The True Business ROI of Installing Solar Power
October 2, 2014
Many organizations are starting to realize that solar power can be a sound real estate strategy. From reduced utility costs and energy savings, as well as new financing and credits that generate tax benefits, solar power can provide a very attractive return-on-investment (ROI).
Some of these tax benefits include the “The Solar Business Energy Tax Credit,” which is a 30 percent federal business energy tax credit available to commercial businesses that invest in or purchase energy property in the United States. The 30 percent credit is taken on the net capital investment for the solar system.
In addition, businesses can recover solar investments through depreciation deductions. This depreciation modeling establishes a set of “class lives” for various types of property, ranging from three to 50 years, over which the property may be depreciated. For solar, the current property class is five years.
Many states have also created a market for tradable solar renewable energy credits (SREC), which are often purchased by electricity suppliers. This is part of an effort for states to advance the goals of their Renewable Portfolio Standard, a regulation that requires the increased production of energy from renewable energy sources. If the utilities are unable to meet these goals from their own renewable generating resources, they have to pay solar generators for all the SRECs the system produces.
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