Last updated on January 24th, 2022 at 12:00 pm
Savvy business owners and c-suite executives are always looking for strategic and innovative ways to leverage their financial position. Historically, a commitment to solar energy was a hot button to support sustainability-focused marketing messages and brand positioning, but today it is considered a prime investment opportunity.
As businesses contemplate their financial position for 2022, solar energy can be a profit and loss (P&L) game changer. There are on-balance and off-balance sheet benefits for commercial businesses to invest in solar energy.
On-balance sheet benefits
Continued education is needed on the financial benefits of solar energy. It is not an overstatement to call this investment a P&L game changer. Business owners are often surprised as they learn more about the on-balance sheet benefits of a solar project. An investment in solar energy:
- Increases the value of a business
- Creates tremendous cash flow and EBITDA improvements
- Lowers current rates, and locks rates in for 30+ years
- Produces annual dividends between 10% and 20+%
- Yields an increased value for a business for sale
“Solar energy is a great opportunity for portfolio diversification with a significant and steady return on investment,” says Ray Hoffman, marketing manager for Current Electric Company.
Off-balance sheet benefits
While sustainability-minded business owners have been first adopters of solar energy, all business owners are becoming aware of the off-balance sheet benefits. Implementing sustainable practices, such as solar energy investments, is more than an environmentally conscious corporate value, it is a best practices tool for marketing, sales, and recruitment.
From a marketing perspective, it provides messaging to support community building. It makes a business, such as a manufacturing facility, a promotable good neighbor. This also supports sales. Furthermore, from a sales perspective, more and more big box stores along with the Department of Defense are requiring sustainability reporting from their supply chain. A solar investment is a way to comply with these pressures and win contracts.
And when it comes to winning the war for talent, given a choice between a company with sustainable practices and one without, businesses committed to environmental responsibility have an edge with potential employees. It serves as a beneficial recruitment tool.
What’s the catch?
An investment in solar energy is like selecting the right stock option, it has to be a good fit for the balance sheet. Businesses that have a volatile or turbulent income statement and an unpredictable need for access to capital are not necessarily a good fit for this financial option.
Solar energy investments are usually a longer, smarter play for businesses in a harvesting cash mode with solid balance sheets and predictable results. “Those who have established businesses with things running smoothly are a good fit as well as those looking to transition to an ESOP or pursuing a sale,” says Hoffman.
The solar industry is growing and businesses looking for a smart investment in 2022 will find solar projects offer a broad range of on and off-balance sheet benefits.
Visit https://www.currentelectricco.com/solar/commercial-solar/ to learn more about Current Electric’s commercial solar services.
Contact Jim Sullivan for a no fee investment proforma tailored to your unique needs.
2942 N 117th St., Wauwatosa, WI 53222
(262) 214-5598 • currentelectricco.com
