Many commercial enterprises in a wide range of industries are lowering their overhead costs by installing photovoltaic panels to convert sunlight into usable electricity. By moving away from traditional sources of fossil fuels and embracing a clean, renewable energy source like solar power, businesses not only gain a significant financial advantage in an increasingly competitive global market, but they reduce their carbon footprint as well.
According to a recent report published by the National Renewable Energy Laboratory, in the U.S. alone, the top 25 companies were responsible for roughly 11 percent of the country's distributed PV capacity. U.S. businesses collectively accounted for 36 percent of the country's total electricity sales in 2013. As more of these companies continue to move into the realm of utilizing a clean, renewable energy source like solar power, they can contribute to a significant shift in the country's energy-consumption habits.
There are many reasons a shoe manufacturer or an almond farmer will want to invest in a solar system installation. One growing small-business owner might choose to install a few low-cost solar panels purely in an attempt to trim overhead costs and boosts profits. A board of directors of a major corporation may want to use their massive solar array as a marketing tactic to generate goodwill among customers by showcasing their commitment to sustainable energy.
Regardless of the reason, there are several considerations when choosing a solar system for commercial purposes.
"Decreasing a building's energy load means the owners can install a smaller and less expensive solar system."
1. Boosting energy efficiency
As noted by Better Buildings Solution Center, it's important for the host building to undertake as many energy-conservation measures as possible before installing the solar system. By maximizing the building's energy efficiency and reducing the overall demand, the owners can realize the solar PV system's full potential. Further, a decreased energy load in the building means the owners can install a smaller and less expensive solar system.
2. Budgetary constraints
Unlike residential or utility-scale solar installations, which operate under different considerations, a commercial enterprise must rely on many other external budgetary factors that impact the size, scope and ultimate success or failure of a PV solar system. Whereas a utility-scale project's sole purpose is to generate and sell electricity, a commercial operation has its own particular goods and services to prioritize. This can leave solar projects underfunded and short-staffed as the sales department or the marketing team jockeys for a higher budget allocation or more personnel, eating into the company's energy project resources.
3. Long-term ROI
Solar project team members at commercial enterprises must often justify the long-term investment of the solar system performance with relatively little data on hand other than general facts. While the benefits of solar energy will be noticeable over time, some commercial building owners want immediate returns and instant profits. Project team members should be prepared to show detailed financial forecasts that highlight the total cost savings of solar energy for the company in the long run.
4. Payment type
One of the first objectives for determining budgetary factors is whether the project will buy the PV system using debt or its own capital. This factor has the potential to greatly impact how much ROI the company ultimately obtains. Using its own money to fund a solar system project ensures a company has the greatest potential for receiving the maximum return. Unfortunately, not every company has the ability to finance a project with their own capital, and many must seek out other financing options, such as a solar loan. Lenders provide both secured and unsecured loans for companies, and different enterprises will have varying levels of access to this line of credit. One thing that's most important to keep in mind when obtaining a solar loan is the solar manufacturer's bankability. Working with a company like Trina Solar that's been ranked as a Tier 1 operation by Bloomberg New Energy Finance provides greater incentive for financiers to approve a solar loan, since they know Trina will be around for a long time to come.
5. Tax incentives
U.S. Congress extended the investment tax credit for both commercial and residential systems for an additional 5 years. This allows commercial organizations to keep taking advantage of this very attractive tax incentive when they install a solar system. Further, many other municipalities and local governments provide tax incentives for commercial organization to install solar PV systems. Depending on the location, companies may qualify for a significant tax break by installing solar panels.
6. Solar power purchase agreements
Small-business owners operating on razor-thin profit margins might be under the assumption that solar panels are prohibitively costly. As revenue-generating organizations, commercial operations have more financing options, from leasing the solar equipment to obtaining grants. One such option includes a solar power purchase agreement (PPA), wherein a developer arranges for the design, permitting, financing and installation of a solar system on a customer's property at little or no cost. Through a solar power purchase agreement, the business owners are able to save on their electricity bills as typically the PPA rate will be lower than the utility bill.
7. Solar leases
Many businesses take advantage of financed equipment, from bakeries leasing new ovens to growing startups financing new technology. Similarly, there are many options for commercial operations to lease solar panels and help companies reduce energy consumption from the grid and trim operating costs.
There are trade-offs for owning and leasing solar systems. Ownership comes with its own responsibilities, including maintenance, upkeep and repairs. However, leasing equipment may not return the best ROI on the project, since cost of capital can vary. Unfortunately, there's no one-size-fits-all solution for determining whether a commercial enterprise should finance the project. The NREL's report found that due to the vast differences in the characteristics and circumstances between each business, the most appropriate PV financing option will vary from one commercial enterprise to the next.
8. Getting grants
In addition to financing options, there are several government grants that benefit small-business owners. The U.S. Department of Energy offers a variety of grants for eligible commercial building owners to install solar systems and reduce energy costs.
9. Marketing strategy
Most commercial projects have some sort of marketing strategy to generate new leads, expand market share and ultimately grow the company. Whether it's airing local commercials, buying radio ads, posting Internet content or simply hitting up the networking circuit, owners are always looking for new and innovative ways to market their companies.
According to a recent Nielsen global online survey, consumers of all age groups are willing to pay more for companies that sell sustainable goods. The survey noted nearly 75 percent of millennials and 51 percent of baby boomers said they would pay extra to companies that sold sustainable offerings. Commercial enterprises can incorporate their solar panels and dedication to environmental stewardship into their marketing campaigns.
10. Preventative maintenance
Although solar panels have a durable design, constant exposure to the harsh elements makes maintenance of the system a regular responsibility. Unlike residential systems, which are typically smaller and rely on reactive maintenance, managers at commercial enterprises should not wait until a problem arises with their systems.
As noted by Solar Power World Online, since they provide a steady revenue stream, commercial enterprises should employ a more robust preventative maintenance strategy for their solar systems. This ensures the best ROI on their solar projects.
"Commercial enterprises should employ a more robust preventative maintenance strategy for their solar systems."
Even though solar panels from Trina come guaranteed with an industry-leading 25- to 30-year warranty, depending on the model, owners should still implement policies to take preventative measures to maintain high levels of efficiency for their solar systems. By implementing internal processes that include regular physical check-ups and constant digital monitoring, project supervisors overseeing commercial solar arrays can obtain a better return on investment for the company, which is often the sole justification for any project at a commercial organization.
Solar systems that utilize Trinasmart modules' innovative power electronics allow businesses to run more efficient operations-and-maintenance checks. Its unique diagnostic system lets project managers troubleshoot real-time problems with panel-level monitoring and detailed alert analytics.