To put it simply, solar can be a fantastic financial and eco-friendly investment for many businesses, but it isn’t for everyone. Deciding whether or not to go solar can greatly impact your business's bottom line. To understand how solar can help or not help, you need unbiased, accurate information.
Our 2024 guide to solar energy for businesses is the perfect resource for any business owner considering moving to solar power.
So, to help you understand whether solar energy is right for you, we’ve put together a list of pros and cons specific to solar energy for businesses in our commercial solar panel guide. These will help you understand solar's benefits and disadvantages to your business.
It’s a simple business equation: when you reduce overhead profits increase. All businesses strive to boost efficiency and bolster the bottom line. Solar energy is one easy way you can achieve this.
Installing a solar system allows your business to produce its own free electricity, knocking down a significant and unavoidable monthly expense. These savings are something you can get used to. Many solar panels are guaranteed for up to 25 to 30 years and may operate even longer, so you’ll be producing free electricity for decades.
Solar energy is great for the environment, and the government likes it. They want more businesses to invest in solar, so they’re making it even more affordable with substantial tax-saving incentives.
The Solar Investment Tax Credit (ITC) allows businesses to recoup 30% or more of their system’s cost through a credit on their federal taxes.
Another valuable tax-saving incentive is bonus depreciation. This allows you to accelerate 60% of the federal depreciation savings to the year your system is placed into service, further front-loading your investment in solar energy. The remaining 40% will follow the 5-year MACRS schedule, along with the state depreciation.
While electricity prices may vary slightly from year to year, they’ll almost certainly get more expensive in the long run. With a solar energy system, you’ll future proof your business against rising rates.
Your electric bill 15 years after you install your system will most likely be higher than it was the year your system was placed into service. So, depending on the degradation of your panels and your electricity rate, the money your solar system is saving you could actually be greater in year 15 than in year one.
Solar Systems Are Low Maintenance
Business owners have enough to worry about and take care of as it is. Adding another item that requires significant maintenance and upkeep may be too much to take on. However, you may be surprised to hear that solar systems require little regular maintenance.
While you certainly can have your panels cleaned if you’d like to, regular rainstorms do a sufficient enough job in most cases. If your panels are in a drought-prone area or in a particularly dusty area, an occasional cleaning could be beneficial
If you choose quality solar equipment backed by substantial warranties, the manufacturer will protect your investment should it not perform up to spec. Similarly, if you choose a solar installer that offers its own warranty on workmanship, production, and monitoring, like Paradise Energy’s Triple Ten Guarantee, they’ll monitor your system and be there to fix it should anything go wrong.
Compared to other investments, solar is particularly low risk - especially given the potential returns it offers businesses. It’s a reliable technology with decades of proven success.
With a solar investment, you’re mostly banking on the following: electricity prices will continue to rise, your equipment will last, and the sun will keep shining.
If electricity prices stay stagnant, you won’t be losing money, you’ll just be saving less. However, it’s pretty safe to assume electricity will be more expensive when your system nears the end of its life in 25 or 30 years or more than today.
When it comes to your equipment working properly, as long as you go for quality solar panels and inverters that are protected by manufacturing warranties, you likely won’t have any issues.
In addition, unlike other types of equipment investments, solar will not raise your payroll or any other fixed costs, and its financial return is not dependent on economic cycles.
Installing a solar system will have a real, measurable impact on the environment. You’ll be able to calculate how many trees you’re saving, how many barrels of oil you’re offsetting, and how many tons of CO2 you’re keeping out of the air.
As a society, we’re shifting increasingly towards an eco-friendly future, and customers and employees alike will appreciate that you’re taking steps to lessen your business’s carbon footprint. Going green can help your business right alongside helping the environment.
One of the biggest barriers to entry when it comes to installing solar is the upfront cost. While prices have come down substantially over the years, it’s still a significant investment to make.
A 100 kW system (which produces about enough electricity to offset a $1,200/month electric bill) can have an installation cost of around $238,600 before the tax incentives and around $114,147 after. That said, many commercial solar systems reach payback in a few short years and contribute a double-digit ROI.
You’ll have to account for where the solar panels will be installed. Many businesses opt to install the panels on their roofs, turning an underused space into a money-making machine. On a roof, the panels will be out of the way of any business operations.
