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Why Commercial Businesses Should Consider Solar Today

Commercial building with rooftop solar array


Advancements in solar technology have paved the way for more rapid adoption by a wide variety of users. As a result, the business case for going solar becomes more compelling with each passing year for commercial applications, regardless of company size and the industry involved.

Below are six important considerations every business and commercial property owner should review when contemplating the leap to solar.

1. Saving money

The most significant driver supporting the case for solar on a commercial building is financial. Solar tech has advanced to such a degree in energy production efficiency and lower per-unit costs that it may now be the lowest-cost energy source available to most businesses.

To illustrate, a helpful metric for comparing energy costs generated from various sources is the Levelized Cost of Energy, or LCOE – defined as the total cost of producing a unit of energy over a generating system’s useful life.

For solar, the system’s useful life is typically a warranty period of 25 years. Thus, by applying the formula:

LCOE= [Total installed cost + total operating & maintenance costs][Total energy produced]

one can calculate that a solar energy system will generate electrical energy for six cents per kilowatt-hour (kWh).

Using British Columbia as an example, businesses enjoying the most favourable rate of utility-supplied electricity are charged 9.68 cents/kWh, a 61 percent premium to solar. However, the average commercial consumer pays 12.4 cents/kWh, a whopping 107 percent more than solar! In Ontario, commercial utility electrical rates average 13 cents/kWh, representing a premium of 117 percent more than solar!

2. Hedging the risk of rising energy costs

The return on investment (ROI) for a solar energy installation today averages around eight percent per year. Depending on a solar energy system’s complexity, one can expect a 12 to 14-year payback. The ROI becomes shorter and more attractive as utility rates rise over time. Appreciating that the typical useful life of a solar energy system is 25 or more years, it’s easy to get excited about free energy after recouping the initial investment.

Even if solar generates only a portion of a company’s energy needs, the decision to go solar becomes an effective hedge against rising energy costs. It allows business owners to maintain control over their solar energy production costs. In some cases, this control becomes even more valuable when energy storage is coupled with solar generation. Batteries can store low-cost solar energy that businesses can draw upon during peak demand hours when utilities charge premium rates, saving plenty on power bills over time. In jurisdictions like Ontario, where peak energy costs are comparatively high, the ROI of energy storage can be less than five years.

3. Tax and cashflow benefits

There are some compelling reasons for commercial businesses to embrace solar energy. One of the newer key incentives is the Clean Technology Investment Tax Credit, which offers a generous 30% tax credit on the capital cost of investments in wind, solar PV, and energy-storage technologies. This credit, available from March 28, 2023, to 2034, provides a significant financial boost to taxable entities. Additionally, the Clean Electricity Investment Tax Credit was introduced to benefit non-taxable entities like Indigenous communities, municipally owned utilities, and Crown corporations. This refundable 15% tax credit encourages investments in renewable energy, energy storage, inter-provincial transmission, and other non-emitting electricity infrastructure. These tax credits make solar energy an attractive option for commercial businesses, not only for its environmental benefits but also for the potential financial savings and returns on investment.

In Canada, the federal government has established a 100 percent capital cost allowance (CCA) for businesses deploying renewable energy systems like solar. The CCA allows a company to fully deduct the capital cost of installing a solar energy system in the first year the system is available for use, with additional beneficial tax planning opportunities. This tax deferral benefit becomes even more appealing for larger companies paying more than the small business tax rate. 

4. Going green – Solar is the real deal

For some commercial businesses, saving money on energy is not the primary driver for installing solar. Instead, their priority is to be a proactive, socially and environmentally responsible enterprise. Going solar can also positively impact a company’s social standing within the community and its customers, possibly generating more sales and securing a more connected and loyal customer base.

Companies that are less visible to the public often view going solar as a purely economic decision. However, the social standing benefits derived by more customer-facing enterprises can become increasingly valuable when long-term relationships are measured. The growing awareness of the value of “going green” is shifting relationships between the corporate leadership teams of manufacturers and resellers. These stakeholders can influence decisions on where to source products and services based on factors beyond cost, namely, those involving ESG (environmental, social, and governance) concerns.

Finally, savvy business leaders are beginning to review what their business will look like to those who will inherit or acquire the company at some point. Going solar adds tangible value and benefits for current and future stakeholders.

5. Installation is straightforward

Installing a roof-mounted solar energy system is a relatively simple process for a qualified installer. During the evaluation stage, a structural professional must assess the roof to ensure it can bear the weight of the solar panels and support racking. Very few buildings fail this test. In many instances, a new roof is installed at the same time as the solar energy system, typically replacing a heavy tar and gravel roof with a much lighter and reflective membrane roof. The combined dead load imposed by the solar array and new roof is often the same as the dead load of the original tar and gravel roof, avoiding the need for structural upgrades. And the savings realized by generating solar energy can help pay for the new roof.

The permitting, installation, and electrical interconnection process with local utilities has become increasingly streamlined over the years as commercial solar has grown in Canada. Many Canadian utilities now have over a decade of experience with grid-connected solar.

It takes about two weeks from when a business owner makes the call to enquire about solar to receiving all the information necessary to move forward. Then, the design, installation, and commissioning require roughly three months to complete, depending on the jurisdiction.

6. Operating and maintaining a system is easy

With a rooftop solar array, most building owners wrap the operating and maintenance costs of the system into their existing building operations and maintenance budget. There is no need for a dedicated solar staff – personnel who regularly perform rooftop inspections and equipment maintenance can check the solar array at the same time.

With today’s solar installations, owners can be notified automatically should an issue arise. And if the owner has a monitoring agreement with the installer, the installer will also be alerted to respond to and correct problems.

Thriving businesses display a knack for taking advantage of every angle to reduce costs, improve efficiencies, and enhance the value they add to their customers and communities. More than ever, the decision for commercial business owners to go solar offers a viable opportunity to save money, lower risk, reduce their environmental footprint, and impress their stakeholders in the process.

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