar installers or solar companies with significant amount of experience in your area
Local conditions are very important when designing a solar power system and managing the entirety of a solar project. If the selected solar company has been serving your area for years, it not only facilitates communication throughout the project development process, but also ensures that they are familiar with local environmental conditions, regulations, administrative requirements, and incentives which greatly affect how fast and smooth your project will get implemented.
4. Make sure that your chosen commercial solar provider is skilled not only in technical design and construction, but also in administrative management
The more you can rely on experienced professionals to take on every aspect of your commercial solar project, the less work you will have to do and the more your business will benefit. Ask them to describe the whole process for you and what documentation they will provide throughout the design and implementation of your solar project.
5. Ask questions during the quotation process and see how thorough and knowledgeable the solar company is with their answers
An experienced and expert solar team will give confident and detailed answers to questions about product and installation costs; product benefits and features; alternate solutions, their compatibility, advantages, and disadvantages; and the involvement of subcontractors (if applicable). This latter point is especially important to explore, because the long-term safety and reliability of your project greatly depends on the installation team, and even large solar companies often subcontract solar installers for the construction part of the project.
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So, all you have to do is find the right solar installation partner, and then you can sit back and relax while they get to work? Not really. Installing a solar power system for a business, even with a trusted partner, is a complex task, and many decisions can only be made by the management. Therefore, it is important that the decision makers of the company are aware of the basic technical, regulatory, and financial framework of commercial solar installations.
How is a commercial solar power system different from a residential solar installation?
We will compare solar power solutions designed for businesses with residential solar installations, as this is what most people are first familiar with.
When you are about to invest in a solar power system for your business, you will have to assess slightly different considerations than when deciding on installing solar panels on your home. A business is a more complex entity than a household, so there will be more diverse needs and requirements when planning.
The first basic and obvious difference is that a business uses more energy than a family. If your business wants to replace conventional electricity completely (becoming net zero electric) or to a significant extent with solar power, simply designing a larger system with more solar panels may or may not work. For one, a business may not have enough roof space for rooftop solar to meet their energy goals. They may have a parking lot, however, that could accommodate elevated solar trackers or solar carports.
Larger solar panels, bifacial panels, specialized mounting structures, larger inverters, solar trackers all provide options for tailoring a commercial solar installation to the needs of a business.
Companies also have more diverse mounting options for installing solar panels. While residential solar panels are typically installed on rooftops or on the ground in a fixed position, commercial solar power systems can also be designed for parking lots, commercial and industrial areas, fields and agricultural operations, and can be equipped with single or dual-axis trackers to produce more energy that fixed systems by tracking the movement of the sun throughout the day.
With ground-mounted solar solutions, a business must also consider the amount of land it has to sacrifice for solar panels that could otherwise be used for revenue-generating business activities. In this respect, elevated solar power solutions such as elevated solar trackers and solar carports are the most economical solution, as they allow full use of the ground underneath.
Elevated, dual-axis solar trackers combine the benefits of solar tracking (where the panels are always kept facing the sun) and elevation, thus achieving the highest energy production with the smallest footprint.
Get (a little) technical
Although a thorough understanding of the technical parameters and options is within the competence of your solar system installer, it is important that you are aware of the basic concepts, advantages, and disadvantages of the different possible solar solutions.
First, you should familiarize yourself with the general structure of solar power systems. A commercial solar solution can have some or all of these main elements. Let’s start with some terminology:
Solar cells, solar panels, solar array
Solar panels are built up of solar cells (also called photovoltaic cells or PV cells for short) that collect sunlight and convert the sun’s energy into direct current (or DC) electricity.
As mentioned above, a commercial solar panel usually contains 96 solar cells.
There are several types of solar panels, two of which are the most common:
Crystalline silicon panels have the advantage of being cost-effective but are more sensitive to weather extremes and their energy production capacity is greatly reduced when they are exposed to shade. Crystalline silicon panels can be of the older monocrystalline type or the more recently developed polycrystalline panels. Although monocrystalline represents an older technology, it is still more efficient than polycrystalline panels (capturing about 20 percent of the sun's energy as opposed to 15-17 percent from the newer technology). However, polycrystalline panels are cheaper, so using them in commercial solar power systems can be more cost-effective.
Thin-film solar panels are even cheaper than crystalline panels, but less efficient (collecting about 10-11 percent of the sun’s energy), but they tolerate heat better and perform better in shade. Because thin-film panels are less efficient, they need to be installed over a larger surface area to produce the same amount of energy as crystalline panels.
