What Business Owners Should Consider Before Investing In Solar

Commercial buildings use approximately 40 percent of energy consumed in the United States today, so increasing the efficiency of buildings is one of the most effective ways to lower energy consumption, save money, and reduce carbon emissions. The last blog entry focused on the financial incentives for a residential solar system with the implementation of the Renewable Energy Grants (REG). We decided to provide a similar comparison for a 50kW commercial system to show business owners how they can capitalize on the REG. The assumptions of this comparison are:

1. PV System located in Laguna Niguel, CA 92677
2. Type: Commercial
3. Size: 50 kW
4. Utility: Southern California Edison (SCE)
5. Federal Corporate Tax Rate = 34%
6. State Corporate Tax Rate = 8%
7. Note: Calculations do not take into consideration time and value of money

Below is a table summarizing the results:



The difference in the ITC versus the REG is still greater on commercial systems as it is on residential. In our hypothetical analysis it is almost a $5,000 cost difference. The estimated cost per watt including utility rebates, grants, and depreciation bring the net cost of the system down to less than $3.00/watt.

Please note: Interested businesses should consult the federal tax code and/or a certified public accountant or tax attorney to determine exact eligibility and provisions of the incentives described above.