Solar for businesses has become the undisputed choice of many entrepreneurs with increased awareness about the benefits it bestows. Along with being a brand recognized for environmental consciousness, they can also realise many financial advantages.
India’s solar capacity has seen a drastic increase and will reach 100 GW soon. The contribution of businesses also lies here. In this blog, you will learn about the various benefits of solar for commercial installations and how quickly it can earn its ROI.
Top reasons why businesses are switching to solar
Energy independence
Businesses can have complete control when they produce energy from solar plants. It reduces reliance on the conventional sources of power from the public grid. They know their energy needs and can decide the capacity of solar systems. This helps them remain self-sufficient.
No impact of volatile prices
Prices of energy generated from fossil fuels are highly volatile, as they depend on various geopolitical reasons. This creates a lot of tension in business operations. Businesses with solar plants need not worry, as they have energy to meet their demands.
Continuous operation
Businesses need to operate without any interruption, and dependence on traditional power sources can impact production. Shifting to solar provides a reliable source of power. Energy can also be stored in batteries for use during low production days.
Reduction in energy bills
Electricity bills are a major expenditure for businesses. Shifting to solar for business can save a significant amount in energy bills. Over time, there can be a complete reduction in bills as a long-term benefit. This leads to cost savings for a business, which can be diverted as investment for business expansion.
Protect the environment
Businesses can contribute their part in protecting the environment from harmful gases. This has a long-term impact, as it improves your brand image as an environmentally conscious business.
Sustainable growth
Long-term sustainability is the goal of all businesses. Shifting to solar energy helps achieve this goal and match the worldwide push for sustainable growth.
Tax benefits
Businesses can also enjoy tax benefits and concessions when they adopt solar energy. Accelerated depreciation allows 40% depreciation of equipment in the first year of operation, thereby reducing the tax burden.
Financial benefits for businesses to choose solar: The ROI
The financial benefits weigh more than the initial investment, and this reigns as a major factor for businesses to choose solar.
Here are some factors that determine the ROI of commercial solar installations:
- Bigger solar systems generate more energy, leading to more energy and cost savings.
- Locations that get optimum sunlight throughout the year have higher production capacity, hence greater ROI.
- Availability of government incentives reduces the upfront cost and leads to greater cost savings.
Here is how the ROI from commercial solar panels is calculated:
ROI (%) = [Total lifetime savings – total cost (includes installation and equipment)] / cost x 100
The average lifespan of a solar system is around 25 to 30 years. The average payback period for commercial systems is around 5-7 years. This implies that businesses can expect an immediate payback, which is a game-changer.
In the long run, the power bills become nil. Also, with net metering, businesses can earn credits for excess energy supplied to the power grid.
Accelerated depreciation, which allows for nearly 40% depreciation of solar assets in the first year, leads to significant cash flow that stabilizes the business. This can be invested back in the business for expansion.
Hence, the huge financial benefits are clearly an attractive aspect for businesses to switch to solar. Along with helping the environment, they can help their long-term growth and sustainability.
Conclusion
India has been witnessing a considerable increase in businesses shifting to solar. Solar energy for businesses not only provides them a viable alternate source of power but also helps in realizing long-term financial benefits. There are several factors that decide the amount of ROI businesses can enjoy. Consult your solar company today to understand your requirements and get the best benefits from solar.