Are You Considering Solar for Your Business?

The high cost of electricity in New Hampshire, the decreasing cost of solar panels nationwide, and recent innovations in energy storage, mean that more business owners are considering solar power.  Potential benefits range from improving a business’s bottom line to boosting a business’s image in the community.  If you are deciding whether or not your business should invest in solar, the following considerations will ensure that your business gets the most out of its investment.

I. Initial Concerns

The primary consideration is proper siting of the solar array, which is essential to power generation.  Start by interviewing a few solar companies and asking for references to companies that have completed similar projects in your area.  The solar companies can visit your property to assess potential sites.

In addition to maximizing power generation, you should also consider other ways siting may affect your business.  For roof installation, a primary concern is whether the roof can sustain a solar array, taking into account the roof’s age, condition, and orientation.  For a ground-mounted solar array, concerns can include anything from local zoning and permitting requirements, to aesthetic or logistical concerns.  For example, will the array obstruct your neighbor’s view, meet setback requirements or obstruct snow plows in the winter?  Is there access for not only installation but also for future maintenance?  Do your neighbors have the right to create shade that will affect the array’s productivity, by allowing trees to grow too tall or by constructing new, taller buildings nearby?  Before moving forward with installation, you should also consider whether there are any easements or other property rights that may be affected.

II. The Agreement

After determining that your business has a viable site for a solar installation, you will need to consider whether you should purchase an array or enter into a Power Purchase Agreement (PPA) with the solar company.  The PPA lets you purchase the solar power without purchasing the array.  Whichever you choose, the agreement should address who will secure any necessary permitting or approvals for the installation.

If you choose a PPA, you should consider whether an installation will increase the local tax assessment for your property, and if so, who will be responsible for the additional taxes.  The PPA should also designate who will be able to claim any of the potential federal tax benefits, state subsidies or rebates, or local property tax exemptions that may apply.  (See our blog post “Could Your Solar Property Qualify for a Tax Exemption?” for more information on solar tax exemptions.)

Some other considerations to include in the PPA: Who will be responsible for maintaining the array and surrounding area, and ensuring the site has proper vegetation and drainage?  Who will cover the cost of repairs if there is damage to the array, or if it malfunctions?  Who will bear the cost if the array does not produce at the projected rates?  The agreement should address how a dispute will be resolved, should one arise in the future.

III. Safety, Security, and Insurance

There may be additional costs and insurance coverage needed when adding a solar array to the property.  Costs may include adding a fence around a ground installation, or replacing or fortifying a structure for a roof installation.  Consider insuring the array itself, supplementing with additional premises liability coverage, and adding workers’ compensation insurance.  Also make sure the solar company installing the array has its own coverage.  The PPA should address these costs, as well as who will provide security for the solar panels if needed.

IV. Long-term Considerations

Another area of concern is what will happen in the future.  If you enter into a PPA, it should provide the option to extend the term or purchase the array at the end of the term.  The agreement should also determine what will happen if you decide to sell the property or business, or if you plan a new renovation or construction project that could affect the array.  You should also address who will remove or replace the array at the end of its useful life.

This might seem like a long list of items, but businesses looking to take part in the growing solar energy market for both cost and environmental reasons can avoid future problems by first addressing these issues with legal counsel.

About the Author: Kelley Stonebraker

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