Commercial Solar Programs
Lower Your Monthly Bill Using The Utility Company’s Money
If you’re a business owner, then the concept of “solar panels for your businesses” might seem like a risky and expensive plan in today’s market. You may have heard about large companies going solar, but thought that it would not be possible for your business. Maybe you’re considering installing solar panels at some point in the distant future when your company can afford to make a major investment. Time to forget that old way of thinking and join the growing community of business owners that have discovered that commercial solar panels are a great fit for small to medium-sized businesses as well as large fortune 500 companies.
Businesses of all sizes are capitalizing on the financial opportunity of installing solar, proving that a solar energy system is a key strategic decision that almost guarantees a solid financial return for your business. The new tax plan passed by Congress introduced two provisions favorable for commercial solar installations: a reduction in the corporate tax rate and the expansion of depreciation allowances.
In the commercial solar industry, a reduction in the federal corporate tax rate from 35 percent to 21 percent, the lowest rate in almost 80 years according to data from the Tax Policy Center. Commercial entities that go solar expect to reduce the energy they purchase from their utility, accordingly lowering bills. Lowering these bills makes the commercial entity more profitable, which increases the entity’s tax liability. Reducing the effective tax rate will lower the amount a corporation pays in taxes. The new tax plan reduces corporate tax rates by a whopping 40 percent, which significantly increases the attractiveness of going solar. If the reduction in corporate tax rates wasn’t enough to get the industry’s bells jingling, Congress also added the benefit of doubling the amount of bonus depreciation that can be claimed on commercial solar projects.
For background, depreciation is a way to allocate the cost of large capital investment over time, such as a new solar installation. Prior to the passage of the new tax plan, Congress allowed you to depreciate 50 percent of a new asset’s value during its first year of operation.
In the commercial solar industry, the remaining 50 percent of the asset’s value is typically depreciated over five and a half years using a technique called the Modified Accelerated Cost Recovery System (MACRS). Until the new tax plan, the amount of bonus depreciation was scheduled to decrease to 40 percent of the system cost in 2018, and down to 30 percent in 2019.
Why would you want to spread the cost of a solar installation that is forecasted to last 25 years over only six years? When calculating a company’s profits, depreciation is considered an expense, meaning it lowers the profits that you report for your taxes. Commercial entities generally prefer to avoid paying taxes as soon as possible, as opposed to waiting for a future period to avoid. This makes a shorter depreciation schedule attractive to corporations: They can claim their tax savings today as opposed to in the future.
Unfortunately, many businesses don’t even know that solar power can help their businesses save large amounts of money. Many think that solar power only works for high technology businesses or that solar power just would not make sense for their type of business The good news is that solar makes sense for a wide variety of businesses and buildings regardless of industry. The key factors to look for to determine whether solar power would work for your business would be (if you have large electric bills due to heating water or operating machinery, round the clock operations, or are subject to energy spikes in high-intensity months. Whether you are a laundromat, data center or huge manufacturing facility, if you relate to any or all of the above, you should consider solar power.
For those businesses with high electric bills due to heating water, such as a laundromat, solar thermal power can heat water at a fraction of the cost. In addition, solar power can help offset a substantial portion of a building’s electricity usage by providing power during the day when utility rates are the highest and then go back on the electric grid during the evening when rates are lower. In addition, all solar power systems come with a battery that can store any excess power produced during the day so that it can be drawn on at night. In addition, solar power can also help offset and smooth out fluctuations in electric usage during high-intensity months such as the summer or winter by supplementing your power supply so that you are pulling less energy from the grid. So whether it is a manufacturing facility or a data storage center that runs all night, provided the building has enough space to house solar panels, solar power will help provide the necessary power to help operate a diverse range of businesses regardless of when or how they conduct their operations.
As you can see, the numbers add up and solar panel systems are a smart investment for any business. They have short payback periods, provide steady financial returns, and help business owners stop the rising energy prices. There are lots of great resources available today that can help you evaluate whether going solar makes sense for your business, so be sure to do your homework! USA Energy Saving Program can help your business join the thousands of other business owners that have decided to go solar. Contact us today to get a free estimate to see how going solar can help your business.