Green Economy: Does Solar Make Financial Sense For Your Business?
James Dumas is principal at Solect Energy Development, LLC (www.solect.com), a full-service solar PV project developer based in Hopkinton.
New England has some of the highest electricity rates in the nation, so it's no surprise that many business and commercial property owners are thinking about renewable energy sources, including solar, as an alternative. Massachusetts, which consultancy Ernst & Young has rated the second-most attractive state for long-term solar development, is seeing a significant portion of this activity because of the state's compelling financial incentives.
So with all the activity surrounding solar, how can businesses tell if it makes sense for them? Here are four practical considerations to take into account.
1) How much shade does your building or property receive? If trees, nearby buildings or other structures cause shade over areas where solar photovoltaic (PV) panels might be placed, they need to be addressed. Since solar panels need sunlight to be effective, it's better to have less shade. There are technical solutions that can be employed to address issues with shade, but the best solution is to remove the shade, if possible.
2) How is your building oriented on its parcel? The sun travels from east to west, which means solar panels are typically installed to face southward. The better the building or land is oriented to the south, the better the panel layout and the larger the system production.
3) How "good" is your roof for solar? There are three things to consider here:
• Usable space: Your roof may be large, but it's the usable space that matters – setback, RTUs (roof top units) and shading must be taken into account to determine the correct system size.
• Support structure: Building codes and load factors need to be considered. A structural engineer needs to visit the property to determine suitability.
• Age of roof and surface integrity: Solar PV systems will last 25 years, so new roof surfaces (typically less than 5 years old) are good candidates. Old roofs (typically more than 15 years old) can also be good candidates. A roof between 5 and 15 years old will need a closer look.
4) What is your financial model? Most property owners and businesses in Massachusetts are eligible for both state and local financial incentives. At the federal level, a 30-percent investment tax credit (ITC), which is paid out over a number of years, is available to property owners who invest in solar.
Legal entities that do not pay taxes such as a non-profit, municipality or education institution, can still benefit from solar and save money – they can lend space on their roof or land to a third party investor (who does pay taxes) and then purchase the power generated from the solar system at a discount.
At the state level, SRECs (solar renewable energy certificates) and net metering come into play. SRECs are certificates earned by solar-system owners based on the amount of energy they generate. They are ultimately purchased by electricity providers in Massachusetts to help them meet their state-mandated goals of a percentage of power coming from solar and are a good revenue stream for property owners who have deployed solar solutions.
Net metering allows excess electricity generated at one location during a billing period to be used elsewhere (some regulations apply). So, a property owner with a few locations could generate electricity at one site and use it at another.
This list of questions is a good starting point; if your property "passes," you might be able to take advantage of the financial and "green" benefits of solar energy and help the environment at the same time.
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