In Focus: Corporate Solar Responsibility and Its Potential
Joe Langan, President and CEO, Langan Energy Solutions (Fall 2011)
When we think of solar energy, we immediately associate it with residential homes, vast commercial warehouses, and utility-scale desert installations. This association is not unusual, because the majority of solar installations are at these types of sites. But limiting the technology to these locations is a mistake, and we are missing a huge opportunity in rooftop solar for office buildings.
The building sector consumes 49 percent of all energy produced in the United States and the U.S. Energy Information Administration (EIA) has reported that this percentage is only going to grow. Furthermore, fossil fuels supply 76 percent of building energy consumption, a figure that is expected to grow by 12 percent by 2030, according to the same source.
Considering that there are 10 billion square feet of office space nationwide, office buildings consume an enormous portion of our national energy production, impacting both the environment and company pocketbooks. It is time that office-building owners begin to explore solar system options, especially now that solar panel efficiencies are able to overcome the challenges presented by office buildings, whose roof areas are often compromised by HVAC and other equipment. Long-term cost savings and the environmental benefits of "going green" are a real draw for companies looking at their financial and social bottom lines.
Let me give you an example. We recently installed an 80-kilowatt rooftop solar system on a three-story office building in Clifton, N.J. This system is expected to offset 10 percent of the building's electricity load and 28 tons of CO2 annually, the equivalent of removing 10 passenger vehicles from the road. Additionally, due to the Section 1603 Treasury Grant Program; the one-year federal 100 percent bonus depreciation allowance; earnings from Solar Renewable Energy Certificates (SREC), a state solar incentive; and savings in energy bills, this system has an expected payback period of under five years.
The office-building owner made an intelligent long-term investment, expecting to break even on the system within five years, and continuing to save on operating expenses during the 25-year lifespan of the system. The building is also now more marketable to tenants and prospective buyers and can boast impressive carbon savings.
If U.S. companies nationwide installed solar systems that offset only 10 percent of a building's electricity load, they would collectively save at least $1.5 billion a year in energy expenditures and offset the carbon emissions of approximately 1.5 million cars. Plus, as solar technology improves, these energy and carbon savings will only increase.
Unfortunately, the high upfront cost of solar means that the only states in which rooftop solar on office buildings is viable are those with liberal solar incentives. The long-term cost savings of solar technology are undisputed, but many companies must rely on incentives to overcome upfront costs. Adding further importance to state incentives is the fact that federal incentives, like the treasury grant and 100 percent depreciation bonus programs, are due to sunset at the end of this year.
Thus, for companies to be able to make this important switch to solar, states must improve on current solar incentives or, in most cases, begin to implement solar incentives so that solar technology becomes economically viable in the short-term. The time is now for companies and state legislators to come together to understand the enormous benefits of solar for office buildings - and for the businesses and public officials who have publicly stated their desire to improve their carbon footprint, it is time to practice what they preach.
Which states have the most liberal solar incentives?
California offers generous incentives to residential-, commercial- and utility-scale projects throughout the state that include rebates and tax incentives. New Jersey offers Solar Renewable Energy Certificates (SRECs), which are publicly traded financial instruments that represent the environmental benefits of solar (as opposed to the actual energy). More
- Joe Langan, President and CEO, Langan Energy Solutions