Solar Pros & Cons:
Looking at the advantages and disadvantages of solar energy from a real estate owner’s perspective is an important step in the research process when considering installing solar panels for the building’s operations.
Here are a few that come up most often:
Advantages of solar energy:
- “Reduces monthly electric costs”
The obvious benefit of going solar is that the application can provide substantial savings on the companies electric bill. Many states require utilities to offer net metering, which allows building owners/lessees’ to offset their electric costs with the energy their solar panels produce. The excess energy can be sold to the utility and will usually be added onto their electric bills as a credit that can then be used to offset future electricity costs. In the mid Atlantic states a 100kW system bring in electric bill savings averaging over $18,000.00 per year, which results in a 30 year savings in excess of $540,000.00.
- “Hedge against inflationary utility rates”
One thing we have all seen is that like clockwork, utility electricity prices have risen over time. According to the Energy Information Administrations August 2020 posting of average monthly $/kWh rates in the US. Prices have risen from 7.25 cent$ per kWh in June of 2000 to 10.97 cent$ per kWh in June 202 an inflationary increase of 2%
annually. Interestingly, the 2% increase holds for the 3,5, & 10 year rolling averages of utility $/kWh.
Solar applications protect you from these rising electricity costs. Because you are producing your own energy, you don’t have to buy power from your utility. For a company that has installed Solar rising utility electric costs are a benefit, as the system gets more valuable everytime the utility increases prices.
- “Solar is Cheaper than ever”
While electricity prices continue to get more expensive, the cost of solar has continued to fall. Solar is now cheaper than ever; in fact, the cost has fallen over 70% in the past decade. These low prices make solar more accessible to more buyers than ever before. Installing solar can be even cheaper when you take advantage of solar incentives. For example, if you install a solar system before the end of 2020, you could be eligible for the 26% federal tax credit.
and the accelerated tax benefits of the Cares Act. These tax attributes can equal up to 50% of the total cost of a system. In addition to the federal tax credit, there are many other solar incentives offered locally.
- “Return on Investment (ROI)”
Going Solar eliminates the portion of your electric bill offset by the Solar production. However, it can also be a source of extra income. Net Metering allows you the system owner to earn money by selling excess power generated to your utility. Some states have other performance-based incentives, like Solar Renewable Energy Credits (SRECs), that have the potential to earn significant additional income. The money earned from net metering, combined with your electric bill savings and other incentives, go towards paying back the cost of your system. In areas that have all of these incentives, the payback time for a solar panel system can be as little as six years.
- “Energy Independence”
Adding a solar installation allows building owners to create their own energy, thereby giving them energy independence. Essentially this means the company isn’t as dependent on the traditional electric grid. This allows the occupant to take power into their own hands and control where the energy is coming from. On a larger scale, the United States making the switch to solar and other renewable energies allows the country to achieve energy independence. The US would not have to rely heavily on other countries to get oil, gas, and coal like we do now.
Renewable energies are great for increasing national security and enhancing the country’s economy.
- “Environmental Impact”
Another big selling point for solar is that it is a renewable energy. This means that as you use the resource, it doesn’t deplete the source. So, by using the sunlight that hits the earth and turning it into electricity, we don’t deplete the sun’s energy. Plus, electricity created with solar panels does not produce any greenhouse gas emissions. Nothing is being released into the atmosphere when we produce electricity with solar panels. The only thing that’s created is clean energy!
Disadvantages of solar energy:
- “High Upfront Costs”
The upfront cost is one of the biggest drawbacks of solar panel systems. Right now, the average cost of commercial solar in the US is between $2.00 & $2.50 per watt before the federal tax credit and depreciation. The actual cost of a solar system will vary by size and type, as well as by the state and local incentives that you may qualify for.
Solar financing options available and in many cases, you can qualify for a zero-down solar loan, which allows you to still save money on your electric bill and reap the benefits of owning a solar system.
- “Solar energy is an intermittent energy source”
There are three main reasons why solar is considered an intermittent source of power:
- The sun doesn’t shine at night. Therefore, solar panels don’t generate power at night.
- The intensity of the sun varies based on the location, the time of year, and the time of day.
- Cloud, snow, and foliage cover can have a significant effect on the amount of energy produced by solar panels.
All of these factors have been used to argue that solar power cannot be relied on for base load or mission-critical applications. However, this is changing with the emergence of cost-effective battery solutions. Batteries allow users store their solar power and draw energy from the battery when their solar panels aren’t producing energy. Ongoing advances in battery storage are a sign that intermittency may not be a limitation on solar power for long.
3. “Solar panels require space”
Solar panels require space in order to meet energy needs. For commercial installations, a roof may or may not be enough space and additional land may be required. However, when you look at large grid-scale solar installations, space can be a bit of an issue. This is because solar panels have a lower power density. Power density is how much power can be derived from an energy source within a certain area, measured in watts per square meter (W/m2). The power density of solar panels is low compared to those of fossil fuels.
- “You can’t take solar with you”
One of the disadvantages of installing solar panels is that it can be expensive to move them, should you decide to move the company. Net metering agreements with the utility are fixed to the property. Also, finding someone to remove and reinstall the solar panels can be costly. But solar adds to the property’s value, so even if you do move, you are likely to see the value of your solar panels reflected in a higher value and or sale price of the property.