Solar Energy and Your Business - Time for a Second Look!

As many know, Mike and I are building a home "off the grid" on Isla Solarte in Bocas Del Toro province, Panama. The solar panels are on the roof and we expect to power all the amenities that we've become accustomed to having - TV, ceiling fans, refrig's - you know everything. But on our US / California business building, we hit several barriers to adding the panels from orientation for maximum exposure to cost - But after reading Kelly's article, I'm searching for a good reason NOT to continue. Maybe you'll agree.

Solar Energy and Your Business: Time for a Second Look?

Posted: 08 Aug 2010 08:25 PM PDT

Like many, you may think of solar panels as an investment for idealists — those business owners who want to do something environmentally positive even though it can take over a decade to see financial payback.

After all, purchasing and installing a system of solar photovoltaic panels generally requires an upfront investment of $8 to $10 per watt, or upwards of $30,000 for many businesses. Those businesses might shave only $1,500 or $2,000 annually off their electric bills. It’s not exactly the ROI most business owners seek.

But the economics of solar energy are brightening, and it might make sense to take another look.

One reason is a new momentum nationally for solar energy production. The Obama administration unveiled plans recently to give $2 billion to two U.S.-based solar plants. The hope is to greatly bolster production of solar energy, while simultaneously creating more than 1,500 new green jobs. This kind of federal promotion of solar energy is helping increase competition among producers of solar panels and bringing the price of solar installations down.

Already, businesses can receive a tax credit of 30 percent of the cost of installing solar panels; the credit is available through 2016.

But there are other encouraging developments. Several states and local governments are using federal stimulus dollars to roll out new incentives, such as tax rebates, for businesses that install solar-power systems. Massachusetts, Delaware and Florida are among the states to do so. In recent years, states have also been bolstering their net-metering laws, requiring utilities to buy excess energy produced by customers with solar power. (A good place to check for solar incentives and net metering laws in your state is www.dsireusa.org.)

More utility providers are also starting to push solar incentives. Rocky Mountain Power, for instance, provides Utah commercial customers a $2-per-watt rebate for installing solar panels, while CPS Energy offers its Texas commercial customer $3 per watt. Many of these utility programs cap their annual payout.

But even with all these various incentives combined, many business owners are probably wondering whether it makes sense to buy solar panels right now. It’s a good question. While incentives may abound, the price of solar is likely to decline in coming years. A good place to start is by finding out what the upfront cost of installing solar panels would be for your business and then what incentives are currently available to defray that cost. Also factor in your business’s electric bills and how much you are likely to save annually with solar energy. Some businesses will now find paybacks of five years or less, while others may still have to wait more than a decade.

From Small Business Trends

Written by: Kelly Spors is a former small-business and entrepreneurship reporter and blogger for The Wall Street Journal who has also freelanced for Yahoo! and The New York Times.

Kelly is now communications and outreach coordinator for Energy Smart, a Minnesota nonprofit helping businesses save money through energy efficiency. The organization works with businesses of all size to help them get low- or no-cost energy audits and take advantage of energy-efficiency incentives offered through utility companies and government.

Follow Energy Smart on Twitter @mnenergysmart or on Facebook. She can be reached at kspors@mnchamber.com