Commercial Solar Incentives: FAQ with Namaste Solar

Photo credit: Namaste Solar
Rachel Mountain

By Rachel Mountain, co-owner and director of commercial sales, Namaste Solar

An increasing number of businesses are boosting cash flow while also differentiating their business with solar. Investing in solar also allows them to capture tax benefits, reduce operating expenses (OpEx), and meet environmental, social and governance (ESG) criteria. We’ve answered some of the most common questions about navigating the complexities of commercial solar below. 

Are there any incentives to go solar? 

Federal Investment Tax Credit (ITC): Taxable entities with tax burden can recoup 30% of the investment for the year the system is placed in service.  

60% Bonus Depreciation: 60% of the taxable basis may be depreciated in the first year for systems placed in service in 2024. Bonus allowance drops 20% annually through 2027. The basis is the contract price less half the ITC, and the value is a minimum of 21% of the investment for a Colorado corporation, or up to 34% for a high-net-worth LLC member. 

Xcel Commercial & Industrial Solar Rewards Program: Should you choose to sell your renewable energy credits (RECs) back to Xcel Energy, they will pay you between $0.035-0.04/kWh for 20 years depending on your system size. 

Utility Savings: Every kWh produced by solar reduces what you buy from the utility, lowering OpEx. There are mechanisms for recouping these benefits from tenants in triple-net leases (NNN). 

Increased property value: Lower OpEx and REC income increase net operating income (NOI), and therefore building value. 

What is the life expectancy of a solar system? 

An expertly engineered and constructed system with equipment from reputable and bankable manufacturers will have a three-decade estimated useful life (EUL). 

What is the typical payback period for solar? 

A typical 200-kW commercial solar system in Xcel Energy’s Colorado territory breaks even in 6-9 years, then provides 21-24 years of pre-paid clean energy. 

What can I expect to save, and will solar reduce demand? 

A typical 30,000-square-foot roof can accommodate a 200-kW solar system. In year one, this system may reduce utility bills $19K, and generate about $11K of incentive income and $300K in tax benefits on a $500K investment. Demand (kW) is a separate charge on the bill, one for which we do not model savings. There is, however, a solar rate available which lowers the price of demand. 

What is the most common solar system in the Denver market? 

Rooftop systems are the most common and cost-effective type of solar installation in our market. 

How does solar attach to my roof? 

Flat rooftop systems are secured to the roof by a hybrid system of ballast blocks in padded aluminum pans and engineered mechanical attachments to account for our winds and the roof’s deadload (structural) capacity. 

Will my roof support solar? 

Flat roof systems need about 5-6 pounds per square foot (psf) of available deadload capacity, while pitched roofs with flush-mounted solar need about 3 psf. The more deadload capacity a roof has, the fewer mechanical attachments are needed, so 7-10psf for flat roofs is preferred. 

When is a good time to go solar? 

Ideally, your roof will have 20 years of life left. It’s also a good idea to consider other future capital energy improvements as you consider solar.

How long will it take to put solar on my rooftop? 

Depending on system size and array complexity, installation may only take 4-8 weeks. However, engineering, permitting, and equipment procurement lead times can add six months or more, so the norm from contract to commissioning is 8-12 months. 

Does solar make sense if I don’t occupy my building? 

Solar is beneficial to both property owners and tenants in gross or NNN leases. There are two methods to overcome the split incentive: Commercial Property Assessed Clean Energy financing (C-PACE) and green leases. 

What is maintenance like? 

Routine monitoring and preventative maintenance are key to ensuring your system is operating at peak performance and maintaining manufacturer warranties. Just like any building asset, a solar system requires repairs from time to time. Solar owners should plan for an unexpected service visit at least every two years.  The most common maintenance needs arise from system outages that occur due to electrical anomalies in the facility or inverters and frequently are resolved with minimal troubleshooting and a simple system reset. 

Rachel Mountain is co-owner and the director of commercial sales at Namaste Solar. Namaste Solar’s purpose is to transform energy and transform business. The company’s experienced solar advisors will help you understand your project goals, timelines, and milestones. Look at their extensive commercial experience and see how they measure up. You can also learn more at www.namastesolar.com/businessbenefits

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