Energy managers and facility managers, your job is not easy and never finished. According to data compiled by the Rocky Mountain Institute, utility bills now represent 30% of operating costs for the average business. And energy market constraints and opportunities are shifting more than ever; notably, by 2050, nearly every power plant in the U.S. is expected to be shut down or replaced.
How are you supposed to navigate these moving targets and at the same time secure the most reliable, cost-efficient, and environmentally compatible energy for your business?
While energy costs have been rising an average of 6% each year over the last decade, solar installations have been generally achieving returns of 7-12%. A solar energy system clearly offers a strong return on investment. In addition to purchasing solar outright, new and innovative approaches have emerged to help organizations buy and finance solar energy.
OnSwitch, a marketplace platform for commercial building energy, can quickly match your business with custom financing that will result in the lowest cost for energy tailored to your business usage and needs. So what are your financing options?
The most straightforward way to get solar electricity is to directly purchase the system for your building. Your business begins benefiting as soon as the install is complete. You buy and own the solar system, and you earn a 30% federal credit, 5-year federal accelerated depreciation and any local/state solar incentives. Your business is immediately insulated from rising electricity prices and you stand to attain the greatest savings while avoiding third-party financing costs.
A solar lease is another option for businesses to consider when examining a conversion to solar. The ability to lease-to-own involves some math to see if the electrical savings generated from the solar system is more than the monthly solar lease installment would be. For small commercial solar systems, leases can be a good option.
If the savings are great enough, your business would be creating instant monthly operating savings. Other solar lease benefits might include little to no upfront cost; in other words, no capital investment. And by securing a low electricity rate at a fixed price per kilowatt-hour, leasing also provides protection against rising electricity prices. At the end of the term – 7 to 10 years – companies can choose to purchase the solar power system for a small residual value or renew the lease.
Power Purchase Agreement
A solar power purchase agreement (PPA) is the popular alternative to financing or buying and owning a system. In California, most solar PPAs provide electricity at a cost that is 10 to 40% less than utility electricity price. Through a PPA, solar power is installed at your facility, but you don’t pay the upfront costs or any of the maintenance. A third party owns the solar system and contracts with your business – typically a 12 to 25-year contract – to provide lower electricity rates with green energy generated from your solar energy system. For all but the smallest commercial solar systems, the best financing option is usually a PPA.
Your PPA will immediately provide your business with reduced electricity costs and you will enjoy increased savings over time as electricity prices continue to rise. At the end of the PPA contract term, you can purchase the system, extend the PPA, or have the financing company remove the solar system at their cost. This is one of the more popular options available to business owners because there is no capital equipment investment or upkeep costs; energy rates are fixed, and the available tax incentive savings are passed on to your business in the form of a competitive, lower PPA rate.
The OnSwitch marketplace is today your most competitive source of commercial solar and energy storage systems where a robust market of energy experts, installers, and financers exists. OnSwitch has the experience, trust, and breadth of offerings sufficient to achieve your business energy goals and beat any competitor’s quote.
If your organization wants to reduce energy costs and contribute for your employees and customers to a clean, secure, low-carbon future, OnSwitch is the easy answer.
For the highest-savings solar energy solutions for businesses, public agencies, and multi-family communities, go to OnSwitch today to receive a free quote customized to your building.