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Commercial Solar Panel Installations: Costs, Benefits & What to Expect

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Engineers holding tablet standing at solar panels roof
Vithun Khamsong / Moment / Getty Images

While rooftop solar systems have become increasingly popular among U.S. homeowners, commercial solar panel installations can be even more effective at generating low-cost renewable energy. Solar energy has a great deal to offer businesses due to the scale at which they can invest, the simplicity of most installations and the high energy costs associated with running a growing organization.

Most business' buildings have wide, flat roofs that can fit a large number of solar panels. Commercial solar panel installations are eligible for two of the largest solar incentives: the federal solar tax credit and net metering programs. Plus, the more solar panels you install, the lower your cost per watt will be. Altogether, this means commercial solar owners get a great bang for their buck.

What Does a Commercial Solar Panel Installation Look Like?

Commercial solar energy systems vary much more in size and scope than their residential counterparts. Most commercial solar arrays are significantly larger, and they aren't always confined to roofs. Some organizations opt for solar carports, while others install ground-mounted solar panels. Larger commercial operations may even feature a "power tower," an array of mirrors that focus the sun's rays onto the photovoltaic panels below them.

Commercial systems are usually installed on a flat surface and must be built on racks tilted toward the sun at the best angle for the solar panels to capture the most energy during the day. Some systems even include features that synchronize the panels' angles (or azimuth) with the changing height of the sun.

Keeping the cost per panel as low as possible is key to securing the quickest return on investment (ROI) for larger commercial installations. For this reason, we recommend selecting the most efficient solar panels available. The less space, products and planning needed, the lower the aggregate costs of the installation will be. More efficient solar panels also tend to last longer, ensuring a reliable investment.

Solar offers commercial property owners a growing number of solutions to offset a large chunk, or even all, of a business's electricity bills. A commercial solar system is a sizable investment, but solar incentives, tax breaks and new technologies make it a very attractive one. The ideal way to get a good understanding of the best solar installation for your business is to consult with a local installer near you and get a quote, which you can do for free below.

Commercial Solar Costs

Given the size of commercial solar projects, customers can usually expect a larger figure than the cost of most residential systems. No two businesses are the same, and though some small organizations may find great value in a commercial system costing around $50,000, large industrial facilities or solar farms can cost over $1 million to install. The good news is that as the scale of the system increases, so does the speed at which you can recoup your investment.

Several tax credits, rebates and incentives still exist for commercial solar panel systems as they do for residential systems.

Incentive Benefit for Commercial Solar Panel Installations

Federal solar tax credit

The federal solar investment tax credit (ITC) allows a deduction of 26% of the cost of the system for any commercial solar installation.

Bonus depreciation through MACRS

The Modified Accelerated Cost Recovery System (MACRS) allows a tax deduction for the depreciation of qualifying solar equipment. This solar tax incentive for commercial installations allows companies to recover their investments over an accelerated amount of time. For solar, this is five years. Bonus depreciation was introduced into MACRS after 2008 and allows you to allocate 100% of the depreciable value in just one year.

In other words, MACRS allows businesses to effectively accelerate their ROI through tax deductions.

Net metering

Commercial properties generating energy via solar panels are eligible for net energy metering (NEM). In the same way that a residential customer would feed excess solar energy back to the grid, commercial installations can exchange their surplus energy for credits from their utility company. These credits can be used to pull energy from the grid overnight or during rainy weather at no cost.

Statewide and local incentives

We encourage our readers to research statewide incentives or local incentives that may be available in their area. Depending on the area, a commercial solar installation could be eligible for solar rebates, renewable energy credits or zero-interest solar loans.

Benefits of Commercial Solar Installations

Commercial solar installations provide all the same benefits that residential solar installations do, only at a much larger scale. As most commercial solar installations can be well over 50 kW (the average residential is between 5 to 10 kW), some commercial solar installations can have over 10 times the environmental and economic impact of your average residential installation.

Environmental Benefits of Commercial Solar Panels

Commercial solar installations have the potential to offset hundreds, if not thousands, of the metric tons of carbon dioxide emitted by conventional energy generation. For example, a 50-kW commercial system will produce an estimated 65,000 kWh of clean energy per year. This would lower a business's carbon footprint by 1,000 metric tons over the course of a commercial solar power system's lifetime (the equivalent of not burning just over 1 million pounds of coal).

As a growing number of consumers are choosing to support businesses with responsible environmental practices, solar presents businesses with a golden opportunity to reflect their commitment to sustainability while still turning a profit.

Financial Benefits of Commercial Solar Panels

Energy costs are routinely one of the highest costs to businesses. Energy Star reports that the nation's small businesses spend over $60 billion on energy per year, and utility rates are only projected to increase over time.

Utility rates also fluctuate with frequent supply disruptions, so investing in solar allows businesses to offset their energy costs in a predictable, fixed manner. The average lifetime of a solar panel is around 25 years, so with the right warranty, a business can reliably budget its energy costs decades in advance. By offsetting the majority (or sometimes all) of their energy costs, businesses can reinvest huge sums of money back into their organizations, raising their bottom line.

FAQ: Commercial Solar Panel Installations

Are commercial solar panel installations worth it?

Installing solar panels is one of the best financial investments a business can make. Assuming they have the proper space and climate for solar panels, businesses can offset huge chunks of their energy costs while fostering an ethical image. With a good number of soon-to-expire commercial incentives on the market today, there has never been a better time for businesses to invest in solar.

How long does it take to install commercial solar panels?

Commercial solar installations are typically much larger than residential installations, so they can have a more intensive install process. Depending on the size of the system, commercial solar panel installations can take anywhere from weeks to months to complete. The best way to learn how long an installation would take for your business is to connect with a local solar installer near you.

How many solar panels do I need for a commercial installation?

The number of solar panels necessary for an installation will depend mainly on the goals of the installation and how much space is available for panels. Though some commercial solar operations like solar farms exist to generate and sell energy for profit, most businesses only aim to offset their own energy costs. That means they won't need to buy as many panels as they can fit, but only the amount necessary to meet their energy needs. The best method to determine exactly how many panels you'd need to meet your energy needs is to contact a local solar installer for a free proposal.

Can solar panels be used for commercial and industrial purposes?

Absolutely. Commercial and industrial solar installations can sometimes offer even more value than residential solar panels. Due to the scale of most commercial installations, price-per-watt is cheaper, giving customers much more bang for their buck. Commercial installations still maintain eligibility for the solar tax credit, net metering and certain tax deductions, making it a savvy investment for business owners.

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