Unused space is transformed into an energy producing hub for commercial building owners.
Solar energy is one of the most promising and profitable sources of renewable energy for commercial real estate (CRE) owners. By installing solar panels on their properties, CRE owners not only steeply reduce their utility bills and carbon footprint, but also increase their property value, rental income, tenant satisfaction and community image.
Read on to explore the benefits and opportunities of solar energy for CRE owners wanting to boost NOI and ROI, and how renewable energy systems create an enduring buffer to surging utility costs.
Benefits of Solar Energy for CRE Owners
There are so many advantages of turning empty commercial roofing space into an energy producing asset. Here’s a few to get started:
- Savings and Profit: Solar panels generate free, clean electricity for the property, reducing the reliance on grid power and lowering utility bills. Depending on the size and location of the system, solar panels can save thousands of dollars per year for the property owner and are typically a lower up-front investment. Plus, decreased reliance on grid power creates a buffer from inevitable utility inflation which sees increases of 4.4% and 2.8% with California breaking this average with skyrocketing energy inflation of 20-30% in 2023 alone.
- Increased property value: Solar panels increase the market value and attractiveness of properties, as they demonstrate the owner’s commitment to sustainability, innovation and community impact. For commercial properties, the value increase can range from over 4%, as solar panels can generate more income and savings for the owner.
- Higher rental income: Solar panels create additional rental income for the property, as they can attract more tenants who are willing to pay a premium for green, energy-efficient buildings and enable owners to charge market rate for the power produced boosting Net Operating Income (NOI). Solar panels can also increase the tenant retention rate, as they can improve the tenant satisfaction and loyalty when they see the lower bill they pay to utility companies.
- Tax incentives and rebates: Installing Solar panels opens up various tax incentives and rebates for property owners from the federal, state, and local governments, as well as utility companies. For example, the federal Investment Tax Credit (ITC) allows the owner to deduct 30% of the cost of the system from their federal income taxes2. There are also many state and local programs that offer cash rebates, grants, loans, and property tax exemptions for solar installations3.
The Many Solar Energy Opportunities
Solar presents a range of opportunities to take advantage of renewable energy systems, such as:
- Rooftop solar: The most common and popular option for CRE owners, as it utilizes the unused space on the roof to generate electricity. Rooftop solar is ideal for industrial buildings, such as warehouses and distribution centers that have large and flat roofs. Solar can also enhance the aesthetic and curb appeal of the property.
- Ground-mounted solar: Another great option for CRE owners who have vacant land or parking lots on their property. Ground-mounted solar can generate more electricity than rooftop solar, with the ability to re-direct orientation and tilt to capture the optimal amount of sunlight. Ground-mounted solar provides an option for shade and protection when utilized as parking for the vehicles underneath.
- Community solar: Community solar is a new and innovative option for CRE owners who want to benefit from solar energy without installing or owning the system. Community solar allows the owner to subscribe to a shared solar project in their area, and receive credits on their utility bill for the electricity generated by the project. Community solar can also help the owner to support the local economy and community, as well as diversify their energy portfolio.
How to Get Started with Solar Energy for CRE Owners
Excited by the benefits of installing solar panels on your property? We get it! Here are some steps that you can take to get started:
- Assess your property: The first step is to assess your property’s suitability and potential for solar energy. To estimate the size, cost, and savings of a solar system for your property, you should partner with a reputable contractor that has industry experience to provide you with accurate, customized estimates.
- Choose a financing option: There are three main options for financing a solar system: cash, loan, or lease. Cash is the simplest and most straightforward option, as it allows you to own the system outright and enjoy the full benefits and savings. Loan is another low-cost option that allows you to own the system, but with the help of a lender who provides you with the upfront capital. Lease is an option that allows you to use the system without owning it, but with a fixed monthly payment to the system owner or provider. Each option has its own pros and cons, and you should compare them carefully before making a decision.
- Select a solar installer or developer: The final step is to select a solar installer or developer who can design, install, and maintain the system for you. You should look for a reputable and experienced company that has a track record of successful projects and satisfied customers.
Choosing A Low-Risk Partner for Solar Success
There is no end to the number of companies selling solar as a means to provide false assurances about what solar can do, with unreasonable estimates and falsified production promises. Pay close attention to reviews and testimonials to make sure you’re getting a quality installation from a contractor that will stick around to support you and your investment.
Kodiak has provided exceptional service to industry titans such as Google and the Sacramento Airport, among many others, that prove we mean business when it comes to providing quality craftsmanship and industry knowledge for the past 30 years. We provide you with free, fully customized designs and estimates to fit your budget and vision to make sure you get everything you need from your system with the quickest ROI possible. Fill out a free quote or contact us today!
