Benefits of Solar for Small Business Owners

By Sarah Lozanova
This article was originally posted on CleanTechnica, part of the Green Options Media Blog Network. Visit CleanTechnica for more clean tech news.

Many businesses are putting the sun to work for them and saving a bundle on utility bills. While much of the country is experiencing increasing energy costs, some are looking to the sun as a solution.

Although nearly all solar applications will eventually save money, a large upfront investment is required. Some businesses are in the position to save a lot more money than others. Let’s explore which businesses can benefit the most from solar energy.

Use Large Quantities of Hot Water

Solar thermal technology is utilized to heat water and is frequently an impressive 70-90% efficient. Restaurants, gyms, apartment buildings, and laundromats are examples of ideal applications. Exactly the opposite of a gas or electric hot water heater, the more use the solar system gets, the larger the energy and cost savings.

Businesses Paying High Tax Rates

Two federal incentives exist to encourage solar installations. One is a federal tax credit of 30% that is set to expire at the end of the year (link). The tax credit is not affected by the tax rate. Businesses can also take an accelerated 5 year depreciation of the solar system. Businesses that pay a higher tax rate, will enjoy greater the tax savings from an accelerated depreciation, while businesses that don’t need additional write-offs won’t save a penny.

High Electric Rates

Rates vary widely across the country. Typically, states that use a lot of electricity generated by coal pay lower rates. Many of the states in the Northeast pay very high rates. Solar photovoltaic systems for electricity are more lucrative in areas with higher electric rates.

State Incentives

Many states have programs that encourage renewable energy. California has one of the best funded incentives, the Million Solar Roofs Initiative . For an overview of all the state programs, visit the Database for State Incentives for Renewable and Efficiency website .

Positive Publicity
When the World’s Largest Laundromat in suburban Chicago installed a 36-panel solar hot water system, it gained press coverage as far away as China! It has even become a tourist attraction. It is hard to quantify the value of this publicity, but it is certainly positive.

Sunshine

All locations are not created equal as far as solar exposure. If you installed identical systems in Phoenix and Seattle, the Phoenix solar system could easily have double the output. PV Watts is a great tool for determining the output of a photovoltaic solar system.

Electricity to be Sold to the Power Grid

Most states now have net metering laws that requires the electric company to compensate solar system owners when they feed electricity to the power grid. This occurs when the system generates more electricity than is being consumed. This is rare during times when a business is in operation, but is more likely during the mid-day hours when the business is closed.

Photo Credit: Solar Service Inc.

Tags: business, Business and Commercial Solar Power, reference, small business, tax incentives