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When a business decides to install solar power in Texas, it is almost always a purely financial decision. Your CFO will love us because we can immediately help your bottom line and provide long-term predictability, stability, and savings from day-one. There are a variety of factors that, when combined, make solar for businesses in Houston a particularly obvious choice:

  • Reduce Grid Electrical Consumption
  • Reduce your Utility Demand Charge
  • Apply Generous Tax Credits
  • Use Accelerated Depreciation
  • Funding through TX-PACE (PACE Houston)
  • Meet Corporate Sustainability Goals
  • Provide for Critical Infrastructure Backup

Consumption Reduction:

This benefit is pretty obvious. With solar, you will generate a portion of your annual electricity on your own roof, and use it to run your business. This eliminates some of the power required from the grid, thus reducing the amount you are paying a retail electric provider for selling you power. By owning the generation capacity, you are not reliant on their electricity and are not subject to price increases.

Demand Charge Reduction:

On commercial electricity contracts, the demand fee in the Houston region can account for 30-70% of the total bill. This is a scary and misunderstood charge that most people do not fully understand. Solar will almost always dramatically decrease your demand charge in two ways: 1) It lowers your Peak Demand, and 2) it can reduce the Demand Charge Rate Tier. This double-punch is one of the most often overlooked benefits of commercial solar. Your business can save a ton of money every month just by taking a bite out of the demand charges. If you want to read more about how demand charges are reduced by solar in the Houston region, just check out our free whitepaper on Using Solar PV to Reduce Demand Charges in Texas.

Industrial Rooftop Solar

Tax Benefits (incentives and depreciation):

There are several lucrative tax benefits for businesses that decide to install solar panels. One is the Investment Tax Credit (ITC), a U.S. federal corporate tax credit that is applicable to commercial, industrial, utility, and agricultural sectors. This very generous incentive assumes 26% of the total installed system cost in 2022. The ITC is set to remain at 26% through 2022 and will ramp down incrementally through 2024 before remaining permanently at 10% thereafter. So, it’s important to act now.

Another major tax benefit is accelerated depreciation (MACRS) to reduce the overall cost of a PV installation. Because depreciation is considered an expense, having a larger amount to depreciate during the tax year results in a smaller overall tax liability. With solar, accelerated depreciation rules allow the full tax basis minus half the ITC to be depreciated over a 5-year schedule. Taxpayers are allowed to deduct a larger portion of this amount in earlier years, giving them the benefit of a greater immediate reduction in federal tax liability.

Finally, a business with a solar PV system placed in service before December 31, 2022, can elect to claim a 100% bonus depreciation. Starting in 2023, the percentage of capital equipment that can be expensed immediately drops 20% per year (e.g., 80% in 2023 and 60% in 2024) until the provision drops to 0% in 2027.

If all this accounting jargon makes your head spin (it sure does for us), we can provide your CFO or CPA with detailed guides developed by the US Department of Energy and the IRS.

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PACE Houston (Low-interest financing without a traditional business loan):

Property Assessed Clean Energy (TX-PACE) is a financial tool that helps commercial/industrial property owners install solar (and other green initiatives) with little or no capital costs up-front. This program was adopted by the state legislature and the City of Houston to provide commercial, industrial, and multi-family property owners access to private, affordable, long-term (typically 10-20 years) financing that is not available through traditional funding avenues. Programs like TX-PACE are ideal if you want to finance your installation without incurring any upfront capital outlay. PACE solves the economics of installing solar by producing a cash-flow positive project from day 1. Projects can be secured by the building that they benefit, and are repaid (at low-interest rates and with $0 down) through the property tax bill instead of from corporate earnings. TX-PACE is not a personal or business loan. It is a voluntary land-secured assessment that is paid off over time. The energy savings are structured to exceed the cost of the assessment, resulting in projects that are cash flow positive from the outset. As the assessment is tied to the property, the repayment obligation transfers to the next owner if the property is sold. Houston Solar Energy will work with the Texas Pace Authority and your preferred Capital Provider to design a project so that you can gain access to this valuable program.

Meeting Corporate Sustainability Goals:

Many corporations have sustainability mandates which can be met through the use of a variety of methods, including photovoltaic solar. If your company has goals to reach a net-zero footprint or otherwise reduce your carbon impact, solar can be a large piece of that puzzle. Houston Solar Energy is ready to help you calculate the direct environmental impact that a large-scale solar project can have on your company. Make your shareholders and investors happy by making the earth happy!