If you own a commercial building or are part of an HOA, you may have considered the value of converting to solar power. Solar energy is clean, renewable, and comes with significant benefits as you can reduce your carbon footprint, increase property values, increase the value of individual units within the building, and dramatically lower the building’s energy bills.
We are all concerned about the state of the environment today. Renewable energy is the way of the future, and converting now will help you to stay ahead of the curve as the world moves increasingly in that direction.
There are many benefits to solar power; however, the cost of entry can be very high. Today we’ll explore the pros and cons of installing solar panels on your commercial or residential building so that you can make the right decisions for you and your tenants.
Benefits of Solar Panels for Commercial Buildings and HOAs
If you own a commercial property, there’s little doubt you’ve seen your energy costs skyrocket in recent years. Installing solar panels will help you offset those costs, generate electricity for less, and gain better energy cost control in the future.
Energy Independence (Protecting Against Grid Failure)
The energy landscape is highly volatile these days. The faster you can move away from fossil fuel dependence, the better off you and your tenants will be. With solar panels installed, your power source is independent of the grid. Even if the local infrastructure fails, your buildings will still be up and running.
Considering the increase of physical attacks on our power grids, an aging infrastructure that is bound to fail eventually, and the potential disruption that could result from such failures, a move to independently controlled solar power just makes sense.
Property Value Increases
A solar-powered building increases the value of your property and individual units within. If a potential buyer or tenant has to choose between a property with solar vs. one without solar, it’s a simple choice – all things being equal. Solar is attractive to buyers because it’s environmentally friendly, renewable, and sustainable from a cost perspective. Installing solar panels is a progressive decision that will drive interest in your property for many years to come.
Corporate social responsibility is a big deal for commercial building owners and their customers. When a company makes sustainability claims, they need to demonstrate that commitment through actionable initiatives, and a solar-powered building supports them in achieving that. Today’s customers are far more likely to do business with organizations trying to do better for the planet. While installing solar panels is just one way to accomplish this, it’s an excellent place to start—and a strong marketing differentiator for attracting new tenants.
Once your solar panel array and storage system are installed, maintenance is minimal. The panels themselves are designed to withstand weather extremes, so with periodic inspections and cleaning, you won’t have to worry about them too much at all.
Tax Incentives for Solar in California
Now is an excellent time to consider converting your commercial or multi-unit residential building to solar power. The Solar Investment Tax Credit (ITC) is a federal tax credit that building owners can claim against any installation initiated between 2022 and 2032. The ITC provides building owners with a credit equal to 30% of the installation cost against tax liability, which can be rolled over to future years if needed.
Other incentives you may be eligible for include an accelerated depreciation tax credit. A depreciation bonus (up to 100%) through the Tax Cuts and Jobs Act of 2017 may be applied if you installed your solar panels in recent years, which decreases by 20% per year until 2027, when the benefit expires. There are some limitations to being eligible for this particular credit. Still, if you are installing new solar panels and equipment and are a business that files federal income taxes, you should definitely look into it.
Eligible costs under the ITC scheme include:
- Taxes on equipment
- Circuit breakers and transformers
- Storage devices
Since time is running out on some of the aforementioned programs, it’s a good idea to start planning your solar panel installation project as soon as possible, so you maximize the benefits.
California Incentives for Solar
Solar power in California is a bit of a no-brainer. The abundant sunshine and great weather make solar more viable as a primary energy source than just about anywhere else in the nation.
Because solar panels increase the value of a building, there might be a concern about your property taxes going up. However, systems installed before January 1, 2025, are excluded from valuations and will not increase property taxes. This rule applies to solar systems installed for primary power generation, not those used exclusively to heat swimming pools or hot tubs.
There may also be regionally specific rebates for equipment, batteries, and installation in your community; most are geared toward single-family residential projects, but it’s worth checking in with the county or municipality to see what’s available.
The Self-Generation Incentive Program (SGIP) provides rebates for installing energy storage systems, including solar batteries. To see what’s available to you as a business owner or HOA, check with the California Public Utilities Commission website for details.
Getting Started with Solar
Solar panel systems can be installed on flat roof systems or pitched roofs with enough area to accommodate the size of the system you need.
To determine the scope of your solar installation project, you need to understand your energy usage and, ideally, be able to project future needs.
Many solar power companies suggest installing a new roof before installing solar panels. Doing so will help you avoid roof repairs and maintenance that might drive up the future costs of maintaining your solar array. Ideally, you’ll want to ensure your roof has at least 15 years of life remaining before you start your project.
We invite you to reach out if you have any questions about solar power for your building or HOA. We’re always happy to share our experience!