Solar Panels for Businesses — What’s the Benefit?
There was a time when plant managers and executives immediately dismissed the idea of supplementing a business’s energy needs with a renewable power source like solar. Over the past twenty years, however, there have been enormous gains in the output, cost-effectiveness and lifespan of photovoltaic cells, and that has many businesses reconsidering solar energy’s place as a viable alternative to more traditional, non-renewable sources of energy. For many companies, the advantages of using photovoltaic cells to meet all or part of their power requirements have become too tempting to ignore.
Commercial Solar Power Then and Now
Before the 1990s, most commercial enterprises steered clear of solar panels for the following reasons:
- They were expensive to purchase and install.
- They didn’t work well in inclement weather.
- The yield was low, so businesses either had to have vast amounts of space to mount numerous panels, or their energy savings were negligible.
- They would lose their efficacy before they paid for themselves in energy savings.
- They represented a cost-prohibitive initial investment that could never be recovered.
- The government incentives weren’t lucrative enough to warrant investing in them.
- Most states hadn’t adopted net-metering policies.
- Businesses that relied on solar power often suffered blackout periods.
In other words, commercial solar power used to be expensive and unreliable. Most companies that dabbled in solar power at the time chose to do so to make the claim that they were committed to green energy.
From the turn of the 21st century, however, new methods for constructing photovoltaic panels have made them both cheaper and higher yielding. Additionally, the degradation of photovoltaic cells is slower, so they convert sunlight to electricity over a longer period of time before they need to be replaced. When you combine these improvements with pro-solar initiatives, like net metering and tax incentives offered by the Federal Government and many states, most of the concerns of the past have been mitigated.
Advantages of Solar Panels for Businesses
Commercial solar power works well for businesses of all shapes, sizes and in different climates, but the benefits will vary depending on a number of factors. Here are three reasons why you should think about upgrading to a solar power system:
- It’s cost-effective – With solar power, most of your costs come at the beginning. Once your panels are up and running, the electricity that they produce is free. You will only pay for an electric bill if you exceed their capacity. You will immediately be able to show reduced expenses on your income statement.
- It’s eco-friendly – Some consumers will only shop at environmentally conscientious companies. After your commercial solar panel installation, your company can boast that it’s fully or partially powered by a clean, renewable energy source.
- There are tax benefits – The Federal Government offers the Solar Investment Tax Credit (SITC) to both residential homes and commercial businesses. The SITC is scheduled to remain at 30% until 2020. The U.S. Department of Energy maintains a state-by-state resource guide with up-to-date information about incentives available to commercial businesses.
Should I Get Solar Panels for My Business?
If you’re wondering whether or not you should get solar panels for your business, you’re probably also interested in what makes them work. Having a rudimentary understanding of the science behind photovoltaic panels will make you a more knowledgeable consumer when discussing options with a company that performs solar panel installation for businesses.
Certain materials, like the silicon found in 90% of the world’s solar panels, are photoemissive, which means they tend to shed electrons when exposed to light. Solar panels can be constructed with sheets of silicon film (thin-film panels) or from lines and rows of crystalline silicon wafers (monocrystalline and polycrystalline panels). Panels are physically arranged to maximize their exposure to the sun. The exterior materials are non-reflective because reflected light won’t interact with the photoemissive material in the panel.
The inside of the panel, however, does have reflective material, so light trying to leave the system is returned to the photoemissive material. When sunlight interacts with the panel, the photoemissive material (usually silicon) yields its electrons, creating an electric current. Other layers of materials and chemicals are often added to maximize the electron flow — and consequently, the electrical output — of the panels.
Solar power output is limited only by the number of panels and the amount of available sunlight. With enough panels and a steady source of light, a solar power plant can meet all of the power needs of even a large facility. Solar fields are often placed on rooftops, so the larger the facility, the more panels it can accommodate. A solar panel installer can calculate the number of panels and estimated output depending on the space you have available.
What Is Net Metering?
In the past, solar panel systems would rely on a bank of batteries to store electricity generated from the sunlight. That way, businesses could still operate at night when the sun wasn’t shining. Most modern systems are now connected directly to a utility company power grid. The electricity that the solar panels produce powers the lights, office equipment and other machinery. If extra electricity is generated, it gets fed into the power grid. At nighttime, when the solar panels are unable to convert sunlight to electricity, the business draws electricity from the grid.
Net metering refers to a system using a two-way meter that tracks electricity as it goes into and out of the business. If at the end of the billing period, the business has used more electricity than it produced with its solar panels, the utility company will send them a bill — albeit a much smaller bill than if the company relied solely on utility power. If, on the other hand, the same business produces more electricity than it consumes throughout the course of the billing period, it will receive a credit from the utility company. Because of this system, it’s virtually impossible to run out of electricity during times of heavy consumption and inclement weather.
The Public Utility Regulatory Policy Act (PURPA) requires energy utilities to purchase portions of electricity from renewable sources. So, any excess electricity that your solar power system produces can be sold back to your local utility.
What Should I Know About Commercial Solar Panels for My Business?
Solar power will invariably save money for your business, but as with any major upgrade to your plant and equipment, the results will depend on a number of variables. Before you start taking bids from commercial solar installers, you will want to give some consideration to the following factors:
- Energy consumption – It’s not difficult for most businesses to determine their monthly or quarterly energy consumption, but if your business is expanding or if you anticipate future consumption to increase, you’ll want your solar panel conversion estimate to reflect those needs. Professional solar panel installers should be able to calculate the number of panels you’ll require based on your consumption, and they can tell you how many you can fit into the space you have allotted.
