Commercial Solar & the ROI for Your Business
Installing a solar system is an easy way to reduce the electricity costs for your Missouri business, but many wonder if the investment worth the upfront costs? Here are some factors that can affect the return on investment (ROI) for a commercial solar system in Missouri or Northwest Arkansas:
Solar Installation Cost
The total installation costs for a commercial solar system will depend on the amount of electricity that your facility requires, the amount of grid power that you would like to replace with solar power, and whether you will oversize the system to take advantage of net metering.
Net metering allows your facility to earn credits for any excess electricity that is generated during the daytime. This can offset the costs of grid power at night or during cloudy weather. Missouri offers net metering for commercial solar installations of up to 100 kilowatts, and Arkansas offers net metering for commercial solar installations of up to 300 kilowatts.
Other factors that can affect installation costs include the solar contractor you choose, the equipment, and the complexity of the job.
Loans vs. Leasing
If your business does not have the available funds to pay for the solar installation upfront, there are a variety of loan and lease options available. A solar loan would be more economical than a lease, and you will own the equipment once the loan is paid in full. Plus, you can take advantage of various federal and state solar incentives, but you will also be responsible for any maintenance and repairs over the life of the system.
A solar lease is a more expensive option, thanks to higher financing costs, and you will not own the equipment, but you will also not be responsible for repairs should anything go wrong.
Ideally, paying upfront with no financing costs would be the best option, and there are incentives that can make that easier for many small businesses.
Solar Incentives for Missouri or Arkansas Businesses
When the Inflation Reduction Act passed in 2022, it increased the federal investment tax credit (ITC) available for solar installations in 2032, and it expanded the USDA Rural Energy for America Program (REAP) for rural businesses or agriculture producers.
If your business qualifies for the federal ITC, you can earn a tax credit equal to as much as 30% of the total installation cost of the solar system, with bonus credits available for commercial solar energy projects made primarily from U.S. materials, those that are in low-income areas, or those that are in “energy communities,” where unemployment is high and large portions of income previously depended on the oil, coal, or natural gas industry. These bonus credits can bring the ITC up a maximum of 50% of the total cost of the system.
For qualifying rural businesses or agricultural producers, REAP can offer grants or loan guarantees that can reduce the upfront cost of a solar installation. A USDA REAP grant can cover up to 40% of the cost and does not need to be repaid. A REAP loan guarantee can cover up to 75% of the cost of the solar system, and it will need to be repaid.
Finally, you can also earn tax credits for the depreciation of your solar system. With the Modified Accelerated Cost Recovery System, you can earn deductions over a five-year period, or the deprecation can be claimed over a longer schedule, depending on your needs. These deductions can account for 25% to 35% of the total system cost.
If your business can qualify for more than one of these incentives, you can dramatically reduce the upfront costs for a commercial solar system while saving money every month on your electrical bills.
Solar Installations in Missouri & Northwest Arkansas
Between a well-designed solar system, the right financing options, and the incentives available to your business, the ROI for a commercial solar system can be quite high. Our team at Solera Energy can help you find the best incentives and financing options for your business in Missouri or Northwest Arkansas, and we can provide a turnkey, professional solar installation using the highest-quality products and materials. Our company features industry-leading workmanship, along with unsurpassed excellence, integrity, and attention to detail.
Call Solera Energy today at (855) 650-7404 or contact us online to schedule your FREE consultation for a commercial solar installation in Missouri or Arkansas.