The guest post below is written by the folks over at Extra Space Storage. It's pretty impressive what can happen when a company sets its mind on using clean energy and energy efficiency. They reached out to me to see if Mapawatt could feature one of their guest posts. I said sure, as long as I could speak with them first. What they didn't know is that my job is selling clean energy and energy efficiency to commercial and industrial customers for Groom Energy and I wanted to see if they were the real deal! Turns out they are. What's the biggest difference between Extra Space Storage and most other commercial and industrial users of energy when it comes to implementing energy projects you ask? They have a much longer time horizon (3-5 years as opposed to an average of 2 years across most other commercial/industrial customers) when it comes to evaluating the savings and ROI from these projects! That and the fact they have management that understands the value of clean energy and energy efficiency, and they have a team in place to implement these projects. Let me repeat that to stress the importance: Leadership who values clean energy and energy efficiency and a team in place to implement on these projects. Whether you're evaluating energy projects for your home or business, you need those two things to have a successful project(s). As always, email email@example.com if you want some more help learning how to evaluate and implement energy projects for your home or business.
Those of us with an interest in solar energy may be attracted to the clear environmental benefits but feel concern about the potential expense of installation. At Extra Space Storage (NYSE: EXR), a self storage company with over 900 self-storage facilities across the United States, we have been making the switch to solar power at those sites where it makes financial sense to do so. Our experience offers guidance in how to determine if a solar project is worth installing at your home.
One important factor to keep in mind is that this is a long-term investment. By finding ways to reduce the cost upfront and carefully estimating energy savings over the long term, it's easier to see whether choosing solar energy will work for you.
Extra Space Storage has installed solar on 120 storage sites in the states of California, Hawaii, Massachusetts, Maryland, New Jersey, Ohio, and Utah. Although it would be exciting to install solar in all our properties, the company could justify it best where the cost of energy is high and in states that contribute to offsetting the upfront cost of installation by providing financial incentives. Part of the reason that solar energy is particularly appealing to Extra Space Storage is because the nature of our business means that we use a lot of power to light, secure and even maintain moderate temperatures in climate-controlled storage.
In order to offset the significant capital investment involved in setting up a solar powered energy system, we relied on recent advances in solar technology, combined with government incentives for using solar energy. The combination of these incentives and calculated energy savings meant an estimated return on investment of just three to five years.
As a publically traded company this kind of return meant that we could justify these solar projects to our shareholders. Solar energy provides significant long-term environmental and financial benefits, but being able to show a shorter term return on the investment was important to get the company's investors and Board of Directors to sign off on the project.
Homeowners can engage in a similar cost-benefit analysis by examining the potential savings resulting from using solar energy and weighing them against the up-front installation expense. Like Extra Space Storage, this means understanding how these three important factors apply to your decision about whether to install solar energy in your home:
- Installation cost
- Incentives for using solar energy
- Cost of energy in your state/locality
1. Installation Cost
The cost to implement solar energy is often substantial. In order to understand the cost for your home, it's a good idea to get an estimate from a solar company. An experienced solar installation company will be able to help you understand the up-front cost of installation and your options for offsetting those expenses. As a homeowner you may qualify for a variety of government rebates and tax incentives, as well as for programs offered by your local power company. Non-profit companies don't qualify for tax incentives but can participate in PPA's (power purchase agreements), allowing them to skip the cost of installation and pay only for the cost of solar energy.
The key to looking for incentives to offset the cost of a solar energy project is to leave no stone unturned. Even if you do use an expert, it is probably a good idea to do some basic research yourself. Incentives exist not only at the federal level, but also from states and municipalities as well. One place to get started is DSIRE, the Database of State Incentives for Renewables and Efficiency. Here you can find lists of tax breaks, loans, and other government incentives offered by the various levels of government and find those for which you qualify.
3. Energy costs
State and local power rates are a major component of evaluating whether solar power is right for you. For Extra Space Storage, when deciding whether to utilize solar energy at a facility, one major factor is the cost of power in the locality where the facility is located. For example, although Hawaii currently has no incentives for solar power, because utility rates are so high there, the investment is cost-effective nonetheless. Similarly, states like New Jersey and California are also good locations for using solar energy because of their high cost of energy.
Making a Decision
Be knowledgeable about your current energy expenditures and whether you live in a state where this expense is on an upward trend. That can help you balance potential savings from using solar energy, along with incentives and rebates, against the estimated cost of installation. Get a sense of the out-of-pocket cost and how long it will take given your energy savings to break even with your investment. As a homeowner your need to balance investments and return will be similar to the considerations we completed at Extra Space Storage. Your considerations will be more personal based on your household needs but if your return on investment is around five years transitioning to solar power may be something you can justify.
If you decide to use solar power and have selected your solar installer, you'll be on your way. As a homeowner the installation company will guide you through all the next steps of getting permission for the project from local authorities, lenders, and local power companies. It typically takes about three to five months from deciding to install solar energy to the completion of the project. At that point, after a final inspection from your energy company, you can begin generating electricity. Once installed, the panels will last for approximately 25-30 years, producing substantial financial and environmental benefits.
Also, you should be aware that adding solar power doesn't mean you can't access traditional power. Most often throughout the day solar panels generate more power than a structure needs so the excess power goes into the power grid. The local power company utilizes this energy and supplies the provider of the solar energy with credit. At night, or during other times when the solar energy has been depleted, traditional energy is used against those credits.
Where Extra Space Storage has installed solar panels, the company has seen its energy costs go down by anywhere from 50 to 90%. The size of this reduction is affected by how much sunlight/solar power is collected, compared to the typical energy costs from the local power company. In addition to these short-term financial benefits, the company expects to see even more savings in the long-term, especially if energy costs from traditional sources continue to rise.
As a homeowner, installing solar power will also greatly reduce your energy expenses. Adding solar power to your home is a marketable asset, increasing its value should you decide to move.
Even if solar energy doesn't work for you today, it is a good idea to go back to it and re-evaluate the cost/savings ratio in 12-18 months. But also consider whether you want to act quickly, while aggressive incentives are available. How do you think solar energy can benefit you?
Brent Hardy is Vice President of Extra Space Storage, responsible for all corporate construction & facilities management. He writes about corporate sustainable practices at blog.extraspace.com/category/sustainability. In California, you can visit the Riverside self storage facility, one of many locations retrofitted to reduce energy consumption.