Solar energy systems can work for companies of all sizes

Over the past several years, we've seen a string of high-profile commercial solar projects. These projects have generated so much PR and media attention that you can barely watch 5 minutes of CNBC without hearing someone mention renewable power or go off on the coming cleantech revolution.

Do solar energy systems make sense for small- and medium-sized businesses, too?

There are a number of obvious differences between Fortune 500 companies and smaller outfits. In general, large firms have more resources. Typically, though not always, they have more on-hand cash (i.e., free cash flow). They also have more equity and often get better terms when borrowing or issuing debt. Perhaps most important, when accepting requests for proposals from contractors, large firms commonly have more leverage relative to their smaller counterparts. In sum, large firms are better positioned to: (1) shoulder the upfront costs of a PV system, (2) get the best price for each watt of installed PV, and (3) generate positive PR, given their large marketing budgets and relative prominence in the marketplace. 

Despite these general differences, the fundamental premise of solar energy remains true for companies of all sizes. A solar-energy system can shield your company from electricity price inflation and price spikes, reduce peak-demand surcharges, and generate positive publicity. Depending on your company's energy usage, and on the types of incentives available to businesses in your area, you could cut energy costs significantly. Let’s take a closer look at two companies in Oregon--one small, one medium--who have done exactly this.

Pacific Botanicals

Situated in southwest Oregon, Pacific Botanicals is a small company that grows a variety of organic herbs. Faced with a $1,000 a month electricity bill, owner Mark Wheeler crunched the numbers and decided to go solar. He installed a 24.3-kW solar PV system on the roof of one of Pacific Botanicals outbuildings, and a 3-kW array on the roof of his home. Together, the systems now provide a full third of Wheeler's residential and commercial electricity needs.

At about $181,000, the entire system was not cheap. But a number of government incentives combined to cover or offset about two-thirds of the commercial costs. The Energy Trust of Oregon provided a cash incentive. Wheeler also benefited from the Oregon Business Energy Tax Credit and a federal commercial tax credit. The rough financials look like this:

    $181,000K total costs

    $41K incentives from Energy Trust of Oregon

    $62K energy tax credits from the State of Oregon

    Five-year accelerated depreciation

    Nearly $4,000 estimated average annual energy cost savings over 20  years of operation

Beyond these financial considerations, Wheeler cited the importance of ensuring that his business "walks its talk". In other words, as an organic producer that strives for sustainability, Wheeler believes it's essential to run the business in a manner that's consistent with the ideals embodied by the company. From this perspective, installing a solar-energy system was a sensible choice.
 
For more details, see the Pacific Botanicals case study (PDF) provided by the Energy Trust of Oregon.

Solar for Small Businesses (page 1)   Solar for Small Businesses (page 2)