From obvious benefits like smaller utility bills to less obvious ones like enhanced recruiting and retention, the potential advantages of solar for companies and organizations are many. But where to begin? Here are some insider tips to help you navigate the process like a pro.
Your roof is just one of many places solar can go.
When most people think of solar, they think of rooftop installations, but that’s just one location where panels can be installed. There are two basic types of solar: on-site and off-site. On-site means the solar panels will be installed somewhere on your organization’s property. Off-site means they’ll sit somewhere else.
On-site solar includes rooftop installations, parking lot canopies, and ground-mounted installations. Rooftop and solar parking canopies are the most popular choices among organizations because they use space so efficiently, so exploring your roof’s potential is a good place to start. Your facilities manager can help you gather basic information about its size, type, and condition.
Ground-mounted solar systems can be a great option if there’s a lot of open area on a property or if your rooftop isn’t an option due to shading or other reasons. Ground-mounted systems can cost a bit more because they include infrastructure.
Off-site solar is becoming more popular, especially in states with supportive policies like California, Maryland, Minnesota, and New York. This approach means a solar system is installed somewhere away from your main property. Your organization then sells that energy to the local utility to offset your total bill.
Some states are more solar-friendly than others, but ROI rules.
States can play a role in whether or not the financials of solar will end up making sense for a given organization. Policies can either support or discourage solar adoption depending on the leanings of lawmakers and policies are always changing. Groups like Vote Solar and Solar Power Rocks publish annual report cards that grade each state’s policies and incentives. The DSIRE website tracks what all those state-level renewable policies and incentives are.
Of course, the final word on any given solar project is the organization’s return on investment. If the price of electricity is high and/or the organization uses a large amount of electricity, solar might add a lot of value even without incentives. Taxable companies can also take advantage of the federal Investment Tax Credit (ITC), which provides a substantial tax credit on the overall project price.
Sizing is key
When it comes to the financials of solar, sizing is one of the most critical factors. Your utility will likely only pay wholesale (and that means very low!) rates for any excess power your system produces, so building an overly large system can be bad for the overall economics. On the other hand, it may be good for your system to produce some extra power, especially in the summer when local demands on the grid are high.
We recently spoke to a science teacher who shepherded more than two dozen solar installations in his school district. He said his number one recommendation was careful sizing. Solar panels vary too, so be sure to understand how the different solar panels a provider offers will impact overall power production levels and cost.
There are new ways to pay.
Not long ago, there were only two ways to go solar: buying or leasing. Now, PPAs are becoming available in more states and offer several advantages. Most notably, they allow organizations to lock in energy prices at fixed rates for 20 years or more. There are no upfront costs, so the panels, system design, and installation are free. Your organization pays only for the power the system produces.
Leases are a good option in states where PPAs aren’t yet available. They can also be good for organizations that want the certainty of a fixed monthly payment regardless of how much energy a system produces. With both PPAs and leases, the solar provider owns the system and takes care of maintenance and repairs. The provider also realizes any tax benefits or incentives associated with the system and typically passes these benefits on to customers in the form of savings.
Direct purchase is an option if you’d like to own the system outright and take advantage of solar incentives directly. Purchasing means paying all costs up front and either doing the maintenance yourself or hiring a service.
An energy audit can cut the cost of going solar.
Before getting quotes on a system, it‘s wise to get a professional energy audit. This lets you see detailed information about your organization’s energy consumption and pinpoint areas for improvement. If you can make energy usage more efficient through better insulation or lighting, your organization’s total energy requirements could decrease, which means a smaller solar system - at a lower cost - will likely cover your needs.
As one solar user said, “At the heart of it all, you could have the biggest solar array in the world but if you don’t couple that with responsible energy use, you’re not getting the most out of the system you could.” Some utilities may even require an audit in order to qualify for certain solar incentives.
Quotes are faster than RFPs.
Once you’re ready to start pricing systems, it’s a good idea to get quotes from at least three different solar providers. Most will want to schedule an on-site visit and inviting all prospective providers to a single site tour can save the hassle of hosting multiple sessions. Afterward, most providers will need 2 to 4 weeks to generate a detailed quote.
Direct quotes tend to be faster because providers create them using their own tried-and-true format. The only challenge with quotes is that it may take a bit more work on your part to make side-by-side comparisons.
RFPs, on the other hand, ensure more consistency and easier apples-to-apples comparisons, but they tend to take longer. A good approach can be to request a quote, but specify any information you need that may fall outside the provider’s standard format. Of course, some organizations require a formal RFP process. The Solar Foundation’s guide to a successful solar RFP is a helpful resource.
In-house financing is one telltale sign of an established solar provider.
Solar providers run a huge gamut in size and quality from the small “Chuck in a Truck” style installer to multinationals with thousands of employees. First, you’ll want to make sure your provider has a regional presence and a successful track record of projects in the area, including references.
One good sign providers are established is their ability to offer in-house financing. The presence of proprietary technology can be another good indicator. Finally, you should ask whether or not a provider is capable of doing every phase of the project from greenfield development (no existing buildings or infrastructure) all the way to scheduled decommissioning. With commercial projects, many providers can only do certain parts then subcontract out the rest.
Pro tip: sometimes, organizations will shortlist the most competitive offers from providers and bring them in for a final round of discussion with all key stakeholders before making a final selection.
A single point person on your side promotes smooth sailing.
The solar process often runs most smoothly when there’s a single internal point person designated to oversee the entire process. This person coordinates the details and makes sure key stakeholders are looped into the process.
If possible, that group of stakeholders should include members of the finance, facilities, and legal teams. Each person will have his or her own perspective and add value to the decision-making process.
We hope you found these tips helpful. If you’d like help navigating your options or understanding your potential return on investment, feel free to drop us a line.