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Losing Operating Costs to Opportunity Costs – Commercial Solar

Commercial Solar & Losing Operating Costs to Opportunity Costs

Losing Operating Costs to Opportunity Costs - Commercial Solar

Businesses are built on making proactive decisions that directly influence their future operations. Businesses with a proactive approach consistently work on opportunities instead of reactive which focus on fixing issues. Hesitation to work proactively can result in lost opportunity cost. Commercial solar can help reduce operating costs for many businesses, but the longer they wait the more they spend on electricity bills.

Competition within industries creates urgency to make processes more effective and improve operations. The more time spent in the non-optimal status quo, the more time and money your business has lost to innovation. Commercial solar has helped countless California businesses take a step-up on their opposition by drastically reducing electricity bills while significantly increasing cash flow.

Capital expenditures are budgeted funds used by a company to acquire, upgrade and maintain physical assets. Businesses on the rise strive to keep a healthy cash flow to capital expenditure ratio, generating cash from operations and reinvesting back into the property, plant and equipment (PP&E).

Strategic planning can be deemed non-urgent and under-prioritized. Certainly important, but when planning for the future and the phrase “eventually” is invoked – those decisions wait to be made and have an indirect impact on the operations they would have changed.

Rising Energy Costs Table - 10000 Monthly Electricity Bill

Opportunity Cost - Electricity Bills

Electricity costs are an expected cost already budgeted for the business, which is what makes commercial solar such an affordable and lucrative decision. 

For example, a business that spends $10,000 on their monthly electricity bills in 2020 will spend a cumulative $1.5 million in the next 10 years and $3.2 million over the next 20. That is millions of dollars this business will have to spend without solar.

Commercial solar can, and has, offset annual costs upwards of $120,000, providing a healthy ROI quickly paying for the system that generates cash flow through those bill savings.

Opportunity Cost - Incentives & Programs

The incentives and programs surrounding solar make it much more affordable. The Solar Investment Tax Credit (ITC), currently valued at 26%, was originally scheduled to step down in 2021 but thankfully had its value extended. The ITC is a dollar for dollar tax credit, put simply, 26% of your solar investment goes toward that much less taxes paid. 

Other incentives, such as the Self-Generation Incentive Program (SGIP), provide rebates for businesses that opt for energy storage. However, the funds available are finite and the future currently looks unclear how this emerging technology may be incentivized. 

Another program facing uncertainty is Net Energy Metering (NEM), currently under the 2.0 version of the program, its proposed successor NEM 3.0 looks to take some value away from how it previously rewarded solar overproduction.

Opportunity Cost - Competitive Advantage

As some businesses continue to pay rising electricity rates, their competitors are taking a step forward and adopting solar. Each monthly bill paid without solar is increased operating costs compared to those who can harness the power of the sun. 

We surveyed some of our prospective clients and found that 9 in 10 expected their energy costs to rise. While not all businesses can take advantage of commercial solar, many already have and will continue to generate positive cash flow on the investment thanks to the powerful bill savings.

Innovation is key to business, companies that invest in sustainable technologies inspire their employees to think towards the future their company has invested in with commercial solar.

It is imperative to your business’ growth that any opportunity to improve is considered. Commercial solar can reduce and nearly eliminate the operating costs of electricity while paying for itself. Electricity costs have risen and will continue to rise to meet growing demand and pay for aging infrastructure, will your business continue to pay for these rising costs? 

Revel Energy is here to help your business take a step up on the competition. Contact us today for a free energy audit to learn how much your business could save on electricity bills.

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