Going solar for commercial buildings
Switching a commercial building’s power sourcing from expensive coal power to cheaper clean energy isn’t just about helping the environment. Though many corporations are using solar arrays to help achieve their sustainability goals, most are installing solar on their commercial buildings for the financial benefits. To give an example of how much companies can reduce their carbon emissions by going solar: we have a customer with a 230 kW rooftop solar system that has prevented 2.2 million lbs. of carbon dioxide from entering the atmosphere just within the past few years. It’s the equivalent of planting 16,000 trees, and it reduces pollutants in the air caused by coal plants.
The Financial Benefits of Purchasing a Commercial Solar Array
One option for financing a solar project is a cash purchase. This would mean the building owner would own the system hardware and can take advantage of all the tax benefits that come with purchasing a solar array including the 30% federal tax credit and the bonus depreciation among many other state and local incentives. Typically, the ROI for solar arrays in the mid-Atlantic region is well over 180% and the payback period is relatively short (anywhere from 3-7 years) compared to the lifetime of the system (25+ years). The payments for installation are done as each step is completed, so there is no large lump sum making the costs easier to budget and project.
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Photo credit: Marcos Paulo Prado/unsplash
The Financial Benefits of using a Power Purchase Agreement for Commercial Solar
A PPA, or Power Purchase Agreement, is a popular choice among entities that want to take advantage of the clean energy production but does not necessarily want to own the PV system. Instead, the system is owned by a solar developer or project investor. This developer or investor would own the system hardware and reap the benefits of the incentives, while the building would reap the benefits of the utility cost savings and switching their energy sourcing to renewables. Unlike a purchase, PPAs require minimal to no upfront capital cost. In recent years, PPAs have become an increasingly popular financing model not just for corporations, but for government entities as well.
C-PACE Financing for Renewable Energy Projects
C-PACE (Commercial Property Assessed Clean Energy) financing It is a public-private financing option that requires no upfront costs for your clean energy system with positive cash flows on day one. The business would still own the system hardware and can take advantage of the tax benefits shared with the C-PACE lender. Different from the PPA option, this C-PACE program allows for the building own to own the system through smaller payments over the long term: A low cost, fixed-rate financing would be paid through the property tax bill over an extended period of time. The initial funding is typically provided by private capital investors paid back through a non-accelerating property tax assessment paid in small amounts over the course of 20+ years.
So the first system payment would not be due until the next property tax bill. The advantage to this financing option is that building owners can realize overhead cost savings well before making the first PACE payment. And since the building owner owns the system, all financial benefits of system ownership can be realized by the owner. In the event that the building owner sells the property, C-PACE financing may be transferred to the new owner. This option is generally available for all commercial property types.
Our project on Eaton Street in Baltimore
The Advantage of Going with Aurora Energy for Commercial Solar
Aurora Energy has been installing solar arrays for nearly three decades in the MD, DC, VA region. It is locally owned, and has a staff of NABCEP-certified professionals to design, install and maintain your system. Aurora also has great relationships with various solar developers and financiers, as well as the Montgomery County Green Bank (which facilitates financing for green projects) for Montgomery County projects. We are available any time to answer questions you have about solar for your building or the process in general (we love talking solar). So give us a call or send us an email.
No commitment, just a conversation.
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