More and more industries are turning to solar for some or all of their energy needs, and the construction industry is no exception.
Providers are meeting this growing demand by improving integration between the disparate technological and practical requirements of the solar and construction industries. Policymakers are reducing the financial barriers to adopting solar technology with tax credits and other incentives.
Between improvements in solar technology, increased cost efficiency, and progressive political initiatives, the time is right for the construction industry to move towards a solar future.
Growing Demand for Solar
According to the Solar Energy Industries Association (SEIA), solar has experienced annual growth rates of 33% during the last decade. Installation costs have fallen by more than 60% over the same period. Declining costs and increasing demand, coupled with federal tax credits for investors, have helped facilitate a nationwide solar capacity of more than 130.9 gigawatts – enough to power 23 million homes.
Although California has traditionally dominated the market, other states are rapidly following suit, with Texas and Florida among the biggest adopters of solar tech. This growth has picked up speed over the last few years, with two-thirds of all nationwide capacity installed since 2015.
The Inflation Reduction Act (IRA) promises to be a game-changer for solar growth. The act pledges to lower energy costs and build a clean energy economy by offering incentives to make solar and storage more affordable and accessible for businesses.
A key IRA initiative is the expansion of the Solar Investment Tax Credit (ITC), which has increased from 26% to 30%. And while the ITC once covered only solar systems with storage, it now applies to EV charging and micro grid projects. It also allows tax credits for projects built in former fossil-fuel-producing sites and in priority areas such as tribal lands, low-income locations, and energy communities. Some projects could qualify for all of these incentives, potentially offering combined tax credits of up to 60%.
Diversification and increased availability has the potential to drive an increase in the amount of overall installations. The ITC can now benefit local governments, nonprofits, and other tax-exempt organizations in a more direct way, cutting through swathes of red tape that once prevented or disincentivized organizations from pursuing solar projects.
Solar Legislation Expanding in California
As the biggest solar market in the country, it’s no surprise that California is leading the way in solar-friendly policymaking. In 2022 we saw the publication of an updated Building Energy Efficiency Standards code by the California Energy Commission (CEC). The CEC made history in 2019 with requirements for all new residential builds to be installed with solar PV systems, and new commercial developments to include roof space for panels.
The CEC has expanded what was the most radical solar mandate in the U.S. to include a storage requirement. The new code stipulates that all newly constructed commercial buildings (and some types of residential buildings) must be installed with a solar PV array and an energy storage system. Building types subject to the new legislation include grocery stores, office buildings, financial institutions, high-rise multifamily facilities, retail outlets, schools, warehouses, convention centers, hotels, libraries, theaters, and medical offices and clinics.
The implications of California’s new energy code are far-reaching. Over the next three decades, the mandate is estimated to provide $1.5 billion in consumer benefits and reduce greenhouse gas emissions by 10 million metric tons.
The code will reinforce the imperative for major corporations to move their energy supply toward solar. Apple has already achieved carbon neutrality across corporate operations and aims to achieve it for products by 2030. Walmart, Amazon, Ikea, Costco, and Target are among other big brands to have invested massively in solar over the past few years. This trend is likely to continue as ‘going green’ becomes a central plank of corporate messaging.
Resource Management & Solar Partnerships
While the aforementioned multinational brands have the resources to plunge vast amounts of investment into solar, small and medium-sized businesses face a tougher time. Building a dedicated internal solar team is time-consuming and expensive. Commercial solar projects demand precise coordination across each phase, from engineering and procurement to construction and maintenance.
For organizations that can’t build their own solar departments, the solution lies in working with solar provider partners. Construction is a key industry for future solar growth; contractors are increasingly turning to solar providers for end-to-end solutions to their energy needs.
Sunworks has been building commercial solar projects for two decades, and is committed to helping construction companies and their clients meet their solar goals quickly and efficiently. If you have questions about solar for your business, contact us today.