A dealership needs plenty of electricity during the day for heating, air conditioning and computer systems and for the service department and body shop. But after employees go home for the day, energy consumption is still higher than at most other businesses. Dealerships have huge banks of lights that help provide security on the lot at night.
Just like manufacturers and suppliers, dealerships are looking for ways to save money on operating expenses so that they can beef up advertising or have more flexibility in negotiating prices.
"A well-run dealership is doing everything it can to reduce expenses," says Paul Taylor, chief economist for the National Automobile Dealers Association. He predicts more dealerships will add solar panels to their roofs.
"It's going to be large in states where conditions are favorable," he says. "Utilities are a big factor in your life. With utility bills up by double digits recently, you will find more dealers looking at (solar electricity) as we go forward."
States that have the ideal climate or that have enacted tax incentives for solar panels are California, Arizona, Florida, New Jersey and New York.
NADA did not have an estimate on the number of dealerships around the country with solar panels. Taylor estimates that around 100 dealers nationwide have invested in some type of solar energy system.
Kinney believes that installing the solar panels on the roof, at a cost of $1.2 million, makes good business sense. He cites four reasons:
1. Cost. California pays about half the total cost of the system.
2. Tax credits. California offers a 7.5 percent tax credit; the federal government allows a 10 percent credit.
3. Depreciation. Capitol can write down its cost for the system 50 percent the first year and 10 percent over the next five years.
4. Monthly savings. Electricity produced by the solar panels is expected to cut the dealership's monthly $15,000 power bill to $10,000 or less.
Kinney says the dealership should recoup all its out-of-pocket expenses within five years. The solar panels are warranted for 25 years and are expected to last 30 years with just a small potential drop-off in efficiency.
As long as the sun shines on the solar panels, the electricity produced will be used on-site at the dealership, says Paul Moreno, a spokesman for Pacific Gas and Electric, the utility that serves the San Jose area.