There’s a lot of buzz around solar energy these days, and rightly so. For business owners, it can provide great returns, access to tax breaks and rebates, and freedom from dizzying electricity costs. Self-storage happens to be a good sector for solar, as most facilities have flat or lightly pitched roofs that are free from shade. They also tend to have consistent, predictable electricity consumption.
To take advantage of the many benefits solar can provide, it’s important to understand what a panel installation can do for your business. Let’s dig into some common questions and misconceptions to help you decide whether it’s the right move for your self-storage property.
Is Solar Expensive?
The important thing to understand is not all solar projects are created equal. Each one is different and must be judged on its own merits. While solar is often a great fit for self-storage, it’s important to know exactly how much your property can benefit.
In putting together a proposal, a solar installer will take into account the type of roof material you have, the tilt and direction of the roof, the amount of sun your facility gets and any shading at your site. They’ll also consult decades of weather data, the metering policy of your utility, and any local, state and national incentives.
Though there’s valuable insight to be gained from other self-storage businesses that have evaluated or installed solar panels, this information shouldn’t be used to replace your own customized quote. Some projects can pay you back in a couple of years, while others may take more than a decade.
I would argue that solar isn’t an expense at all. Rather, it’s a business investment that’ll bring you a return over time. That return will be determined by the above factors. Whether an installation is worthwhile should boil down to how much benefit it’ll generate in comparison to other investments, not simply the price tag of the project. The gains can be impressive, especially for self-storage properties, which can offset as much as 100% of their electricity use and generate tens to hundreds of thousands of dollars in additional revenue.
Will Solar Save You Money?
A solar project isn’t about savings, it’s about earnings. By reducing the amount of money you pay the utility company, you increase your net operating income (NOI), which increases property value. Solar helps reverse the trend of rising electricity costs. As the price of electricity rises, your return on solar will increase, and your installation will also appreciate in value.
Isn’t It All About the Environment?
Not entirely. It’s more about achieving significant financial return. Other benefits include being a responsible investor and an environmental steward as well as helping you achieve ESG (environmental, social and governance) goals for your business. Self-storage operators can often use these advantages to bolster their marketing efforts and earn media coverage, but the vast majority of solar panels get installed because of return on investment.
Is Solar Just a Fad?
It would be more accurate to say solar is inevitable. Renewable energy is a rapidly growing American industry. In the first half of 2022, it yielded 24% of all electricity generated in the United States and 67% of new electrical capacity, according to the U.S. Energy Information Administration and World Economic Forum, respectively. In one way or another, your self-storage business will soon be powered by renewable energy (if it isn’t already). In addition, the increased incentives that have been passed into law mean the adoption of solar will accelerate quickly.
The self-storage industry has been a large adopter of solar installation. Countless independent operators have put panels at their facilities, and some of the sector’s largest operators—Extra Space Storage, Life Storage and Public Storage—have launched projects across their portfolios. Ultimately, it’s about control. As a business owner, is it better to enjoy the benefits solar can provide or buy electricity at rapidly increasing prices? For those who are concerned about how their profitability is being affected by inflation, economic volatility and rising costs, solar is increasingly becoming a solution to these conditions.
At the end of the day, solar is an excellent way to bolster the profitability of a healthy self-storage business. It can increase NOI and value while providing access to tax breaks, rebates and federal grants.
Should I Seek Professional Guidance?
Because every solar project is unique, it’s crucial to have a solution tailor-made for your self-storage business. The best way to understand solar and how it can benefit your operation is to get in touch with a reputable installer (or two or three), particularly those who have experience in the industry.
These professionals will take a little bit of information—usually your address and 12 months of electric bills—and turn it into a free feasibility study that’ll show you the real economic benefits to your self-storage operation. A good installer can even evaluate your likely consumption if you’re adding additional units or developing a new property. For something that takes about an hour of your time, it could net you hundreds of thousands of dollars.
Aubrey Lethbridge is a commercial energy consultant with Austin, Texas-based Freedom Solar, a nationwide solar installer. Founded in 2007, the company has completed residential and commercial installations in more than a dozen states and specializes in evaluating and installing projects for local, regional and national self-storage portfolios. For more information, call 512.387.4574; email [email protected].