A solar array is a certain number of solar panels installed together in a solar power system – on rooftops, on ground-mounted fixed or solar tracking systems. Your solar consultant may talk about the size of your solar array when discussing your energy needs, which means the number of solar panels your commercial solar system will include.
Inverters
The purpose of an inverter is to convert direct current (DC) into alternating current (AC). AC electricity will power all the lights and electrical equipment in your business. There are two types of inverters:
String inverters (also known as central inverters) collect and convert the power generated by an entire solar array. They are built on highly reliable, proven technology, are cheap but less efficient because the power loss of a single shaded panel affects the energy produced by the whole string. Their efficiency can be increased by installing power optimizers on the back of the solar panels. They condition DC electricity to reduce the overall power loss due to shading. The power optimizers send the conditioned electricity to the string inverter, which converts it into AC electricity.
Microinverters, like power optimizers, are located on the back of solar panels. They convert DC electricity to AC locally, so neither a central string inverter nor power optimizers are needed. Although more expensive than string inverters, they can be cost-effective, especially if the solar panels are installed in a shaded area.
Mounting structures
Solar panels are mounted on a support structure. The type of mounting structure depends on where the solar panels are installed and whether you decide to go for a fixed solar power system or a solar trackerthat follows the movement of the sun. Fixed solutions can be roof-mounted or ground-mounted. Trackers can be singe-axis or dual-axis and are installed on the ground. Ground-mounted support structures can be attached to low or elevated poles.
Meters
A production meter allows you to monitor and record how much energy your commercial solar power system is producing. The data it generates enables you to monitor system performance and keep an eye on the return on investment of your solar installation.
Batteries
If you generate excess energy that your business cannot use immediately, you can store it in batteries and/or feed it back into the grid to receive a financial compensation from the utility at the end of the year.
Solar power systems are technically complex but being familiar with some of the concepts above will make it easier to work with solar companies and help you better understand the steps in the design and installation process for more informed decisions.
What federal and state regulations are in place for solar power systems?
The design, installation, and operation of solar power systems are regulated by several federal and state codes. Designing a solar panel system that complies with these regulations is important for your business to facilitate a smooth approval process and to qualify for various tax incentives.
An experienced solar contractor is familiar with these regulations and can help your business put together a solar power system plan that meets these criteria. However, it doesn't hurt to be able to check your chosen contractor's knowledge of the relevant industry rules and regulations.
The installation of solar power systems is subject to safety regulations at the federal level under the National Electricity Code, which aims at "the practical safeguarding of persons and property from hazards arising from the use of electricity." In addition to the federal code, building and fire codes also apply to solar power systems, and local permits will need to be obtained prior to installation.
Compliance with the codes is monitored by the authority having jurisdiction (AHJ). AHJs can be fire chiefs and marshals, building or electrical officials, inspectors. Their responsibilities include checking plans, conducting field inspections, evaluating the installation process, and ensuring overall code compliance.
What tax incentives are available when installing a solar power system for your business?
An important parameter in calculating the return on investment when installing a solar power system for a business is the tax incentives available. Federal, state, and local governments provide significant incentives to businesses that choose to cover all or part of their energy use with solar power solutions.
The federal solar tax credit, now called the Clean Energy Credit, is the most important solar incentive available today – it can cover up to 30 percent of the cost of a solar power system for your business in 2022.
Under the federal Modified Accelerated Cost-Recovery System (MACRS) program, your business can accelerate the depreciation of the components of your newly installed solar power system. Unlike with other fixed assets, you do not have to spread the tax deductions over the lifetime of the system but can write off the entire investment in the first year.
The Solar Renewable Energy Credits (SRECs) are one of the most useful benefits your business can claim after installing a solar panel system that generates more power than what you use. The idea is that you can earn additional income on the extra energy by selling the SRECs received to other businesses or organizations. SRECs are often used by solar developers who install and operate projects for the sole reason of providing other entities with SRECs.
In addition to federal-level credits, there may be additional local or state incentives available where your business is located. For example, in Oregon where Stracker Solar operates, the Energy Trust of Oregon offers a cash rebate of up to $25,000 ($0.25 to $0.45 per watt) per project, paid upfront. The City of Ashland offers an additional $0.25 per watt cash rebate (up to $5,000 per project) for all solar power system customers. You should carefully research similar local incentives early in the planning phase, as they can significantly affect the total costs and return on investment of the solar project for your business.
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As you can see, the design and implementation of a commercial solar power system gives you plenty to think about and do. But don't let that scare you, because a good solar energy company can guide you through the process with confidence and expertise. And the result is well worth it: clean energy from a solar investment that pays for itself quickly thanks to the available financial incentives, helps you control your energy costs and can make you largely independent of the grid.
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