Does your business qualify for Solar Energy?

Business owners are being targeted by solar energy companies with aggressive marketing, some offering FREE solar. Its true solar is now cheaper than ever, but it certainly in not FREE.

This may very well be the perfect time for your business to invest in solar energy, however many factors must be considered. The first consideration must be to insure your business qualifies for a solar insulation? An unobstructed southern exposure of your facility is the preferred situation. East- West exposure may work, but will be more costly as the number of solar panels required to offset usage will increase. Also for a roof mounted system, the condition of your roof must be considered. If a roof is 10 years or older, NJGEC recommends consulting a qualified roofer prior to making any decision to install solar.

If you are considering an asset purchase, current Federal tax code offers a 30% federal investment tax credit (ITC) for a solar system asset purchase.  The 30% federal investment tax credit (ITC) is currently in place through December 31st, 2019. The credit will drop to 26% in 2020 and 21% in 2021. Please consult with your tax accountant to make sure your business has the appropriate tax appetite to take full advantage of this ITC.

The next consideration may be whether to lease a solar system or take advantage of a PPA (Power Purchase Agreement) program? In both programs, the system and all incentives are owned by the financing company.  A lease will be a predetermined monthly fee with an annual escalator (read the fine print) built in for a specified 15 or 20 year term. PPA programs require you purchase all the power the system produces at a predetermined rate over a predetermined term. Annual rate escalators are also common in PPA agreements. When considering a lease or PPA confirm the responsibility for system maintenance should be assigned to the financing company.

New Jersey lawmakers are beginning to advance a new bill designed to overhaul the SREC (Solar Renewable Energy Credit) program. SRECs are a solar incentive that allows solar system owners to sell certificates for every 1000 kilowatt hours (kWh) produced by their system.  If enacted, the new bill would phase out the SREC program by 2021 and reduce the length of time new solar system owners could collect the credit, from 15 to 10 years.

SRECs exist in New Jersey and in states that have Renewable Portfolio Standard (RPS) legislation with specific requirements for solar energy. The income received from selling SRECs increases the economic value of a solar investment. At times SREC pricing has been extremely volatile. NJGEC recommends taking a conservative approach when valuing long term SREC revenue and depending on a client’s risk tolerance a hedging strategy may be appropriate.

NJGEC is a very strong advocate of solar energy; however it would be wrong not to recommend efficiencies first. Lowering your load profile would reduce the size of the solar system required for the largest offset possible. Making your facility more energy efficient is the easiest and most cost effective way to reduce energy costs. The cheapest kilowatt is a kilowatt not used. A good first step would be upgrading old incandescent, fluorescent or halogen fixtures to modern LED technology. An LED lighting upgrade will improve the energy efficiency of your building and will help reduce greenhouse gas emissions as well. Lighting retrofits not only lower energy cost, they also improve the quality of light and decrease the heat in the building envelope, which will reduce HVAC run times and create a more productive work environment.

Our “holistic energy management” program is designed to ensure your business receives the greatest value from every dollar spent on your energy budget. To help identify your business short and long term energy management goals, contact us to schedule your complementary energy analysis today. Call us at (973) 287-7797

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