Over the past few years, you have likely seen an explosion in the usage and implementation of onsite solar across the United States.  While you may have shrugged your shoulders and figured that solar wasn’t for you, manufacturers (and your competitors) have a unique ability to benefit from installing onsite solar.

Sustainability

Likely, the most obvious benefits of installing onsite solar are its “green” benefits.  Whether you are in a B-to-C or a B-to-B industry, customers are increasingly including sustainability as part of their purchasing decisions.

Purchasing strategies that include sustainability can range from strict ESG (Energy, Sustainability, and Governance) goals that measure a company’s supply chain carbon footprint to simple purchasing decisions based on a product’s or a company’s sustainability efforts.

Regardless of the reasons to be sustainable, if you haven’t been asked about your own company’s carbon footprint, don’t worry….you will.

Manufacturers who have elected to install onsite solar have reported lower carbon footprints than their peers and reap all of the rewards that come with it.  Whether increasing business as part of a supply chain that requires sustainability or the publicity and marketing benefits of installing solar, installing solar can mean real dollars (more sales) for your organization.

Employee Retention/Recruiting

As you probably know, finding and retaining workers in this new economic environment is getting increasingly hard.  With unemployment levels at record lows, the pool of available workers is increasingly shrinking.

What does solar have to do with employment?  Being sustainable and good towards the environment is very important to the younger generation.  In a 2023 McKinsey study, 9 out of 10 GenZ’ers believe that companies are responsible for addressing social and climate concerns.

To attract and retain talent, a company’s reputation and values are increasingly important to this new generation of workers.

How does solar fit into this?  Not only does onsite solar help a company tell its story, but the visual aspect of solar on your site helps show these workers the company’s commitment to environmental responsibility.

Agree or not, workers are looking to companies to be more sustainable when they make employment decisions.  Your competitors are using onsite solar to tell their company’s story and display their values.

Cost Reduction

Saving the best for last…this might be the most important benefit to manufacturers!

For most manufacturers, energy and utilities comprise around 3 to 5% of the Cost of Goods Sold (COGS).  Some who have a more energy-intensive manufacturing process might see this number be as high as 20 or 25%.

Manufacturers who install onsite solar can take this 3 to 5% directly off their COGS (depending on how much solar they can install).  With costs for virtually everything increasing by the month, imagine being able to add 3 to 5% directly to your bottom line.  Ask your CFO if that would be impactful.

Depending on the state, solar can have an ROI of as little as three years.  Compare that to as little as 5-6 years ago when you would be looking at a return of at least five years on solar.

What Has Changed?

A combination of these factors has made solar energy more economical:

• Federal tax incentive (Inflation Reduction Act)
• Local state and utility rebates
• Reduction in the base cost of solar

Important to note: state rebates and utility-friendly rules are essential to have and know before installing solar.

Regardless, manufacturers that have elected to install solar will have an economic advantage over those that have not, especially in the face of rising electricity rates…which are likely coming.

Conclusion

In the end, manufacturers must decide if solar is right for them.  They must have long-term plans for their site, be able to install solar either on their roof or on adjacent land, and need to verify their financials for solar projects.

There is a reason that you are seeing more solar projects pop up across the US.  Just ensure that it’s you and not your competition benefitting from it…