Expert: Now is the Time to Get Solar on Your Business

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Erik Melang, 52, the CEO and co-founder of Distributive Solar, says now is the time for business owners to put solar panels on their facilities. He should know; in under one year since he launched the business, his team has 75 megawatts of solar projects in the pipeline.

Erik recently made the case for investing in solar now in a post on Linkedin and joined me for a quick conversation (watch it at the top of this article) to talk about the reasons.

He offers four primary reasons for considering solar now:

1. The investment tax credit on solar installations will begin to expire in 2020. Given the time required to evaluate, design and install solar, there isn’t much cushion in the calendar to take advantage of the tax benefits.

2. Even before the solar investment tax credit begins to expire, the accelerated depreciation provisions of the tax code will begin to be phased out. In 2018, the first year depreciation on new equipment will drop from 50 percent to 40 percent.

3. Interest rates continue to be low, allowing a business with good credit to finance most if not all of the cost using ten-year financing that will allow the business to save more in electricity than it pays in total financing costs each year, thus providing instant positive cash flow and leaving the business with a free source of electricity after only ten years.

4. The pre-tax cost of solar is lower today than many in the industry thought possible by 2017. Commercial-scale projects can be completed under $1.70 per watt installed before any tax considerations.

There are lots of solar calculators that can help you get a more exact number, but according to one, the average number of KWH produced by each watt of installed solar is 1.44 per year. If you pay, say, $0.20 per KWH to your utility, you avoid $0.288 per installed watt per year. In this hypothetical example, you would achieve savings of 16.9 percent.

Of course, every situation is different. The further south your business sits, the more sun you tend to get. Utility rates vary, having a lot to do with your community’s proximity to coal.

Erik says utility rates are likely to rise more or less with inflation as the cost of coal, oil and gas production will tend to rise with inflation. This suggests that your future savings could be even greater than your current savings.

Because the sun is likely to shine consistently year after year and the panels are guaranteed for 25 years, according to Erik, the risks are low. With double-digit returns possible–even before tax considerations–and when those returns are highly probable, it makes sense to give serious consideration to these opportunities.

Given that many utilities are making net metering difficult if not impossible, Erik recommends installing only enough solar panels to provide for your peak daytime load (or less) so that you never have to sell power back to the utility. This approach is called staying “behind the meter.” Like conservation tactics like LED light bulbs, you reduce your power bill and keep all of the savings. No need, he says, to get mired in the bureaucracy of selling power back to the utility.

Scott Hill, President of Clean Energy Advisors, a Your Mark on the World Center sponsors and investor in Distributive Solar, says, “The cost of solar is coming down to the point where it makes sense for businesses to consider taking some control over their energy needs. Plus, more and more customers are demanding the businesses they purchase products and services from are being responsible about their carbon footprint.”

One day soon, he notes, power storage technology will allow businesses to produce all of their own power reliably and affordably, but that day hasn’t arrived, yet.

Today, he says, is the day to put solar power to work for your business to reduce but not fully eliminate your power bill.

Erik Melang, courtesy of Distributive Solar

More about Distributive Solar:

Twitter: @distrsolar

Commercial Solar Origination. Recruiting, training and supporting commercial solar consultants to present the economic, branding and environmental benefits of going solar to commercial business owners.

Erik’s bio:

Twitter: @espmel

Erik Melang is a Co-Founder of Distributive Solar and oversees the firms Recruiting, training and support of Independent Sales Representatives. Erik previously served as Managing Director of Impact Partners, where he led impact strategies initiatives and renewable energy private equity investments. It is in this role that Erik was drawn to the amazing business opportunity around Commercial Solar Origination. The industry is in the early stages of mass adoption and Commercial Business Owners are realizing the tremendous economic benefits of deploying solar panels on their rooftops. Erik is an Appalachian State MBA with strong desire to learn and teach and is an avid follower of everything solar and all things “Impact.” Erik’s interest include Clean Energy, Fishing, Snow Skiing, Travel , Guitar Pickin’ and is a child adoption advocate.

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