Rising utility bills. Shrinking budgets. Rolling power outages triggered by wildfires and high winds.
Due to these reasons and more, medium and large California industrial manufacturers are finding it increasingly difficult to maintain cost-effective facility operations. It’s easy to assume that purchasing capital-intensive equipment like a solar array would only add more costs to an already strained bottom line. However, installing onsite solar is actually one of the best ways for a facility manager to reduce electricity costs and achieve efficient, sustainable long-term operations.
Your onsite solar system starts generating savings for your facility from the moment it becomes operational. The array produces daytime solar energy that you can use to offset your demand for grid energy, which directly lowers your monthly utility costs. Your system exports any surplus solar energy that you don’t use to the grid. In California, you will likely even be compensated by your local utility for your exported energy in the form of bill credits, through a process known as net metering. This means that not only will you save money from day one with solar, you’ll also be earning bonus revenue from your system.
Thanks to these financial benefits, as well as improved technology and record low system costs, the average payback period for solar is a mere eight years compared to its roughly 25-year operational lifetime. You can add greater flexibility and energy savings potential by pairing your solar array with an onsite battery energy storage system. You’ll be able to store unused solar energy in your battery to use when utility electricity prices spike, or as backup power when the grid goes down.
Onsite solar benefits your business in other ways as well. It not only increases your property value, but it’s also a high visibility way to showcase your business’s commitment to reducing its carbon footprint.
Lastly, updates to California Building Energy Efficiency Standards require that new and renovated commercial facilities integrate solar plus energy storage. This means that onsite solar can not only provide financial and sustainability benefits, but it is also an essential addition for many businesses to comply with state building codes. These requirements make California the first state to require both solar and energy storage in commercial buildings; solar must be able to meet 60% of a building’s load and energy storage must have a usable capacity of 5 kilowatt-hours (kWh) and be able reduce solar export capacity to 10% of solar generation.
Once you’ve decided to explore onsite solar, how do you find the optimal system for your facility? It’s important to find an experienced partner that will take the time to work with you to find the best system for your business.
Many developers aim to maximize the solar system size based on available rooftop space, but this approach can lead to oversizing and unnecessary costs. Instead, we recommend that you work with a developer that customizes your system to maximize your return on investment.
For example, our sales team at Renewable America analyzes each customer’s historical 15-minute utility data to design a system that aligns with their unique energy consumption patterns and needs, while also respecting budgets and other constraints. Our software enables us to directly compare the bill savings of different solar system sizes, both standalone and paired with energy storage, to find the one with the best economic value. We use an industry-leading software platform called UtilityAPI to request access to relevant data before securely importing it for analysis. Client accounts and passwords are never accessed by our team, and no client data is downloaded or used outside of the analysis. We do not charge for this preliminary analysis, as we prioritize finding the best possible solution for a facility’s needs.
Not only can you save money with the right system, but lucrative benefits also currently exist for business owners going solar. The federal solar Investment Tax Credit (ITC) provides system owners with a tax credit of 26% of system costs, which essentially translates to a 26% discount. What’s more, sites within California’s three investor-owned utility territories (Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric) can earn bill credits for exported solar energy through net metering.
But it’s important to act quickly; both of these benefits will decline in upcoming years. The ITC will step down to 22% in 2023, and then permanently to 10% in 2024. The California Public Utilities Commission (CPUC) is also finalizing formal updates to net metering that, if approved, will greatly reduce net metering compensation for commercial solar owners in the state.
Add in the fact that commercial system costs have dropped almost 70% in the last decade – and it’s clear that there has never been a better time to go solar.
With diminishing federal financial incentives and net metering compensation, it’s important to act now.
For California manufacturers dealing with volatile electricity prices and energy instability, solar is a savvy long-term investment that helps you gain greater independence from the grid and save up to hundreds of thousands every year in operational costs.