- Physical location – Your solar panel output is directly related to the number of panels that can fit in the area you have available. For many smaller businesses, their roof will provide ample space for the power they’ll need to run their operations. Larger businesses and businesses that have a higher-than-normal energy demand may need to allocate some ground space for additional panels.
It’s also important to make a determination as to how long your business will be at its current location. Because licensed installers should handle removing and re-installing photovoltaic cells, it can represent a significant expenditure. If you anticipate your facility changing in the next few years, you may also want to delay your conversion until after the move.
- Net metering availability – Net metering refers to a two-way meter that tracks usage and production of electricity. With net metering, your business can sell the electricity it doesn’t use to power companies. Currently, 43 states and District of Columbia have adopted a net metering policy. The Database of State Incentives for Renewables and Efficiency (DSIRE) provides a state-by-state summary of the various policies affecting net metering.
- Climate Considerations – Contrary to popular belief, you don’t need to be located in a warm-weather state like California or Florida to reap the benefits of a photovoltaic solar network. Solar panels respond to light, not heat, so they work fine in cold climates. Advances in solar technology have increased the ability of panels to take advantage of ambient and diffused light. The panels do, however, have to remain clear to work. If they are covered with snow, for example, they won’t produce power until the snow is cleared.
What Is the Solar Panel Payback Period?
Whether you’re the president of the company or you’ve been tasked to look into the viability of solar panels for businesses, it’s important to know at what point the solar panels will pay for themselves. The payback period, or break-even point, is dependent on a number of factors, including:
- The cost of your initial solar investment – That’s the cost of the panels, installation and any applicable upfront fees charged by the utilities for connecting to the grid or upgrading your meter.
- The price of electricity from your utility – The more expensive electricity is in your area, the more cost-effective solar power is.
- Tax incentives and state rebates – In addition to the Solar Investment Tax Credit, a number of states offer tax breaks or rebates to encourage solar conversion.
- Number of sunlight days – Don’t confuse this with warm days. Solar panels react to light, not heat.
A professional solar panel installer should be able to help you approximate your break-even point, but the calculation isn’t difficult. To determine your solar panel payback period:
- Calculate your total upfront expenditure for purchase and installation.
- Subtract government incentives including the SITC.
- Calculate the anticipated output from your solar energy farm in kilowatt-hours.
- Multiply that figure (step 3) by the amount the utilities charge for kilowatt-hours.
- Divide your net costs (calculated in step 2) by the monthly savings (calculated in step 4).
It’s important to remember that you will begin realizing savings the minute your solar energy system goes online, as you will no longer be paying for any electricity that it produces.
Frequently Asked Questions About Commercial Solar Panels
There are still other factors to consider when it comes to whether or not to install solar panels. Here are some frequently asked questions:
- How long will a solar panel last? Solar panels undergo 0.5% degradation every year. That means after twenty years, your solar panel should have about 90% of the efficiency they did when they were new. Most reputable manufacturers offer a 25-year warranty that guarantees the panels will retain at least 80% of their rated efficiency during the coverage period. Thin-film solar panels degrade at a slightly faster rate and often have shorter warranties.
- What do solar panels cost to maintain? Because there are no moving parts, there isn’t a great deal of maintenance involved. For maximum performance, it’s important to keep the panels clear of obstruction, so if you’re in an area prone to snow, you may have to clear them occasionally.
- Which types of solar panels are best for my business? While there are several different types of solar panels, they all accomplish the same mission: to produce electricity. From a consumption standpoint, there isn’t a discernable difference between the electricity produced via thin-film panels and crystalline-silicon solar panels. There are, however, noteworthy differences in yield, durability and degradation.
Thin-film solar panels are less expensive, but they tend to degrade at a slightly faster rate, have lower output and don’t work as well in warm weather. The lower output means you may end up buying more thin-film panels to yield the same electricity as crystalline panels, which can be problematic if you don’t have as much space. Conversely, both monocrystalline and polycrystalline solar panels work well in the heat, last longer and produce more electricity, but they also cost more.
- Where will the solar panels go? For many businesses, the roof is the obvious choice. Solar panels need to be located in a place where they can receive sunlight. If the roof area isn’t sufficient or is ill-suited for the purpose, the panels can be located on the grounds outside of a building. The area must be clear of trees and other obstructions that would cast shadows over the panels. Not all facilities are ideal for solar panels. If your business is located on the lower floors of a high rise, for instance, it may not be possible to convert to solar without relocating.
Businesses That Have Invested in Solar
If you’re under the impression that solar energy is a niche industry best suited for small boutique-styled businesses, you may want to take a look at which companies are investing in photovoltaic cell systems to help power their businesses. Walmart, for instance, is the nation’s leading solar panel investor, boasting 348 solar installations, providing 142 megawatts of electricity. In 2015, the top 25 solar corporations had 1,462 installations for a combined 757 megawatts of renewable electricity generated from sunlight.
Solar Power for Businesses
If you’re considering joining the thousands of businesses that have already made the conversion to solar power, you should consult a licensed commercial solar installer in your area. If you’re located in PA, MD, NJ, DE, NY, MA or CT, contact us to schedule a consultation.