Common questions about commercial solar energy
By John Shaw
More and more companies are increasing their cash flow while differentiating themselves. They invest in solar to take advantage of declining tax benefits, reduce operating expenses (OpEx) and meet environmental, social and governance (ESG) criteria. Navigating the complexities of improving solar capital energy can be difficult, so we’ve answered some of the more common questions below.
Are there any incentives to go solar?
- Federal Investment Tax Credit (ITC): Taxable entities with a tax burden will recover 26% of the investment when filing income the year following installation. ITC is expected to increase to 22% in 2023 and to 10% permanently in 2024.
- 100% depreciation bonus: the entire asset can be depreciated in the first year. The base is 87% of the contract price in 2021, and the value is at least 21% of the investment for a Colorado company.
- Xcel Medium Solar Rewards Program: For systems between 25 and 500 kilowatts (kW), Xcel Energy pays 3.75 Â¢ / kWh of production for 20 years. Technically, they buy your Renewable energy credits (RECs).
- Savings on Utilities: Each kWh produced by solar energy reduces what you buy from Xcel Energy, reducing OpEx. There are mechanisms to recoup these benefits from tenants in triple net leases (NNN).
- Increase in property value: Lower OpEx increases Net Operating Income (NOI) and therefore the value of the building.
What is the lifespan of a solar system?
An expertly designed and built system with equipment from reputable and reliable manufacturers will have an estimated useful life (EUL) of three decades. The solar modules themselves have a 25 year performance guarantee. The standard warranty for inverters is 10 years.
What is the typical payback period for solar?
A typical 200kW commercial solar system in Xcel Energy’s Colorado area hits breakeven in 6-8 years, then provides 22-24 years of clean prepaid power.
What can I expect to save and will solar reduce demand?
A typical 30,000 square foot roof can accommodate a 200 kW solar system. In the first year, this system will reduce utility bills by $ 15,000 or more, generate approximately $ 11,000 in incentive income, and produce over $ 185,000 in tax benefits on a $ 400,000 investment. Demand (kW) is a separate load on the bill, for which we do not model savings. Solar power can reduce measured demand, but because of the way Xcel Energy measures it (the highest 15-minute average over a month), it is not predictable enough to model with certainty. . However, there is a solar tariff available which lowers the demand price.
What is the most popular solar system in the Denver market?
- Roof systems are the most common and economical type of solar installation in our market.
- Carports are another option for commercial building owners that will protect vehicles from the sun and the elements, such as hail. Although they are double the cost of a roof system (or more), they offer these additional benefits:
o Covered parking can generate income.
o Greater visibility for your system.
o Pairs well with the installation of electric vehicle (EV) charging stations.
- Floor mounting systems cost about 1.5 times the cost of a roofing system and are more efficient systems, but are not as common for commercial property owners due to the land required.
- Custom solar solutions such as building integrated photovoltaics (PV) and solar canopies are much less common, often less efficient, and increasingly more expensive.
How does solar energy attach to my roof?
Flat roof systems are attached to the roof by a hybrid system of ballast blocks in padded aluminum bins and mechanical accessories designed to accommodate our winds and the permanent (structural) load capacity of the roof.
Will my roof support solar energy?
Flat roof systems require about 5 to 6 pounds per square foot (psf) of available standing load capacity, while sloped roofs with recessed solar panels require about 3 psf. The higher the permanent load capacity of a roof, the less mechanical accessories are required.
When is the right time to go solar?
Ideally, your roof will have another 20 years of life. It’s also a good idea to consider other future energy saving improvements, such as LED retrofits and more efficient HVAC, when sizing solar systems.
How long will it take to install solar power on my roof?
Depending on the size of the system and the complexity of the array, installation may take as little as 4-8 weeks. However, engineering, permitting, and equipment procurement lead times can stretch to six months or more, so the norm between contract and commissioning is 8 to 12 months.
Does solar make sense if I don’t occupy my building?
Solar power benefits both landlords and tenants under gross leases or NNNs. There are two methods of overcoming the shared incentive: Commercial Property Assessed Clean Energy Financing (C-PACE) and green leases.
How is the interview going?
A preventive maintenance visit once a year is necessary to maintain the UPS warranty, and an unscheduled maintenance visit approximately every two years is typical. The most common maintenance needs arise from system failures due to electrical anomalies in the installation or the inverters. Solar systems protect themselves from damage by shutting down in such cases and are frequently solved with minimal troubleshooting and a simple system reset.
John Shaw is co-owner and sr. developer of commercial solar projects – NamastÃ© Solar. NamastÃ© Solar’s goal is to transform energy and transform business. Of the society experienced solar advisors will help you understand your project’s goals, timelines and milestones. Look at them extensive commercial experience and see how they measure up.