As you may be aware, I drum up interest in solar energy for businesses in Oregon. As it turns out, the incentives for going solar in Oregon are unmatched, that is, if you have the tax liability to make everything sensible. Here’s an example of how I create preliminary estimates for some of my clients:
Step 1: Hit the online maps and the phone
I have been making 40 outbound calls a day, mostly to wineries and nurseries throughout the state. Nurseries are particularly good targets because they usually have a lot of land, and have traditionally done well even in the face of some of this economic uncertainty. I mainly use Google Maps to find these businesses:
Step 2: Zoom Zoom Zoom
When I’ve had a friendly chat with the owner and have got them interested enough to at least consider some numbers, I zoom into their roof:
Step 3: Paint it up
Next, I take a screen capture by hitting the “PrtSc” button on my keyboard and paste the image into MsPaint so I can draw the area where solar panels might go (I love MS Paint. Check out what I did with that program to mock up some concentrating solar power plants last year):
Step 4: Crunch, Crunch, Crunch
At this point, I’ve got a nifty little image of the roof of their business, have oriented some potential panels on the southerly facing side of the building. Now it’s time to break out the heavy machinery to produce a solar quote.
I spent quite a bit of time creating an Oregon commercial solar energy calculator in Excel, and boy has that ever been worth it. I can now simply select from several options to suit the situation of my potential clients and quickly get proposals out the door by printing to PDF. Options include whether the owner will finance the system or not, if their roof is pitched (flat roofs require more square feet to produce the same amount of solar energy due to shading), roof material, if there is a long conduit run, and who their utility provider is (different utilities have slightly different incentives):
Built into the spreadsheet I also calculate the cashflow of the project in more detail with several assumptions. The biggest assumption is the client’s ability to benefit from rapid depreciation on this equipment. Specifically, solar energy is on a 5 year rapid depreciation schedule. This means the owner of the business could write off the entire cost of the system as a loss on their taxes over these five years. However, as a result of the recent stimulus bill, there is now a bonus depreciation in the first year of 60%. So, if the business is forecasting some 2009 tax liability and go solar, they will potentially be able to eliminate 60% of the system cost from their taxable basis (and 10% over then next 4 years). This could potentially save them from paying multiple thousands of dollars in taxes. I am no tax advisor and I make that clear on the phone, but it is imperative they get on the horn with their Oregon tax professional to figure out potential savings:
Step 5: Communicate the benefits of going solar
If you are running a business in Oregon and are projecting any state and federal tax liability for 2009 and/or beyond, there’s a lot to consider here.
- First, you get a first year payment from the Energy Trust of Oregon for going solar which will amount to roughly 20-25% of the cost of the installed system for working with a trade ally. This is considered taxable income, however if you take advantage of the depreciation above, you will probably be able to easily write off this amount on your taxes.
- Second, you get the Oregon’s 50% Business Energy Tax Credit (lovingly referred to as the BETC, “Betsy”) for going solar. That’s right, 5-0, half of the system in state tax credit taken at 10% per year for 5 years. Even if you don’t have that amount of tax liability in these years, you can extend the credits out an additional 8 years. Alternatively, there’s something called a passthrough mechanism, where those businesses that do have significant tax liability will purchase your 50% credit from you and sell it back to you for 33%. That option can be included in your proposal as well, simply drop me a line.
- Third, you get the 30% Federal Tax Credit. This is a very flexible credit. You can take it all in year 1 if you have that kind of tax liability, or you can extend it out many many years.
- Fourth, there’s bonus depreciation. We already covered that.
- Fifth, you get a nifty solar energy monitoring system. You can beam all the data to a flat panel display in your lobby so everyone working with you and your customers can see how much energy you’re producing from the sun, the equivalence of planting X amount of trees, and your carbon reduction.
- Sixth, you’re going to realize a significant PR bang for your buck. We’re very well equipped to help you maximize all of the good press that will come from your decision to install solar on your business.
- Seventh, if you can take advantage of all these incentives, you can stay cash flow positive from the very beginning with a solar loan. Without the loan and your ability to provide a tax shelter through depreciation, the system will pay for itself in 3-5 years.
- Eighth, solar systems are warrantied to be kicking out at least 80% of their original capacity at year 25. So that’s quite a bit of energy savings there.
- Ninth, you’ll protect your business from further utility rate increases. By producing your own power, you don’t need to worry about future energy expenses.
- Tenth, we do all the paperwork, permitting, and incentive legwork for you.
- Eleventh, we guarantee the work we do on your building for 10 years, the longest workmanship warranty out there. We’ve also been installing solar for over 12 years and are the nation’s largest installer. You can take comfort in knowing we’ll be there to service your warranties if anything unexpected happens.
- Twelfth: We are local, good people. Our team includes seasoned professionals who contribute and are part of your community. We love Oregon, are passionate about solar, clean up after ourselves very nicely, and we exude friendly. Check out our hops:
Questions? Interested in an Oregon commercial solar energy quote? I’ll get you one and we can chat! Just fill out the form below:
Last modified: February 28, 2018