Solar Return-On-Investment (ROI)admin2021-02-15T15:23:43-06:00
Solar Panels Return On Investment (ROI)
Are Solar Panels Worth It?
In a world where central banks create money out of nothing, finding a safe investment is challenging. When businesses and building owners consider a solar investment, they often ask: “what’s the return on investment for a solar panel system? Is it worth it?” At Tick Tock Energy, our goal is to help answer those important questions.
Investing in your facility with solar and energy-efficiency solutions reduces electrical operating expenses and may provide a much higher return on investment (ROI) compared to the cost of trying to acquire new customers.
Solar panels provide a long-lasting, reliable and low-maintenance power generating system that can last 30 years and beyond. Consider this famous quote:
“I’m not so much concerned about the return on my money as the return of my money.”
– Will Rogers, Great Depression era
Turn Sunshine Into Cashflow SM
Investing in a solar system yields many benefits. Protect your business from electricity inflation, reduce your operating costs, capture great tax incentives, and receive income from Solar Renewable Energy Credits (SRECs) for producing your own power.
With so many great solar incentives in Illinois and in other states, business owners should take a serious look at solar panels’ ROI and the financial benefit they provide.
The factors to consider when estimating cash flow of a solar project include:
Annual electricity costs savings
Annual operating costs
Investment Tax Credit (ITC)
5-Year Accelerated Depreciation (MACRS) Benefit
SREC (Solar Renewable Energy Credit) Income
Other Grant or Rebate Income
Future equipment cost replacement (like an inverter)
Taxes on income (e.g. on SREC income)
Insurance premium increases
In addition to the items listed above, an organization might reap additional benefits such as higher building rents, marketing benefits and more—further enhancing the ROI of solar panels.
Example cash flow estimate for commercial solar PV investment:
The typical solar PV investment “break even” point often occurs between three and six years after installation for an Illinois business entity and possibly similar or longer in other states. Key factors that influence solar return on investment are factors such as:
Cost of the project
Cost of electricity
Similarly, the Internal Rate of Return (IRR) of a commercial solar investment will range from 10% to 20% in many situations. This estimate does not factor potential improvement to your property value. When you sell your property or business, you may find an additional return from your investment in solar panels.
Boost Property Values & Increase Net Operating Income (NOI)
Commercial real estate valuations are often evaluated based on the net operating income (NOI) that a building generates for an owner. Lowering electricity costs is an easy way to boost NOI, and thereby increasing property value.
If you’re still asking yourself if solar panels are worth it, give us a call or contact us online—our experts are ready to discuss your specific application.