Solar for Business: Onsite vs. Offsite Solar

There are many different ways for companies to go solar. Project structuring is flexible, and solar developers can customize solutions for the specific goals and around the constraints of each company. Whether your company has ample space for onsite solar or would rather participate through an offsite system, read on to learn about the different options within each category.

What Is Onsite Solar?

When a solar system is installed directly on the purchaser’s property, and the renewable energy that it produces is consumed there, it’s considered an onsite system. There are a couple ways to go about installing solar energy onsite: one is financing the installation yourself and another is entering into an onsite power purchase agreement (PPA) with a developer.

In a scenario where you finance the system yourself, installation costs are offset by your energy savings and any incentive programs (such as renewable energy credits) over the life of the system so that you can recoup your initial investment and then some. With an outright purchase of an onsite system, companies can benefit from additional financial incentives, including the Federal Investment Tax Credit that enables system owners to deduct 26% of the system’s eligible cost basis from their federal taxes.

With an onsite PPA, a developer covers the system installation and upkeep costs and retains ownership of the system. The developer sells the renewable energy produced by the system to you at a fixed rate that’s often lower than your utility’s rate, guaranteeing a fixed cost for electricity over the term of the contract.

Adding a storage option to your onsite solar system can also help protect against demand charges, provide a flexible tool when utility rate structures change, and in certain cases, protect against blackouts and brownouts, allowing your company to become even more independent from the power grid.

Whether you participate in a PPA or own your system outright, having a solar system visible on your property can not only save you money but also help grow your business. A recent study suggests that a majority of consumers are willing to spend more on brands with sustainable practices, so it’s no surprise that big players like Target, ASICS, and Medline have gone green onsite with the help of PowerFlex. Furthermore, onsite solar can add value to your property and provide a highly visible statement of your company’s commitment to sustainability.

What Is Offsite Solar?

An offsite solar system is not located on the purchaser’s property but still allows the purchaser to benefit from the renewable energy it produces in the form of credits that are used to offset their facility’s energy costs. Offsite solar systems can be managed through an offsite or “virtual” PPA (structured much like an onsite PPA), where the developer owns and operates the system and sells the energy to the purchaser at a fixed rate, often lower than the standard utility rate. Some states offer remote net metering as an option for companies with sites that are not good candidates for onsite solar. For example, Bloomberg L.P. chose to go solar using remote net metering by crediting the renewable energy generated from a rooftop project in Queens to a Manhattan skyscraper that was not a candidate for onsite solar.

Alternatively, Community Distributed Generation (CDG) enables companies, along with other members of the community (including employees!), to receive energy bill credits for a portion of the electricity generated by a nearby large-scale solar project. By signing on as a subscriber, a company can benefit from credits on a sizable amount of the energy produced (up to half, depending on local regulations). If serving as a corporate sponsor, a company can share those savings with its employees. And if a company elects to install a solar system and host a CDG project on its property, it can also potentially benefit from annual site lease payments.

Regardless of the exact method, participating in offsite solar can have upsides similar to onsite. While both offsite and onsite options offer project structuring with no upfront installation costs and provide renewable energy at a fixed cost, the two system types ultimately can offer their own distinct benefits.

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When deciding between onsite or offsite solar, let PowerFlex help you decide which option is best for your company. We have more than 14 years worth of experience in the solar industry and have helped clients from Amazon to Bloomberg L.P. lower their energy costs and meet their sustainability goals. Contact us for a free solar assessment today.