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Can Solar Power Increase Your Commercial Property Value?

By February 1, 2023Blog, News
Rows of solar panels mounted on the roof of an industrial building with green landscaping and trees in the background.

Commercial solar installation undoubtedly offers several significant perks for businesses. While it is easy to list the benefits of commercial solar energy to power a business property, quantifying their values takes time and effort.

One of the commercial solar systems’ prime benefits is their impact on commercial property value. It should not be a surprise to find that a building with solar photovoltaic (PV) systems is worth more than another that relies on electrical power generated from fossil fuels. However, how can you determine how much a commercial property’s value increases through commercial solar panels installation?

Solar panel systems can significantly increase a commercial property’s value. After all, renewable and clean electrical energy resource is a profitable investment. Commercial solar panel installation can deliver an excellent ROI (return on investment) by increasing your property’s market value.

Continue reading this piece to learn how having a solar power system at your commercial property will boost its resale value.

Can Solar Power Increase Your Commercial Property’s Value?

Looking across the roof of a commercial building with solar panels.

Yes, but not for everyone is the quick response. Not all commercial solar projects are created equal, and location is one of the most significant factors.

It will be challenging to argue that your property value will rise enough to support solar as the best renewable energy option if you live in an area that experiences significant periods of darkness throughout the year (or if your building is shaded by a nearby mountain or forest tree line during peak sun hours). Likewise, commercial solar is not ideal if local regulations forbid net metering and you are not qualified for other advantageous financial incentives.

Non-geographical characteristics also make each project distinctive. Even solar installations include several possible dangers, some of which are unlikely, such as building concerns, faulty materials, and even a small amount of commercial risk (as one would have with any significant commitment of company resources). These hazards may affect the real value that a planned project adds to (or takes away from) a particular property.

Let us think about the instances below. It would be challenging to argue that a solar rooftop system contributed any value if it was built incorrectly and caused property damage that outweighed any potential energy cost savings.

Alternatively, suppose your solar installation is completed on time and within budget, but you used low-quality equipment that would malfunction after a few years. What meaningful value have you added? Finally, the alleged value-add may be in doubt if your solar equipment is of high quality but your provider files for bankruptcy while your system is still covered by warranty.

Potential dangers can be considerably decreased by collaborating with a trustworthy, properly insured solar equipment vendor with the experience and resources to offer a comprehensive solar panel warranty to support a high-quality product. The numerous variables that may affect the overall value of a commercial solar system can be identified with the assistance of a skilled energy expert.

Ways in Which Solar Power Can Boost Commercial Property Value

Aerial view of California commercial building with rooftop solar panels.

When it comes to business premises, solar panels have a terrible reputation. Many people erroneously think that solar panels make it harder to sell your commercial property and even lower the property value.

According to numerous property owners, solar panels actually add to the value of commercial properties and make them more appealing to purchasers.

Reduce Overhead Costs

Your company must pay for overhead expenses each month. These are a few examples of rent, mortgage, utilities, supplies, and power. The electricity cost may be one of your higher monthly expenses for many businesses. That monthly cost is eliminated with solar panels. Your commercial property generates its electricity, saving you money on electricity costs and drastically lowering your monthly overhead costs.

Lower Electricity Bills

A solar panel will eliminate your reliance on grid electricity for all enterprises. However, cutting back on usage will still be advantageous and help you pay less for electricity. Since you only pay for what you use, several electricity companies, including Dominion in Virginia, now use net metering systems. You have more capital and cash thanks to a lower electricity payment, which you may use to pay for other business needs.

Little Upkeep

Solar panels are a pretty robust piece of machinery, although they appear fragile and breakable. Solar panels can survive the rigors of nature and continue to operate correctly in the rain, sun, hail, or snow. As a result, solar panels require little maintenance after they are installed. Many solar panels do not even require maintenance for years.

Not Dependent on Grid Energy

Not being reliant on the grid can have further advantages in addition to saving money on grid electricity. This includes not experiencing unplanned power disruptions or rising energy prices.

How Much Potential Property Value Does a Solar System Add?

Aerial view of solar panels on rooftop of Visalia Citrus commercial building.

After deciding that commercial solar is, in fact, the best option for your company, you might be curious as to how much property value will be raised. This is where difficulties with the valuation of commercial real estate are present.

Even though the response “it depends” may not be very pleasing, it does provide the opportunity to learn more about the various ways solar might raise a property’s value. The answers to each of the following questions will have a significant impact on the specific effect of solar on commercial property value:

1. Does Your Business Own the Property for the Solar Project?

Adopting commercial solar power by an organization that owns both the site and the installed solar equipment results in the greatest possible value-add. Purchasing commercial solar equipment enables owners to take advantage of any potential tax benefits, lower energy costs, and the opportunity to recoup “green energy credits” (as well as the ability to promote the green attributes of their solar system). Added value for commercial real estate is also on that list of advantages.

2. What Are The Advantages Of Commercial Solar Energy Delivered Through The Leased Property?

The fact that many businesses choose to rent rather than buy their commercial real estate does not exclude them from reaping the same advantages. The lessee is responsible for most of the property’s expenses, including insurance, property taxes, and utilities.

Installing commercial solar may help save the lessee’s energy expenses while also allowing them to gain from having solar on their property and a favorable public view.

3. Are There Any Softer Advantages To Getting Solar That May Eventually Harm Commercial Property’s Values?

Few things speak to “environmental consciousness,” “social responsibility,” and “progressive thinking” as loudly as conspicuous business solar panels, which is a less obvious but noteworthy consideration. A commercial solar system delivers all the advantages and financial savings of becoming green, in addition to enhancing public perception while also modernizing a building’s outward appearance. Properties with more appealing exteriors typically have higher property prices.

Other Benefits of Commercial Solar Panel Installation

Ground-mounted solar panels against a city skyline.

Solar panels have a number of other advantages besides just raising the property value of your business location.

Quick ROI (Return on Investment)

The return on investment (ROI) will play a significant role in determining whether to put solar panels on a commercial property. The original investment cost and the amount of energy your solar panel produces will significantly impact your project’s overall return on investment. Businesses typically have four to six years to see a return on their investment.

Clean Energy Option

Your company’s investment in green energy will encourage customers to use your products/services as more consumers switch to cleaner, more efficient energy sources. This shift toward “environmental awareness,” “social responsibility,” and “progressive thinking” may therefore have an impact on your overall earnings.

Solar Investment Tax Credit

Solar panels are also eligible for a tax credit for solar investments in addition to these advantages. Virginia property owners are eligible for the federal solar energy tax credit. Using this credit, you can deduct 26% of the installation cost of solar panels from your taxes. This incentive, however, is only valid through 2024. So do not wait if you are thinking about installing solar panels.

No Increase in Property Tax

Typically, your property taxes rise together with the value of your property. That is not the case concerning the installation of solar panels. You do not pay more taxes because your property value grew because of solar electricity. After all, solar energy equipment is exempt from municipal property taxes.

Get Commercial Solar Power Installation from Coldwell Solar

As you can see, solar power is a high-value technology that will significantly boost your company. Turning to solar power is smart whether you are trying to raise the value of your property so you can sell it for more money in the future or you just want to give your company more value and good branding.

Due to renewable energy’s assurance that your energy expenses would be lower and its favorable effects on the environment, investing in clean energy will free up your money so you may use it elsewhere.

The Fed has passed a bill granting renewable energy funds, meaning an expanded tax credit for renewable energy users

Contact us to learn how you can benefit today