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Key Policies for Corporate Onsite Solar

aerial shot of a rooftop solar project

In response to mounting pressure from investors, customers, and employees to address Environmental, Social, and Corporate Governance (ESG) concerns, American businesses are embracing renewable energy as a major resource for clean and reliable power. Solar energy in particular has emerged as a key component in corporate sustainability initiatives due to historically low prices spurred by the development of cheaper and more efficient equipment. According to SEIA, the price per watt has plummeted by more than 70% in the last 10 years. Many U.S. corporates, including Bloomberg L.P., PepsiCo, and Amazon, are taking note of these favorable economics and have been utilizing solar not only to meet their sustainability targets but also to hedge against the high cost of utility-grid electricity. From flexible installation and ownership options to attractive financial incentives, here’s a rundown of some of the most compelling aspects of corporate solar.

Installation Options Built for Scale and Returns

The two main types of solar installations are offsite and onsite. Each provides a different pathway to incorporating solar energy based on different needs. Offsite installations enable companies to benefit from solar energy on a large scale because the system size is not constrained by the space of their property. They allow for the purchase of large quantities of solar renewable energy credits (SRECs) that go to support internal renewable goals as well as RE100 certifications. Onsite solar, also known as distributed generation (DG), refers to when a solar system is installed directly on a client’s property, with the energy being produced where it’s consumed. There’s huge momentum behind this type of solar because, in addition to helping corporations meet sustainability targets, onsite systems yield high returns on investment by allowing the owner to offset energy costs while taking advantage of attractive utility policies and government incentives.

Favorable Utility Rates and Interconnection Policies

There are a variety of utility benefits that are available to companies who choose to own and install an onsite solar system. Benefits vary from state to state, but here are a few of the most common ones.

  • Net Metering: After satisfying the onsite power load, solar system owners may be credited for any excess electricity they deliver into the power grid at a rate determined by their utility company.
  • Virtual Net Metering: In some states, a solar system can be designed offsite but corporates/rate-payers within the utility zone can get a dollar-for-dollar reduction on their bills using the full net metering credit.
  • Feed-in-Tariff (FIT): Instead of using solar energy to meet onsite power loads, a system owner may choose to deliver all of the electricity they generate into the grid over a specified period of time. The credits they receive in return are at a fixed rate that’s independent of shifting retail prices.
  • Value of Distributed Energy Resources (VDER): New York offers this specific type of feed-in-tariff that credits solar power producers based on the total benefits the energy creates for the electrical grid. This is determined by a “stack” of values placed on the energy produced, environmental attributes, capacity, and the reduced demand on the local distribution system.

State- and Federal-Level Incentives

In addition to favorable energy rates, there are various state- and federal-level incentives that further strengthen returns on onsite solar projects. Many of these policies stem from Renewable Portfolio Standards (RPS) that require that a certain portion of the energy production come from renewable sources.

  • Investment Tax Credit (ITC): Owners of onsite solar systems will receive a 26% federal tax credit on installations through 2022. The ITC is scheduled to step down to 22% in 2023, and then down to 10% in 2024.
  • Modified Accelerated Cost Recovery System (MACRS): If their system qualifies, owners can recover costs by depreciating their solar property, with the potential to recover even more through 100% bonus depreciation.
  • Solar Renewable Energy Certificate (SREC) Markets: SRECs are allotted for every megawatt-hour of solar energy produced, and can be retired by a purchaser to demonstrate their use of renewable energy. They can be sold for revenue on the market, where they’re purchased by utilities and other entities who wish to claim they use renewable energy.
  • Performance-Based Incentive (PBI) Measures: With a PBI, solar owners are usually paid fixed rates ($/kWh) for a finite period of time-based on the amount of energy their system produces — effectively incentivizing system performance and upkeep.
  • Property-Assessed Clean Energy (PACE): Thanks to PACE, system owners can receive financing through a lien on their property. The loan is paid back through additional payments on their property taxes.
  • Solar-Plus-Storage Incentives: In some states, such as New York and California, incentives for solar systems with battery storage are available. Storage is a smart addition to any solar project since it allows the system owner to control when they use the clean energy generated on-site, thereby helping to maximize returns and support energy resiliency.
  • Request for Proposals (RFPs): Organizations can write an RFP to get state/utility-provided monetary incentives, and to have multiple solar developers bid on the project installation. This allows solar purchasers to entertain a range of offers and choose the one that best meets their needs.

If your company is interested in evaluating solar, PowerFlex can provide a tailored analysis based on your portfolio, energy usage, and available incentives. PowerFlex is agnostic to project structuring, whether you wish to own the solar system outright or take advantage of third-party models like a power purchase agreement (PPA) that allows companies to enjoy the benefits of solar energy without having to commit capital. Lease arrangements with a path to future ownership are also available, among other options. No matter what, we’ll make the process as seamless as possible. Contact us today for a free solar consultation.

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