June 2, 2016 | By RGR Marketing Blog

The growth of solar energy has slowed a bit as fossil fuel prices have dropped a bit and conventional energy markets have stabilized somewhat over the last two years. Despite this, investing in solar power still has many benefits for small and large businesses alike.

Big consumers of energy are still investing in solar power systems, and other solar energy purchasing arrangements to achieve sustainability goals and to hedge against the projected volatility of conventional energy markets.

It can be difficult for many businesses to decide between the various power generation or purchasing options available to them when pursuing a commercial solar deal. On-site purchased commercial solar is still a compelling option for many businesses. Other businesses may find that leasing onsite solar is best for them. And still others will find that entering into power purchasing agreements (PPAs) may be better for them, whether the solar panels are located on-site or elsewhere.

While many businesses would not combine purchasing or leasing their own systems with PPAs, it does happen occasionally. Read on for an examination of the pros and cons of each approach.

Direct Investment

If a business is interested in installing on-site commercial solar and has the available investment capital and the tax burden necessary to handle both the accelerated depreciation and tax credits associated with owning a new on-site solar power system, then this is often the best option.

This can also be an excellent way for a business that doesn’t have a high enough credit rating to lease a system or the desire to enter into a PPA with a long-duration of fifteen or twenty years. However, direct ownership does generate additional costs for maintenance and operation of the system.

Leasing a Solar Power System

For a company that doesn’t have the free capital and tax burden to benefit from the direct investment in an owned, onsite solar power system, and does have the necessary credit rating, leasing an on-site system can be an excellent approach to fulfilling sustainability goals.

Leasing generally has little to no startup costs associated with it, and maintenance and operation costs are typically included in the deal. The downside of leasing a system is that the business will end up paying considerably more over the course of the lease than it would have cost them to purchase it outright.

Power Purchasing Agreements

For many businesses, entering into a third-party PPA will be the best possible option. Just as with a lease, a PPA has little to no start up investment associated with it. As with purchasing or leasing a solar power system, a PPA allows a business to hedge against the future volatility of the conventional power market.

And, unlike a leased or owned system, the business entering into a PPA does not need to have the space (or ideal power generating conditions) to install a solar system on-site. This has an attendant marketing opportunity cost associated with it as consumers will not actually see evidence of sustainability on-site. But this cost is generally low when compared with the potential benefits of a PPA.

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