If your business or property has a flat (low-slope) roof, it is likely that there is an open space that is perfect for the installation of solar panels. For many businesses, generating electricity from a rooftop solar installation is more cost-effective than ever.
In recent years, solar panel and other component costs have dropped precipitously. So much so, in fact, that commercial solar installations are more economically viable than ever. At the same time, commercial rooftop solar reduces carbon emissions by reducing demand at plants powered by fossil fuels.
In today’s world, many businesses are committed to sustainability. Solar energy is both clean and renewable, and it reduces the consumption of non-renewable resources like natural gas, oil, and coal.
Purchasing Rooftop Solar Systems
Manufacturers typically warranty their solar panels for 20 to 25 years, and many panels will last longer than that. This means you’ll enjoy energy savings year-after-year. Savings will be even greater should electricity prices spike in the future.
Businesses that purchase commercial solar systems typically offset a percentage of their capital investment through tax savings. Tax credits and accelerated depreciation are available to businesses that own the solar panels and components. There are other financial opportunities available to those who install solar panels on their commercial roofs without actually purchasing them.
Tax Credits
When a consolidated appropriations bill became law in December 2015, an important provision was an extension of deadlines for solar installations qualifying for the Business Energy Investment Tax Credit (ITC).
The bill extends the full 30 percent ITC through 2019. This is a federal tax credit, so you’ll only benefit from the 30 percent, dollar-for-dollar credit if your company owes sufficient federal income taxes. In 2020, a phase-out begins, with the tax credit reduced to 26 percent. It is 22 percent in 2021, and a final reduction to 10 percent is set for 2022 and the years following.
Put another way, the federal government is helping you to add a valuable asset to your property at a relatively low net cost. To qualify for the full 30 percent tax credit, you must begin installation before December 31, 2019, and the system must be in service by the end of 2023.
Accelerated Depreciation
An owner of a qualifying solar installation can depreciate costs using an accelerated five-year schedule under the Modified Accelerated Cost Recovery System (MACRS).
Furthermore, if you put your system into service in 2018 or 2019, you can also take advantage of a bonus depreciation schedule. There is a 40-percent depreciation bonus for solar systems acquired and placed in service through 2018 and a 30-percent depreciation bonus for systems put into service in 2019.
Thanks to these generous solar roof benefits, many commercial enterprises will hit the breakeven point only three to seven years after installation. After that, it is possible to enjoy virtually free electricity for the remaining life of the system, which can range up to 40 years.
Leasing Rooftop Solar Systems
A business owner does not have to purchase a solar system to enjoy solar roof benefits because it is also possible to lease a rooftop system or to enter into a power purchase agreement (PPA).
A solar lease functions much like any other equipment lease. A lessor installs and maintains the solar installation, and the lessee (the customer) makes monthly lease payments for a set period of time. The lessee gets free electricity that at least partially offsets its monthly utility bill.
Power Purchase Agreements for Rooftop Solar
A power purchase agreement is a contract between a solar developer and a business with adequate roof space for a solar installation. The developer pays for and maintains the system, and the business agrees to purchase the electricity generated at pre-arranged prices for the term of the contract – typically 10 to 25 years. Rate increases are typically built into the payment schedule. However, prices are typically well below the rates charged by the local utility.
PPAs are ideal for companies that prefer a low-risk arrangement with little or no upfront cost. However, overall solar power benefits are typically less than when the solar installation is purchased outright.
Since every business is different, it is ideal to get expert advice as to the best approach for you.
Contact Us Today
CRS can work with you to maximize your tax credits and other solar roof benefits when you install a commercial roofing system together with solar panels. Inquire about a CRS program that features a low or no-cost roof installation when a solar system is involved. Those that qualify get renewable solar energy, and they may even enjoy a cash positive outcome.
CRS has served commercial clients from Bergen County, NJ, to CT and PA since 1977. We are a true full-service commercial roofing specialist certified to install advanced commercial roof systems manufactured by industry leaders like Duro-Last and Carlisle SynTec.
We offer every roofing service you’ll ever need, including periodic inspections, routine maintenance, emergency work, minor/major repairs, re-roofing and full roof replacements. Our design team can customize a roofing system matched to the unique characteristics of your roof.
To arrange for a visit from our certified roof inspector, please contact us today!
