CREJ

July 2021 — Property Management Quarterly — Page 15 www.crej.com Sustainability A n increasing number of businesses are boosting cash flow while also dif- ferentiating their business. They are investing in solar to capture waning tax benefits, reduce operating expenses and meet environmental, social and governance criteria. Navigating the complexities of a solar capital ener- gy improvement can be challeng- ing, so we’ve answered some of the most common questions below. n Are there any incentives to go solar? There are several incentives available. • Federal Investment Tax Credit: Taxable entities with tax burden will recoup 26% of the investment when filing taxes the year after installation. The ITC is scheduled to step down to 22% in 2023 and to a permanent 10% in 2024. • 100% bonus depreciation: The entire asset may be depreciated in the first year. The basis is 87% of contract price in 2021, and the value is a minimum 21% of the invest- ment for a Colorado corporation. • Xcel Medium Solar Rewards Program: For systems between 25 and 500 kilowatts, Xcel Energy pays 3.75 cents per kilowatt-hour of pro- duction for 20 years. Technically, it is buying your Renewable Energy Credits. • Utility savings: Every kWh produced by solar reduces what you buy from Xcel Energy, lower- ing operating expenses. There are mechanisms for recouping these benefits from tenants in triple-net leases. • Increased prop- erty value: Lower operating expenses increases net oper- ating income, and therefore building value. n What is the life expectancy of a solar system? An expertly engi- neered and con- structed system with equipment from reputable and bankable manu- facturers will have a three-decade estimated useful life. Solar modules themselves have a 25-year performance warranty. Inverters’ standard warranty is 10 years. n What is the typical payback period for solar? A typical 200-kW commercial solar system in Xcel Energy’s Colorado territory breaks even in six to eight years, then pro- vides 22 to 24 years of prepaid clean energy. n What can I expect to save, and will solar reduce demand? A typical 30,000-square-foot roof can accom- modate a 200-kW solar system. In year one, this system will reduce utility bills $15,000 or more, gen- erate about $11,000 of incentive income and produce over $185,000 in tax benefits on a $400,000 invest- ment. Demand (kW) is a separate charge on the bill, one for which we do not model savings. Solar can reduce measured demand, but because of the way Xcel Energy measures it (the highest single 15-minute aver- age throughout a month), it is not predictable enough to model with certainty. There is, however, a solar rate available that lowers the price of demand. n What is the most common solar system in the Denver market? Rooftop systems are the most common and cost-effective type of solar instal- lation in our market. Carports are another option for commercial property owners that will protect vehicles from the sun and ele- ments, such as hail. While they are double the cost (or more) of a roof- top system, they offer these addi- tional benefits: • Covered parking can generate revenue. • There is greater visibility for your system. • They pairs well with installing electric vehicle charging stations. Ground-mount systems are roughly 1.5 times the cost of a roof- top system and are more efficient systems but are not as common for commercial property owners due to the required land. Custom solar solutions like building integrated photovoltaics and solar awnings are much less common, frequently less efficient and always more expen- sive. Common questions about commercial solar energy John Shaw Co-owner and senior commercial solar project developer, Namasté Solar Please see Shaw, Page 27 Namasté Solar Denver Water’s goal was to build a net-zero building designed to be LEED Platinum, and the solar arrays were a major component of this design.