However, not all roofs are ideal for solar. If your roof doesn’t have ample sun exposure or cannot support the additional weight of the panels, you may want to find another solution. Ground mounts, while they do take up land, can be positioned in the optimal location for electricity generation.
Another option is installing a solar carport. Mounted above your parking lot, these systems will also increase the function of underused space. Your solar system will not only produce free electricity but also provide shelter for your employees’, visitors’, and customers’ cars.
Sunshine is essential to a solar system. The more sunshine there is, the more money you’ll save. However, not every location is ideal for solar energy, from regional weather patterns to trees or buildings that cause shading.
Solar works best when it faces south tilted at a degree specific to your location’s latitude, and free from any shading-creating obstructions. Should your building be surrounded by large trees that shade the roof throughout the day, solar may not be feasible unless you’re willing to eliminate those trees.
That said, you don’t need to live in Florida or Southern California for solar to make sense. A solar investment can thrive even in areas renowned for their snowiness and cloudiness. From Ohio to Upstate New York, we’ve seen businesses thrive with a solar investment.
Curb appeal can be important to many businesses. The look of your building may be a potential customer’s first impression of your business. It’s natural to want to put your best foot forward by creating an attractive, welcoming space.
Solar panels may not fit into the aesthetic of every building and business, though the return on your investment may be enough to convince you otherwise! That said, solar panel manufacturers hear this and have worked on a few different options to make their products more visually appealing, from frame type and color to panel type and size.
Solar energy is a long-term investment. Your system can take a few years to generate enough electricity to fully pay for itself. But once it does, it generates pure savings, so you can keep that money right in your pocket or reinvest it elsewhere.
If you plan on moving your business to a different location a few years after installing your solar system, you may want to hold off until you’re settled in your new place. The longer you stay in your building to take advantage of that free electricity, the greater the system's return for you.
When the power goes out, and the grid goes down, your grid-tied solar system will stop providing power to your business. If it’s sunny, your panels will still be capable of producing electricity, however, for safety reasons, it’s required that your solar system shuts off until power is restored.
This means you won’t have access to electricity unless you invest in solar batteries. With a battery-backed solar system, your charged batteries can kick on when the grid goes down to provide power to your business until the grid comes back on. That said, batteries can be expensive to install and will decrease the financial return of your system.
When considering solar energy for your business, it's important to know that there are various innovative solutions available tailored to meet your specific needs. From roof or ground installation to solar carports, there are a variety of commercial solar installation options that can help maximize the benefits of solar energy while fitting seamlessly into your business operations.
One of the primary considerations when installing solar panels is the location. The most common installation is rooftop solar, which utilizes unused roof space to generate electricity.
For businesses without suitable roofs, ground-mounted solar systems offer a flexible alternative. These installations can be placed in open areas with the best sun exposure, ensuring maximum energy production. Ground mounts are highly adjustable and can be scaled to fit the available space and energy requirements.
Solar carports are an innovative solution that serves a dual purpose. By installing solar panels over parking lots, businesses can turn an otherwise underutilized space into a source of renewable energy.
Solar carports not only generate electricity but also provide shade and protection for vehicles, enhancing the overall functionality of the parking area. This solution is particularly beneficial for businesses with large parking lots, offering an additional layer of utility and value.
For businesses looking to integrate solar solutions without compromising aesthetics, solar canopies and awnings are excellent options. These installations can be added to existing structures or designed as part of new constructions, providing both energy production and architectural appeal. Solar canopies and awnings can be customized to fit various design preferences, making them suitable for storefronts, outdoor seating areas, and walkways.
To sum up, the benefits solar energy has for businesses, it’s a relatively low-risk, low-maintenance investment that can deliver substantial short- and long-term savings, all while significantly reducing your carbon footprint.
But for all its amazing benefits, there are some disadvantages. A solar system requires an upfront investment and needs a dedicated space with enough sunlight. To get the most from your investment, you’ll be better off staying in the same location for at least a few years. Solar also won’t solve your backup energy needs unless you opt to install batteries.
Overall, solar energy can be incredibly beneficial for many businesses, but it isn’t ideal for everyone.
If you're ready to see if solar is a good investment, request your free custom quote. Your quote will provide the data you need to determine whether solar is a good fit for you.
Maybe you're not ready for a quote. We've got you covered too! Browse our other educational blog posts or use our Solar Savings Calculator to get an instant price and savings estimate.