For your consideration, here are the ways Solar Electricity aka Solar PV can add value to your business and your future…
#1. Quantitatively reduces operating expenses. When we analyze your property for cost-cutting with solar, we give you a 30 year Pro Forma on projected annual savings by installing rooftop solar on your commercial property. These are hard numbers from which we derive a return on cost. On average the cash-on-cash return from annual savings on your electricity bill is 10%.
#2. Quantitatively reduces personal tax liability. Solar PV projects come with tax credits from the federal and state government. You have an investment tax credit and federal and state depreciation savings. Overall these incentives make up 60% of your project cost on average. That means the owners of the building that install solar can use 60% of the project cost as a one-to-one reduction of their personal tax liability. I’m talking about credits, not mere deductions. The vast majority of that 60% can be “redeemed” in year 1. The rest is spread out over the next 5.5 years.
For example, a $1,000,000 Solar project will give its investors $600k in tax credits on average.
These are the two main benefits, when combined, achieve a 3-5 Year Payback, on average, from your upfront investment for Solar PV.
There are many more Tangible, Financial Benefits.
#3. Hedges against rising electricity rates. We’ve experienced an average increase in electricity rates in California by 3% over the past decade. Solar PV protects you from electricity inflation because as your rates increase so do your savings from Solar. Protect yourself against uncertainty.
#4. Frees up cash flow. Because you’ve significantly reduced your electricity bill, what can you do with the extra cash? Solar perpetuates a virtuous cycle of positive cash flow because you can use the savings from solar to invest in other cost savings projects, which further compounds your savings and cash flow. Other cost-cutting measures for you to consider include EV Charging and Battery Storage. We can help with both.
#5. Wins you the highest prices. Thinking about selling your property? Solar PV isn’t just for long term holders. Reducing your electricity bill means increasing your net operating income on the property. Because theoretically property values are calculated comparing your NOI to a cap rate, an increase in NOI leads to an increase in property value during disposition.
Say your property is valued at a 5% CAP. An annual savings from solar of $100k will increase your property value by $2,000,000. You net $1,000,000 because the average cost of installing a Solar PV system that yields $100k of annual savings is $1,000,000.
#6. Alternative to raising rents. Are you having trouble meeting performance goals on the property? You think about raising rents but the market just won’t allow it. Quantitative cost-cutting with Solar helps you increase your NOI the other way. Cost reduction works in a good or bad market. In other words, it’s sustainable.
#7. Wins you the best properties. Solar helps you play to win. You are scoping out acquisitons to your portfolio. After searching through 100s of candidates, a property pops on your radar–finally–with the fundamentals to meet your stringent criteria. But 3 or your competitors want this gem as well. You look at the electricity profile of the building and notice Solar can offset $100k in billing each year. You are comfortable putting in a winning bid because your future cost-cutting strategy is sound.
#8. Wins the arbitrage game. These projects can be financed many ways–with your own capital sources or with ours. Put your low interest rate debt source toward a positive cash flow producing Solar project. Pocket the spread.
Say you have refi’d the property at 3.32% (which isn’t unheard of these days) and you assess Solar identifying a 10% cash-on-cash return (conservative estimate). The difference is 6.68%. On a $1,000,000 Solar project that is $66,800 in previously unrealized positive cash flow.
We can provide financing for your Solar project if you do not have one of your own. Lenders love the quantitative nature of Solar.
#9. Wins you the best tenants. The largest and most prestigious corporations in America are increasingly setting environmental sustainability goals in addition to their usual profitability benchmarks. Often they look at the facilities wherein they operate for opportunities to achieve these goals.
If you add Solar to your building, you strengthen your ability to attract the most stable and long term tenants possible because Renewable Energy on your property helps them meet corporate strategy goals therefore making you a desirable landlord.
#10. Attracts investors. High Net Wealth and Institutional investors are increasingly looking to make investments in companies and funds that are sustainable–of both the financial and environmental definition of the term. Kill two birds with one stone. Add Solar PV to your portfolio.
We see this especially with public REITs getting direction from Wall Street to add Renewables to the mix.
If any of these tangible financial benefits interest you, please email us at email@example.com or call us 213-599-3937. We’ll schedule a free consultation.