In the last year, Pennsylvania businesses have experienced an unprecedented response to legislative changes impacting the cost of electricity. Electricity rate data provided by eia.gov over the past 20 years shows that commercial utility rates in Pennsylvania have steadily increased by 1 to 5% annually, with some years remaining flat and occasionally even decreasing, as in 2012. However, over the last year, commercial rates in Pennsylvania had an average increase of 21.21%.
Businesses who have not switched to solar energy are effectively paying for it anyway, but without the benefits of the investment. The simple fact is that federal and state incentives, combined with friendly solar financing, have led to an exodus of commercial clients from utility companies. As a result, utility companies in Pennsylvania have had no choice but to raise rates among their existing customers, a trend that is likely to continue for the next decade and beyond.
If your business has not assessed its energy plan, indecision could cost you hundreds of thousands of dollars in operating capital.
Three key factors for market changes in Pennsylvania:
- Despite rising interest rates, solar renewable loans garnered massive appeal due to lenders factoring in that businesses will pay down the 30% federal tax credit in the second year of the loan. Thus minimizing dealer fees and keeping the interest rate low, while also eliminating penalties for early repayment. These loan products have make businesses cash flow positive in year one of installing their solar system, Giving businesses new found operating capital.
- While many Pennsylvania businesses are leveraging the solar loans, others are leveraging the benefits of C-PACE, short or Commercial Property Assessed Clean Energy program that removes the need for a lender, and instead finances the cost of solar through a property tax program. C-PACE allows property owners to make energy-efficient upgrades to their buildings, including solar installations, with no upfront costs or fees.
- The federal government’s passing of the Inflation Reduction Act (IRA) in the summer of 2022 was the catalyst of change. Moving the federal tax credit from 26 to 30% was just the beginning. Pennsylvania’s history of coal production has led to a dense population of “energy communities” which offer additional tax credits. If your business facility is in an energy community, you may be entitled to additional tax credits and grants on top of the 30%.
How to get a Financial Solar Report
If you’ve read this far and are curious about what incentives your business is entitled to, request a free solar report from TerraSol Energies. The free report includes a preliminary solar design, incentive research, and two 25-year cash flow projections for both cash versus financing. Knowledge is power for Pennsylvania businesses. Not knowing can be costly.