Last year over $500 million was invested in solar energy. Microsoft, Google, Wal-Mart, Warren Buffet’s MidAmerican, Costco, Apple, and Kohl’s are just a few of the corporations that have invested in renewable energy and more specifically solar farms. But why are they investing?
Many businesses are looking to cut their carbon emissions. From a marketing standpoint it looks good to show the world that their business is taking steps to fight climate change. In the past, this was done by purchasing renewable energy credits that were associated with renewable energy projects. But over the years, wind and solar farm projects have grown, as a result, the cost of building and owning these projects has declined and this has lead to the investing in renewables. This infusion of long-term capital has helped spur the renewable energy market and these investments represent a deeper commitment to the environment. An additional benefit of these investments is they also help reduce the utility bills of the corporation, which could lead to higher profits in the long-term.
So the next question is why invest in solar farms? Corporations are finding that solar panels are more appealing because the panels can sit on top of unused rooftops to generate their own power on site. Others are buying the renewable energy that flows into the grids where their operations are located. Google co-owns a renewable energy power plant that sells electricity to utilities. Whatever way a corporation invests they are hoping to make a good return on the investment.
Another reason to invest could be the 15% return after taxes, which is higher than most bonds. It could also be that solar farms are now considered ‘bankable’ or less risky and part of a broader market. But whatever the reason, as more businesses invest, it is nurturing the young renewable energy industry which should help lower the price of solar and promote the use of clean power and that is a win-win for the public and the corporations themselves.