By Rachel Mountain
Namaste Solar has seen companies from all different industries and verticals invest in onsite solar systems. We designed and built 4.2MW of solar power at 20 sites for Colorado State University. We worked with Jax Ranch & Home to design and install a system that would offset 100% of their store’s energy use. And we built solar carports and installed EV charging stations for KONG Company. Regardless of the industry or industry, most property owners can benefit from solar in these five ways:
1. An improved bottom line through tax benefits
At least half of your initial investment in solar is recouped through tax credits and deductions, allowing solar to achieve a double-digit internal rate of return (IRR) in many cases. Thanks to the Inflation Reduction Act of 2022, the state Investment Tax Credit (ITC) is now back at 30%. You can also increase the tax credit through adders, including an additional 10% if the project meets the minimum requirements for domestic content.
2. Reduced additional costs
On-site solar power replaces an otherwise sunk cost with an asset. The money you would normally pay to the utility company can instead be used to buy a three-decade-old solar system that will provide long-term benefits for your business. Even owners of triple-net (NNN) rental properties, where tenants pay the utility bills, can recoup their investment while providing energy savings to their tenants.
3. Potential to generate positive cash flow immediately
Colorado’s Commercial Property Assessed Clean Energy (C-PACE) program enables companies to implement solar energy with little to no equity (100% loan-to-cost), allowing projects to be cash flow positive from the first year after a tax refund Advantages. In addition, builders can bundle the cost of a new roof, PV system, LEDs, and heating, ventilation, and air conditioning upgrades into one fixed-rate loan with terms of up to 25 years. The loan structure takes any risk away from property owners, as the non-recourse financing is linked to the property via a special tax assessment. This allows C-PACE financing to pass to the next owner when the property is sold.
4. Brand reputation and differentiation
The Denver metro area is a growing and increasingly competitive market that attracts many domestic and international companies. Commercial solar systems differentiate these companies from the competition and give real estate investors access to a more sophisticated tenant base with internal sustainability committees or mandates. Solar helps increase occupancy and base rates, meet the company’s sustainability goals, comply with regulations (like Energize Denver), and retain good employees and tenants. Companies that have installed solar systems know that there are few capital-heavy energy improvements that deliver such a holistic array of benefits.
5. Increased real estate value
In addition to the energy savings from solar power, some utilities will purchase renewable energy credits (RECs) generated by your system. For example, a 200 kW system on a 30,000 square foot flat roof in Xcel Energy’s territory will generate approximately $11,000 annually for 20 years. This income directly increases the Net Operating Income (NOI) of your property.
Commercial on-site solar power is cheaper than traditional utility power over time. As electricity prices continue to rise, the value of the energy from your solar system increases, and these savings free up capital to fund core business initiatives or investments. For those looking to achieve environmental, social and governance goals or missions, solar power brings impressive and quantifiable environmental benefits to the table. It also increases the marketability of your property, giving you an edge in today’s highly competitive market, whilst generating an attractive return on investment.
Rachel Mountain is a co-owner and commercial solar project developer at Namaste Solar. Namaste Solar’s mission is to transform energy and transform businesses. The company’s experienced solar consultants will help you understand your project goals, timeline and milestones. Check out their extensive commercial experience and see how they fare.