Now is the time to consider Solar Power for your business.
A flat roof is the ideal place to install solar panels. Why? The panels are mounted in frames that are ballasted to stay in place, there are no penetrations of the roof, and solar can supply one third to one half of the power used by a light manufacturing facility, warehouse, distribution center, or a wholesale or retail store.
As of August 2014, the 25 companies with the largest number of solar installations have over 1,110 installations in this country with a combined capacity of nearly 600MW and they are continuing to add capacity. What all these installations have in common is that they are on buildings with large flat roofs. The companies with the largest number of installations are Walmart, Kohl’s, Costco, Apple, and Ikea.
In this part of the country, solar panels on a 100,000 sq ft roof can produce about 1 million kwh per year. At a typical rate of 9 cents per kwh, that is $90,000 worth of electricity. A project this size might cost $1,600,000. Is it worth it? With a combination of tax incentives and financing, the project will pay for itself in three years. Here is how it is done:
- 50% of the project is financed with a 10 year loan from a bank that will give a low interest rate loan on a green project. The reduction in utility costs pays the debt service.
- 30% of the project is paid for by the Investment Tax Credit. The ITC is available immediately upon completion of the project, but can be factored into estimated tax payments in anticipation of completion.
- 20% of the project cost is the tax benefit from depreciation for the first three years. The project can be depreciated over five years using accelerated depreciation. The tax benefit from depreciation over the remaining years is equal to 8% of the project cost.
- 3% of the project cost is from utility company incentives (net of tax) in the first three years. In Ohio right now, utility company incentives known as Solar Renewable Energy Credits (SRECs) can be sold for .025/kwh for the next five years and .02/kwh for the next five years. Over a 10 year period, SRECs, net of tax, will pay for 9% of the project.
A solar project will produce power for 20 to 30 years or longer with minimal maintenance. Utility company rates will continue to rise due to regulation and inflation. The cost of a solar project is known from the start, and once paid for, the power is essentially free.
Caution! The ITC expires at the end of 2016. Projects must be completed before then to qualify. The supply chain vendors and installers anticipate a surge of orders that they may not be able to handle.
Contact COSE Energy at 216-592-2205 or firstname.lastname@example.org for more information, or Martin Shook at MShook@racercpa.com