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Commercial Solar Power Systems

First let's look at simple ways to determine your commercial solar system size, price and space required. Keep in mind that these are averages and your system will vary depending on your unique situation. Look on your power bill to see what your monthly usage is in kilowatt hours (kWh). Multiply that number by .008 to determine the size of your system in kilowatts (kW), 32 to determine the cost and .6 for square footage (sf) required. For example, a 1,000 kWh monthly bill requires 8kW, costs $32,000 and requires 600 sf.

The next factor is to determine your rate. Rate is important because rates vary and effect your return, but in most cases we can show rate savings over the life of the system. Take your kWh and divide by the total usage bill. If you used 1,000 kWh and were billed $150, your rate is 15 cents per kWh. It can be somewhat complicated to determine your rate because power bills can be confusing to read. We have read many power bills and have a good understanding of them.

The reason so many large corporations have installed solar power on their facilities is simple: tax benefits in the form of a 30% federal tax credit and accelerated depreciation. A 30% federal tax credit allows the solar system owner to credit from their tax bill 30% of the solar system cost. This is a credit and not a deduction which can be carried forward and is not subject to AMT. In effect, the federal government is paying for 30% of your solar system. Accelerated depreciation is allowed on 85% of the initial cost of the solar system. This is a tax deduction, so assuming you are a California entity with an upper end combined tax rate of 50%, the depreciation tax savings pays for an additional 42.5% of your solar system.

Let's look at the numbers on a cash purchase by an company that has a large "tax appetite". After the 30% federal tax credit and 85% accelerated depreciation, remaining is 27.5% out of pocket cost. Therefore, a solar system costing $32,000, less tax credit and depreciation, is only $8,800 out of pocket. If you take $8,800 and divide that by the $150 monthly bill, it takes less than six years to break even. When you factor in power bill inflation, the number is reduced to five years, for a return of investment (ROI) exceeding 20%.

Purchasing a solar system with either cash or your corporate credit results in the simplest transaction as you own the system and its benefits with little hidden expenses. You have the flexibility to pay off your debt according to your business plan with no third party involvement. Smaller systems under 50 kW or $200,000 can be installed in less than 60 days.

Leasing a solar system may be beneficial for your organization if it has bankable credit and either has a small tax appetite or wants to conserve it's internal credit facility. In this case, a third party may own the solar system, allowing your organization to monetarily receive the energy savings while a third party benefits from the tax credit and depreciation savings. Commercial leasing is usually reserved for mid sized systems from 50kW to 500kW. However it does complicates the process, slightly driving up costs and, due to 3rd party funding requirements, generally takes up to six months to complete the project process.

Power Purchase Agreements are financially similar to a lease with third party ownership of the system and its benefits, but rather than entering into a fixed monthly lease payment, the PPA charges a rate based on the solar system output. PPA's are generally used for large systems in excess of 250 kW and excellent credit is required. PPA's are extremely complicated with a detailed vetting process and can take up to a year to complete the project process.

With all that said, the first step is to send over all the pages of the latest copy of your power bill that you want to offset with solar power. Within minutes of review we can determine if you are a good candidate for a solar power system. We will not waste your time or ours if you are not a good candidate. We will provide a honest assessment and do what is best for your organization at all times.

Simply email your name, address and monthly power bill to This email address is being protected from spambots. You need JavaScript enabled to view it. to start the process or call 619-448-7770 x19 and speak directly to our company president Phil Edwards.


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