In business, timing is everything. And the time is now for business owners who have been toying with the idea of converting to solar energy. Solar costs are down while fossil fuel costs are up, federal tax credit incentives are keeping the cost of initial installation down, and solar equipment made in the USA is built to last longer.
Sun power has never been more attractive. Conversion to solar energy will decrease your energy costs over the long haul while minimizing your carbon footprint. And you won’t have to break the bank if you take advantage of incentives that encourage convergence.
Solar or fossil fuel, which costs less?
According to the Solar Energy Industries Association, solar project costs have dropped 45 percent since 2012 (primarily due to technology innovations and new inventions). Meanwhile, electricity is costing more. The U.S. Energy Information Administration states that the average American retail electricity prices rose from 7.61 cents per kilowatt-hour (kWh) in 2004 to 10.52 cents per kWh in September 2014.
Local solar energy businessman Jack Cahill confirms those assertions. “What most businesses look for is to cut down on the rapid price increase of electricity, which has gone up 40 percent in the past 10 years,” said Cahill, owner of Jack’s Solar, a solar energy equipment supplier in Umatilla. “That will not decrease anytime soon. In 10 years, it will be even more expensive.”
Federal Slice and dice the initial cost
You can knock 30 percent right off the top thanks to a federal tax credit established by the Energy Policy Act of 2005. But don’t drag your feet. According to Energy.gov, the system must be in service before December 31, 2016. After Jan. 1, 2016, the tax credit falls to 10 percent. The time to act is now.
That 30 percent credit translates into a significant reduction in the initial cost of installation for business owners. “Depending on the project, the cost is $3 to $3.50 per watt. To install for 5,000 watts of power will cost $15,000,” said Cahill. “Thirty percent, or $4,500, is deducted by federal tax credit, leaving initial installation cost of $10,500 for the first year only.”
And the tax credit isn’t the only cost break you’ll get. Solar energy depreciates rapidly, at a rate of five to six years for tax purposes. “They can depreciate an entire system in one year. When you get down to it, it is like you are getting it for nothing, given the tax breaks,” said Cahill.
Panel prices plummet
According to a new report from the National Renewable Energy Laboratory, the price of solar panels dropped by 19 percent nationwide in 2013. And prices are expected to drop another 12 percent in 2014 according to bizjournals.com.
And the bigger the job, the bigger the savings. The price of solar panels fell below $2 per watt in 2013 on utility-scale projects, and then fell to $1.80 per watt in 2014 — a whopping 59 percent plunge from 2010.
Of course, cost varies from market to market, and from dealer to dealer.
Cahill acquires his solar equipment from Solar World, an American company. Cahill feels that solar products from China or Mexico are not made to last as long.
All things considered, $25,000 is the average cost for a homeowner or small business owner in Florida to convert to solar. In Florida, the monthly savings of converting to solar is $139 per month. With the federal tax incentives in place, the average Floridian would save $30,000 – $39,000 over the course of 20 years.
Cahill breaks down the savings with another basic example. “Let’s say they had a $200 per month electric bill – that’s $2,400 they will not spend this year. The average return is five to seven years, depending on the consumer. In that time, you have 100-percent return on your money. Then you have essentially free electricity, so long as you are in that business location.”
Put another way, Cahill asked rhetorically, “Would you invest $10,000 into CDs whereby you will get all your money back in five years, followed by a return of $200 per month for life?” Of course you would. It is a no-brainer.