- Corporations continue to lead the “renewable energy revolution.”
The market for corporate solar installations exceeded a remarkable 2.5 GW in 2017, with 326 MW installed last year alone (SEIA Solar Means Business 2017). A wide variety of companies have gone solar, such as Target, Swiss Re, Bloomberg and Amazon among many others. The last few years have also shown a dramatic increase of new entrants to the marketplace among small and mid-sized companies.
- Solar is more affordable than ever (and batteries are coming!)
Over the last decade, the falling costs have made solar projects financeable opportunities for companies both large and small. At the end of the day, if a project does not financially benefit a company or boost its bottom line, very few parties are likely to invest the time and resources to move forward with it. Economics are the primary driver of corporate renewable energy procurement. As solar has grown in scale, the equipment has become increasingly efficient and prices have significantly decreased. Since 2010, the cost to install solar has fallen by more than 70% (SEIA 2018).
- Federal incentives can cover 50% of the cost of solar.
In addition to falling solar prices, there are significant federal and state incentives available for corporations that adopt solar. Federal incentives alone typically enable a system owner to recoup approximately 50% of the total project cost. Through the Investment Tax Credit, system owners receive a reduction in cash taxes equal to 30% of the total system cost. Bonus depreciation then allows solar owners to claim 100% of total system cost as a tax deduction in the first year, providing cash tax savings of roughly 20%. Before even applying any state incentives, solar system owners have already reduced half of the total project cost.
- Many states incentivize solar to support the local electrical grid.
Many states also offer incentive programs designed to increase the overall amount of renewable energy added to the electricity grid. Some states have implemented Renewable Energy Credit (“REC”) Programs, which provide monetizable certificates based on renewable energy production that can create revenue streams for businesses with solar. Sales and property tax exemptions are also available in certain states, allowing companies to avoid taxes on the purchase of a solar system. A wide variety of tax credits, breaks, grants and cash streams have created profitable opportunities for companies to go green.
- Companies can hedge against electricity price volatility for 20 years through solar.
Controlling the risk of future energy prices is a valuable tool for many corporations looking to lower operational costs and ensure financial stability. Corporations often find solar an appealing way to reduce their electricity costs and hedge against unpredictable energy prices.
- Solar is an ideal way to reduce your carbon footprint.
Generating electricity with solar helps mitigate the human impact of climate change. While the lucrative financial benefits of solar energy are enough for many companies to go green, internal sustainability benefits are also an important driver of businesses. As corporations set lofty sustainability goals, one of the major objectives is addressing greenhouse gas (“GHG”) emissions and a company’s carbon footprint. Adding a rooftop, ground-mount or solar parking canopy system to a facility will minimize a company’s carbon footprint.
- On-site solar shows a strong commitment to sustainability.
A solar array on a roof, property or over a parking lot functions as a billboard for renewable energy; the marketing benefits are evident and immediate. Another benefit to on-site solar is the component of additionality. Additionality, which has become a bit of a buzzword in the corporate renewable energy sphere, means that a project would not have been possible without the explicit actions of the company. While purchasing renewable energy credits or carbon offsets plays an important role in both renewable portfolio standards (“RPS”) and voluntary markets, many corporates require solutions that will demonstrate a direct effect of increasing renewable generation on the grid. On-site solar projects check this box by allowing a company to drive the solar installation from start to finish in a hands-on way.
As the financial benefits of solar continue to grow alongside the sustainability commitments of companies, we will keep seeing the rapid acceleration of corporate renewable energy procurement. If your company is interested in evaluating solar, EnterSolar can provide a tailored analysis based on your portfolio, energy usage and available incentives.