Commercial solar panels

A look at how small and large businesses can go solar

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Businesses, local governments and nonprofits can all benefit from commercial solar panel installations. However, the trick is knowing for sure before you invest your organization’s funds.

We’ll cover everything you need to know about commercial solar installations to help determine if one may be worth it for you.

Key insights

  • Buildings and businesses of all shapes and sizes can potentially benefit from going solar.
  • Commercial solar panels can cost tens or hundreds of thousands of dollars upfront — it really depends on the size of your business.
  • There are financing programs and incentives available to make commercial solar investments significantly easier.

What is a commercial solar installation?

By definition, “commercial solar” refers to any solar energy project that is installed for commercial purposes. Sitting right between residential solar (for homes) and utility-scale solar (for energy companies), commercial solar serves a wide and variable market of organizations and industries. A few of the most common examples include:

  • Malls, stores and other retail businesses
  • Hospitality and apartment buildings
  • Manufacturing and processing plants
  • Local governments, schools and universities
  • Places of worship and nonprofits

Solar panels can help drive down energy costs for most commercial properties by replacing some or all of the electricity they purchase from the local utility company with free, eco-friendly power.

Because it’s a clean energy source, installing commercial solar panels can also help improve an organization's image among its internal team, partners, customers and the greater community.

» LEARN: Solar energy vs. fossil fuels

Types of commercial solar panels

While PV solar panels generate electricity from sunlight, thermal solar systems can harness the sun’s thermal energy to help heat buildings, water systems and other facilities.

There are two main commercial solar panel technologies that businesses, governments and other organizations are adopting to go green: photovoltaic (PV) systems and thermal energy systems.

In the greenest states in the U.S., like California and Vermont, you’ll often see commercial solar systems that incorporate both thermal and photovoltaic (PV) panels side by side. While PV and thermal panels don't necessarily work together symbiotically, both technologies can be useful, renewable power sources for commercial buildings. (We’ll be focusing on PV solar panels throughout the rest of this guide.)

Now more than ever, critical organizations (such as hospitals, transportation hubs and other public services) are increasing their energy security by installing backup battery systems alongside commercial PV solar panels. These properties gain more control over their energy use and can even continue to access solar power during local grid blackouts.

» MORE: Types of solar panels

How much do commercial solar panels cost?

According to an analysis conducted by the National Renewable Energy Laboratory (NREL), the average cost of a commercial solar energy system in 2022 was $1.84 per watt for a rooftop installation and $1.94 per watt for a ground-mounted array. That means the cost of a commercial solar panel array may be anywhere from a few thousand dollars to the upper six figures, depending on the size of the system, its components and several unique project variables.

In addition to purchasing the panels themselves, there are several other expenses involved in a commercial solar project that contributes to its total cost, including:

  • Additional equipment, such as inverter systems, wiring and mounting materials
  • Labor, permitting fees, inspection fees, taxes and overhead costs
  • Energy management systems, security systems and other miscellaneous features

(For the record, these expenses are already factored into the averages above.)

Comparatively, the average cost per watt of commercial solar is less than residential solar (roughly $2.95 per watt) and greater than utility-scale solar (roughly $0.99 per watt). To illustrate the average costs of solar panels at all levels, here's a quick look at the expected costs for four separate photovoltaic systems.

Installation typeSystem sizeAverage cost before tax credits, rebates, etc.
Residential solar 8kW $23,600
Small-scale commercial solar (retail, offices, etc.) 30kW $55,200
Large-scale commercial solar (manufacturing, solar farms, etc.) 300kW $552,000
Utility-scale solar 1MW (1,000kW) >$1 million

While commercial solar panels can cost larger companies hundreds of thousands of dollars upfront, decades of clean energy production can also help save money over time, and many organizations take advantage of financing opportunities to pay for their green energy investment with a solar loan.

Most companies do not have the cash on hand for a good-sized solar system. They’re expensive.”
— Andrew Eckhardt, head of energy transition at Westend Bank AG

As Andrew Eckhardt, head of energy transition at Westend Bank AG, explained to us: “Most companies do not have the cash on hand for a good-sized solar system. They’re expensive. That’s why specialty solar loans are helping fund projects all over the world.”

» LEARN MORE: How much do solar panels cost?

Commercial solar incentives

The U.S. government now offers a variety of tax incentives, rebates and aid programs for commercial solar power upgrades. (These programs may be available on both the national and local levels, so it’s worth checking out what programs operate in your area. For example, California has a number of state-level solar incentive programs for its residents.)

Like homeowners, businesses can take advantage of the federal solar investment tax credit (ITC) to reduce the total cost of their solar investment by up to 30% through 2032.

Commercial solar systems can also qualify for a production tax credit (PTC), which allows owners to claim up to 10 years of tax credits at a value based on the system’s kilowatt-hour (kWh) production.

» LEARN: How many kWh does a solar panel produce?

Critically, most commercial solar project owners can only claim either the ITC or the PTC — but not both for the same installation. Before enrolling in either program, talk to your installer about which credit can lower your total investment cost more.

Find a Solar Energy partner near you.

    Are commercial solar panels worth it?

    From retail stores to massive manufacturing facilities, solar panels can reduce most commercial properties’ energy costs through emission-free on-site power generation. So, although every installation is different, commercial solar panels are often worth it for companies hoping to save money, go green and help contribute to a more sustainable future.

    If you'd like to determine whether commercial solar panels are worth it for your organization, you can start the process by contacting a few of the best solar energy companies in your area to compare proposals.

    When thinking about your own property’s energy goals, you may also want to consider adding extra system components, such as battery storage or electric vehicle charging stations. David, a ConsumerAffairs reviewer from California, was thrilled to bundle a charging station with their clean energy investment: “We negotiated a car charger as part of our promotion, which was what we wanted. … We haven't paid a power bill since then.”

    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
    1. The National Renewable Energy Laboratory (NREL), ”U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks, With Minimum Sustainable Price Analysis: Q1 2022.” Accessed June 21, 2023. 
    2. U.S. Department of Energy (DOE), “Federal Solar Tax Credits for Businesses.” Accessed June 21, 2023. 
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