The Future is Solar: Why Commercial Buildings Should Go Solar
The climate crisis demands urgent action, and the commercial real estate sector has a crucial role to play in reducing greenhouse gas emissions. Buildings account for nearly 40% of global emissions, with commercial real estate responsible for a significant share. As we look to decarbonize our economy, solar power represents one of the most impactful solutions available today for commercial properties. Installing solar panels on warehouses, offices, retail stores, and other buildings can deliver strong financial returns while showcasing corporate sustainability commitments. The future is undoubtedly solar for the commercial real estate industry.
The Falling Price of Solar Power
One of the biggest drivers making solar more compelling for commercial buildings is cost. According to the Solar Energy Industries Association, the average price of solar panels has dropped by more than 70% over the last decade, leading to a corresponding drop in the cost of installed systems. With solar already at price parity with fossil fuels in many markets, the economics will only become more favorable over time. As technology improves and installation scales up further, solar energy will be downright cheap in the years ahead.
Significant Energy Bill Savings
Solar energy offers commercial property owners the chance to cut utility bills substantially. Sunlight is free once the solar system is in place, allowing buildings to reduce grid power purchases. Any excess solar electricity produced can even be sold back to the grid through net metering programs. For commercial portfolio owners facing rising retail electricity rates, going solar has an obvious appeal. GAIN Renewables client Metro Storage LLC recently highlighted how its solar installation at a Chicago self-storage facility is generating first-year savings of $8,600, with a payback period of just four years. The projected lifetime savings are over $350,000. Examples like this will encourage other companies to tap solar’s money-saving potential.
Improved Property Valuations
There is growing evidence that solar can boost commercial property values, making systems an attractive investment for landlords and tenants alike. A recent Lawrence Berkeley National Laboratory study found that commercial solar projects can increase building valuations by an average of $4 per installed Watt once the tax benefits are factored in, though the increase can be much higher. This asset value lift results from lower operating expenses and demonstrated management commitment to sustainability. As savvy companies market their real estate’s green credentials to attract tenants and buyers, solar energy will become a must-have feature.
Enhanced Brand Reputation
Corporate solar investments offer a highly visible way for companies to improve their brand reputation with customers and shareholders. Big-name brands including Apple, Amazon, and Target have installed hundreds of megawatts of solar capacity at their facilities to lower emissions, enabling them to trumpet their environmental credentials. Commercial property owners can highlight solar projects in sustainability reports to showcase their commitment to fighting climate change. Even small-scale systems provide green marketing opportunities. In a world where consumers and investors increasingly factor sustainability into purchasing decisions and capital allocations, solar projects deliver significant reputational value.
Compliance with Building Codes and Standards
Looking ahead, solar energy will become more imperative for the commercial real estate sector as green building codes and standards continue to evolve. Many jurisdictions have already mandated solar readiness provisions on new construction. For instance, California’s Title 24 requires all new commercial buildings to reserve roof space for potential solar installations. Such policies aim to facilitate future decarbonization. Voluntary green building certifications like LEED are also upping their renewable energy criteria, encouraging solar adoption. Companies will find solar projects helpful for meeting both required and optional standards that support emissions reductions.
The Inevitable Transition to 100% Renewables
Given the compelling economics and reputational benefits, solar energy is set to displace fossil fuels for a growing share of commercial buildings’ needs. Many leading corporations have already committed to transitioning their operations to 100% renewable energy by specific target dates. Google, General Motors, Apple, and Coca-Cola are among over 400 companies pledging to go all in on renewables through the RE100 initiative. Commercial property owners will play an instrumental role in bringing these clean power visions to life. Rooftop and off-site solar represent readily available technologies to help companies meet their energy goals. The transition to zero-carbon buildings is inevitable, and solar will lead the way.
A Brighter Future Through Solar
The world has reached an inflection point where inaction on climate change is no longer acceptable. The commercial real estate sector must leverage solutions like solar to chart a more sustainable path forward. By investing in solar panels, portfolio owners and managers can reduce emissions while enhancing financial performance and brand reputation. For any business focused on success over the long-term, solar represents an obvious win-win opportunity as well as a moral imperative. The future of commercial buildings is undoubtedly solar. Contact tad@GAINrenewables.com to discuss how your properties can capture the benefits today.