Solar Is More Important Now Than Ever Facing Energy Uncertainty
April 4, 2022
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June 21, 2022Rising Electricity Costs Are Driving Commercial Solar Demand
Rising Electricity Costs Are Driving Commercial Solar Demand
California’s electricity rates have been rapidly rising to meet demand of its booming private sector, prompting many commercial businesses to consider how to reduce future energy costs. Competitive businesses have found that investing into a sustainable future through commercial solar or other “green” technologies, provides energy independence and are much less-affected by future rising electricity rates.
As increasing inflation rates and the threat of recession create uncertainty for California businesses, utility providers will certainly continue to raise electricity rates for their customers. Inflating prices and absorbing costs are traditionally used to curb the effects of inflation, but competitive businesses are looking ahead – generating their own free electricity, improving future cash flow through creative solutions like commercial solar.
Investor-Owned Utilities Increasing Commercial Electricity Rates
Investor-owned utilities, or IOU’s, are responsible for providing most of California’s electricity; they’re also responsible for an average 30% rise in electricity rates for ratepayers just from 2020 to 2022. This rate spike was preceded by 20 years of rates consistently rising by an average of 3% annually. Even as current rates have risen 5-times more than average growth, IOU’s are scheduled to continue this trend.
Pacific Gas and Electric (PG&E) have already proposed additional rate increases up to 25% starting in 2023 for commercial, industrial and agricultural customers. Sempra Energy, parent company of San Diego Gas & Electric (SDG&E), is paying their investors its highest profits ever recorded, most significantly from SDG&E as its ratepayers face the highest per-unit electricity prices in the county.
Commercial Electricity Costs Case Study
To provide a tangible example of rising electricity rates, Revel Energy conducted an electricity cost case study using a Southern California Edison (SCE) commercial ratepayer going back 5 years. From 2018 to the beginning of 2022, this commercial business saw a shocking 37% increase in their electricity rates, an average increase of more than 7% annually.
With the foresight to look ahead, operations and management were intent on fighting electricity cost increases and inevitable future rising rates. Working with Revel to install a rooftop commercial solar system paired with energy storage, the facility was able to significantly offset electricity use starting in early 2020.
With increased cash flow from electricity savings added with lucrative incentives like the Solar Investment Tax Credit (Solar ITC) and the Self-Generation Incentive Program (SGIP), state and federal bonus depreciation – the net cost of the system was brought down to pay for the system back in less than 3 years. Designed with an expected 3% annual increase in electricity costs, the actual 7% annual average increase didn’t affect the solar-equipped facility as much as their neighbors without solar.
As the cost of electricity in California for businesses increases, many agricultural, commercial and industrial businesses are fighting these rising rates sustainably with commercial solar and energy storage.
For a majority of utility customers in California, businesses included, the average commercial retail price of electricity has increased on average by about 3.5% per year from 2001 to 2020. However, after global events in 2020 such as the coronavirus pandemic, rates through 2023 have risen much higher than previous averages. Some customers are paying annual increases as high as 23%.
This was revealed to us in a case study conducted by our team looking at customer utility data through the past few years.
Learn how 2023 electricity rates are increasing for businesses in different IOU territories such as San Diego Gas and Electric, Southern California Edison or Pacific Gas and Electric.
Rising Electricity Costs - A Catalyst for California Businesses Going Green
“Going green” is undeniably a good thing, doing so affordably is the challenge for modern businesses. As electricity rates get more and more expensive, generating free electricity is making commercial solar more affordable. Learn more about how California businesses are building capital through sustainability.
Without solar businesses will continue to pay rising electricity bills, it is baked every year into their budget. Investing that money into commercial solar and generating free electricity is the catalyst for California businesses going green.
Revel Energy has helped commercial, industrial and agricultural businesses take control of their consistently-rising electricity costs with dynamic energy solutions including commercial solar, energy storage, LED retrofitting and EV charging stations determined around their needs. Contact us today to learn how much your business could save in the face of future rising electricity costs.
Commercial grade rooftop solar is ideal for: manufacturing, warehousing, logistics, industrial, retail, hospitality buildings and more with over 10,000 sq. ft. rooftops.
CARPORT SOLAR
Free standing carport solar generates added solar power for properties with limited rooftop space. Added benefits include shading and protection for employees vehicles.
Crucial for reducing peak demand charges. Automated to supply electricity when your panels won’t. Energy storage is ideal for businesses that incur significant peak charges.
As the popularity of electric vehicles increase, so does the demand for on-site charging. This sustainable amenity has become a parking lot fixture for competitive employers.
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Client Testimonial: Kelemen Company
Corporate Business Park in Irvine, CA has created significant electricity cost savings through commercial solar installed across the 5-building business park.
Client Testimonial: Tice Gardner & Fujimoto LLP
See how this CPA firm saved on electricity and gained valuable tax credits through commercial solar that they used to keep cash in the businesses.
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