Power Up Your Profits: Investing in Solar Panels

Power Up Your Profits: Investing in Solar Panels

A recent presentation sponsored by the AutoCPA group has my mind on harnessing the sun’s power. Specifically, how auto dealerships can benefit greatly from investment in solar panels and why dealers should be starting now to prepare for a changing future. With rising energy costs, commitments by government agencies for increasingly stringent emission standards, and targets set by automakers for increased electric vehicle (EV) sales goals, dealers may want to consider solar as part of their strategic cost-savings plans.

We have had dealers reach out to us about purchasing their operating facilities from the previous owner and their desire to have us involved throughout the process. In addition to advising on entity structure, financing, and cost segregation studies, solar panel investment will be at the top of our discussion list. We started to envision clients’ available rooftops covered with solar panels, which even prompted some dealers to consider an investment in carports. A carport could also house solar panels while performing its usual duties of protecting inventory from the elements and providing for improved inventory lighting. 

One aspect to be shared with dealers that we had not previously considered before attending this presentation was the minimized installation disruptions (they are on the roof!) to the dealer’s regular operations. Working through and around building renovations and improvements can be a real drag for the dealership team and on a customer’s dealership experience. While on the subject of customers, we suspect many customers would be impressed and appreciate a dealer’s commitment to alternative energy, similar to the way they respect a dealership’s commitment to their communities. 

Starting the solar panel investment sooner rather than later will ensure dealers are able to benefit from tax incentives, including the federal Investment Tax Credit. 

The Investment Tax Credit is currently a 26% tax credit for projects commencing in the years 2021 and 2022. The credit drops to 22% for projects commencing in 2023, so dealers have an incentive to act now. Dealers can also benefit from bonus depreciation benefits related to solar projects under the Tax Cuts and Jobs Act, and the dealer’s state may offer certain state tax incentives as well. Making the solar investment now not only allows the dealership to capture the benefits previously noted but will begin the start of continued utility cost savings for years to come.

We look forward to partnering with auto dealership clients through their solar journey, but it is clear to us that dealers need to build a relationship with a solar expert they can trust. 

An expert in the auto dealership solar space can help dealers properly plan the optimal EV charging station locations and their appropriate charge levels now to meet manufacturer requirements and to meet future needs. They can also guide dealers through solar equipment purchasing and financing, permitting, installation, and maximize the dealer’s return on investment through careful analysis of peak demand times and future expansion, including excess power storage. If a dealer is unfamiliar with how solar can produce significant cost savings in a world of rising energy costs and join the efforts to produce clean, sustainable energy, the time to act is now!

Contact ARB

As a Team Leader for ARB’s Auto Dealership Advisory Services Team, I am actively involved in the industry and committed to helping auto dealerships maintain effective, efficient, and compliant financial operations. I can help you analyze and uncover the opportunities available from converting to solar. If you’re ready to discuss your strategy, contact me today!

by Laura Everett, CPA

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Laura Everett is a principal at ARB. She provides accounting, attest, tax, and business advisory services primarily to auto dealerships, credit unions, and buy here/pay here finance companies. Prior to joining ARB, Laura began her career in private accounting with a Maine-based auto dealership group, where she developed a keen understanding of automotive accounting and issues facing the industry. Laura works closely with dealership accounting offices to advise on office operations and centralization, internal controls, month-end procedures, fraud investigations, and industry and legislative updates.

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