5 Ways Your Business Can Benefit From Commercial Solar

As businesses across Louisiana continue to evolve, one of the most transformative shifts happening today is the embrace of solar energy. While the concept of solar power is far from new, its application within the commercial sector in Louisiana is burgeoning with opportunities. Let’s explore the ways in which Louisiana businesses can save more and hedge against rising energy costs.

Hedge Against Rising Energy Costs

For businesses where electricity costs consume a significant portion of operating expenses, solar power presents an opportunity to reduce these costs dramatically. After the initial investment in solar panels and installation, the cost of generating power is essentially non-existent other than a small amount for maintenance and operations. Louisiana’s generous sunshine provides an optimal environment for solar energy production, ensuring businesses can maximize their savings. 

Moreover, solar power offers protection against rising energy prices, securing long-term financial benefits for businesses. As the cost of traditional fuel increases and fluctuates, your energy costs with solar can remain fixed for at least the next 20 years.

This reduction in expenses can increase your business earnings, resulting in a higher valuation of your business. As time goes on and traditional energy prices rise, your profits will grow at a faster rate than others in your industry, making your business more valuable with each passing year. 

Tax Credit and Incentives

The Investment Tax Credit (ITC) is an incentive, allowing businesses to deduct a significant percentage of their solar energy system costs from their federal taxes. These financial incentives not only lower the initial investment needed but also accelerate the payback period and ROI.

The ITC is a cornerstone incentive for businesses nationwide, including those in Louisiana. Commercial entities installing solar energy systems can leverage a 30% tax credit on the installation cost. For example, if a business spends $100,000 on a solar installation, it can claim a $30,000 credit on its federal income taxes, directly reducing the net cost of the solar project​​. If that’s not enough, there’s even more savings with accelerated and bonus depreciation. 

Modified Accelerated Cost Recovery System

Beyond direct tax incentives, commercial solar installations can also reduce taxable income from depreciation. Businesses can depreciate the cost of solar equipment over a period, reducing their taxable income. The Modified Accelerated Cost Recovery System (MACRS) allows businesses to recover investments in certain property through depreciation deductions. Under the federal tax code, solar energy equipment is eligible for a cost recovery period of five years, providing a significant tax deduction over this period.

For instance, a $100,000 solar installation could potentially offer a business $20,000 in depreciation deductions each year for five years, assuming a straight-line depreciation method. 

Bonus Depreciation

Bonus depreciation modifies the timeline compared to the Modified Accelerated Cost Recovery System, enabling a business to expedite its depreciation benefits. Unlike MACRS, which spreads the depreciation tax benefits over five years for solar installations, bonus depreciation allows a business to apply the entire depreciation in the first year after the solar array is installed.

Increased Property Value 

Investing in solar panels can significantly increase the value of commercial property. Solar installations are seen as upgrades, much like renovated interiors or enhanced landscaping. For businesses that own their premises, this can be a significant boon, making their property more attractive to potential buyers or tenants. Moreover, solar energy can lead to lower operating costs for the property, making it more appealing from an investment standpoint.

Speak to a Solar Consultant

For Louisiana businesses, the transition to solar not only offers a pathway to sustainability but also presents an array of financial incentives that can boost the ROI of going solar. Businesses can significantly reduce both their initial investment and ongoing energy costs. Furthermore, the ability to depreciate solar installation costs adds an additional layer of financial benefit, enhancing the overall appeal of solar investments for the commercial sector in Louisiana.

The experts at Sidera Energy are ready to help you determine if the benefits of solar are right for your business.

To speak with one of Sidera Solar Consultants, fill out this short form.