Installing a solar energy system for your commercial building can be a great choice, with both financial and environmental benefits.
In 2019, I spoke with Taylor Poff, a project manager with solar installer JBL Solar Energy, a Sonoma County company with extensive experience in commercial installations, who passed on some important tips for business owners considering solar electric systems.
Own the Building to Reap the Most Benefits for Your Business
Converting to a solar electric system makes the most sense for business owners who own their buildings, thanks to the generous tax rebate and other financial incentives.
“It’s an investment in your business,” says Poff.
The current federal solar tax credit (known as the Investment Tax Credit, or ITC) allows you to deduct 26 percent of the cost of a solar electric system for projects that begin construction by the end of 2022. The credit drops to 22 percent for projects that begin construction in 2023 and to ten percent for commercial projects and zero for residential projects after 2023.
The future of the ITC is in question, however, as it’s tied to the fate of the Biden Administration’s Build Back Better bill, which may or may not impact potential extensions or expansions of the tax credit.
In addition to the tax credit, tax law allows businesses to take accelerated depreciation on qualified solar energy systems, allowing them to write off the value of the system over a cost recovery period of five years.
“That means you get about 55 percent of the depreciation benefit of the system in the first two years,” says Poff. “In the end, you’re only paying 35 to 40 percent of the cost of the project and can recoup your investment really quickly. Ultimately, a 30 percent return on investment is common.”
Plan Now for Solar Energy, but Don’t Rush
Because of the time limit on the tax credits, it makes the most sense to plan your commercial solar project soon. But don’t panic if you can’t get it done this year.
The difference between a 26 percent tax credit and a 22 percent credit, is small, and, says Poff, it’s more important to take time to find an installer and product that best suits your needs than it is to get that extra four percent.
“Don’t let salespeople rush you,” he says. “This year or next year is fine.”
Remember that the tax credit is good for the year in which construction begins, so it doesn’t necessarily have to be complete by December 31, although if you’re going to pay in advance, you should be certain you trust your installer to complete the job to your satisfaction even if you’ve already paid in full.
Don’t Get Oversold, but Invest in a Quality Solar Energy Product
While some installers will try to sell you a “Cadillac” solar energy system, most businesses don’t need high-efficiency panels, which have a higher cost per kilowatt/hour, says Poff.
Take the time to talk to several installers about your business’s energy needs to figure out what type of system will give you the most benefit for the least cost.
It’s important, however, that your installer uses high-quality products.
“I’ve seen poor quality panels that delaminate after seven years,” says Poff. “A solar panel is a sandwich of a bunch of elements with a million little micro welds. When they’re cheaply made, the welds fail faster than they should, and moisture gets in there to corrode the circuits. It eventually affects the performance of the panels.”
The inverter is equally important because it must efficiently convert the DC electricity produced by the panels to the AC electricity used by your lights, appliances and everything else that plugs into your system.
The bottom line is that price isn’t everything. The most expensive system may be more than you need, while the cheapest system may use inferior products. It’s important to do your homework and find an installer you trust who uses high quality products.
Consider Individualized Panel Control
Most solar electric systems use string inverters that convert energy from banks of panels, but Poff prefers systems that offer individualized control.
“When panels are wired together in banks, they all operate at the level of the lowest efficiency panel,” he explains. “So when one panel fails, or if one is more in the shade, every panel is affected.”
Micro-inverters, which are tiny inverters placed under each individual panel, are one solution to the problem, but they have the disadvantage of being more expensive to install. Moreover, because a system’s inverter is usually the component most prone to failure, having many small inverters rather than one means more opportunities for problems.
Poff’s company also offers a hybrid system, which uses a single-phase inverter with panels that are individually controlled, which he feels offers the best of both worlds.
“We install tiny optimizers that manage each panel individually, which gives you more control,” he says. “It also means we can do data analysis and look at what each panel is doing.”
Find a Good Installer who Actually Does the Work
As with any building project, it’s essential to get references for solar installation. The key, says Poff, is to follow through and check those references. And, as mentioned above, be wary of companies that try to hard-sell you or push you to make up your mind quickly.
“People don’t check references enough. But this is a major investment, so you need to take the time,” says Poff.
The other important thing is to select a company who does the installation work themselves rather than just selling the product and contracting out the installation – a common practice.
If the company you select does the installation, not only do you know who’s actually doing the work on your building, but they’re likely to be more responsive than a company who sells the product then hires a third party to do the installation.
Maintain Your System
A good solar electric system should last around 25 years with an inverter replacement about halfway through the system’s lifespan, according to Poff.
Fortunately, most systems are low maintenance.
You can use a garden hose to rinse off any accumulated dirt or leaves as necessary – just make sure to do it when the panels are cool.
If your building is in an area with lots of dirt or debris – say, near a highway or gravel pit – you may want to have your panels professionally cleaned every three to five years, Poff says.
With all the financial incentives plus the opportunity to lower your business’s environmental footprint, there’s little reason not to consider solar energy for your commercial building.
You can reach Taylor Poff at taylor@jblsolarenergy.com or call JBL Solar at (707) 388-2001.