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How Much Do Commercial Solar Panels Cost?
Leading provider of commercial solar panels estimating.
The cost of installing commercial solar panels has seen significant reductions over the past decade, dropping by more than 50%. This decline has made solar energy a more viable option for many businesses looking to offset their energy expenses. Below is a summary of the updated costs associated with installing commercial solar panels based on different business sizes and types:
Average Cost of Commercial Solar Panels
Business Size / Type | System Size (kW) | *Total Installed Cost (Before Tax Credits) |
Small | 15 – 25 | $45,000 – $105,000 |
(Retail boutiques, small clinics, small offices) | ||
Small-Medium | 26 – 50 | $78,000 – $210,000 |
(Large retail stores, medium-sized office buildings) | ||
Medium | 51 – 100 | $153,000 – $420,000 |
(Commercial farms, warehouses) | ||
Large | 101 – 250 | $303,000 – $1,050,000 |
(Schools, hospitals, factories) | ||
Extra-Large | 300 – 350 | $900,000 – $1,470,000 |
(Large shopping malls, industrial factories) |
Cost Breakdown and Savings Potential
- Installation Costs: The initial installation cost for commercial solar panels typically ranges from $3.00 to $4.20 per watt. This can significantly decrease to $1.44 to $2.10 per watt after applying federal tax credits and local incentives.
- Savings on Electricity: Many businesses experience savings of up to 75% on their electricity bills after switching to solar energy. This substantial reduction can help offset the overall installation costs over time.
- Incentives: Various federal and local tax credits, rebates, and other incentives are available to businesses that choose to install solar systems. These incentives can further decrease the net cost of installation, making solar energy more affordable.
Solar Energy for Different Commercial Sectors
The commercial solar sector encompasses a wide range of non-residential properties, making solar energy a versatile solution for many industries. Typical sectors include:
- Office Buildings: Transitioning to solar can significantly reduce operating costs while contributing to sustainability efforts.
- Retail Businesses: Stores can lower their overhead costs by reducing electricity expenses, which is especially crucial in a competitive market.
- Factories and Warehouses: Large facilities with high energy demands can benefit immensely from solar installations, reducing reliance on grid electricity.
- Educational Institutions: Schools and universities can invest in solar to save on operating costs and promote renewable energy education.
- Healthcare Facilities: Hospitals and clinics can utilize solar to decrease energy expenses, allowing funds to be allocated to patient care.
- Agricultural Businesses: Farms can power operations sustainably, benefiting from solar’s ability to reduce energy costs.
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How Much Do Commercial Solar Systems Cost?
Commercial solar panel systems cost an average of $1.66 per watt as of 2023. This is almost half the cost per watt for residential projects, which stands at $3.27.
Based on these average cost figures, we can estimate the costs of commercial solar power systems of various sizes:
System Size | Suitable For | Cost |
15 kW | Retail outlet, clinic, etc. | $29,880 |
75 kW | Farm, warehouse, etc. | $149,400 |
350 kW | Factory, hospital, school, etc. | $697,200 |
Commercial Solar System Cost Breakdown
The following table details a typical cost breakdown for a commercial solar system installation. These percentages reflect the average costs associated with each component, and specific costs may vary based on various factors.
Factor | Percentage of Total Cost |
Solar Panels | 40% |
Balance of System | 36% |
(All other components making up the solar array—mounting structures, inverter, cables, wiring, electrical panel, etc.) | |
Installation | 24% |
Total System Cost | 100% |
Factors Influencing Commercial Solar Panel Costs
- Electricity Usage: The more energy your business consumes, the more solar panels you’ll need to offset costs.
- Off-grid vs. Grid-tied: Off-grid systems require additional costs for battery storage and generators. For instance, a 30kW off-grid solar system costs $144,000 to $180,000 to power a small business.
- Location & Market: The number of sunny days affects the size and number of panels required. This factor also influences labor rates, regulations, permitting fees, interconnection fees, and available incentives.
- Interconnection Point: The distance from the solar panel system to the interconnection point affects installation costs; greater distances lead to higher costs.
- Solar Panel Type:
- Monocrystalline panels are the most efficient and most expensive.
- Polycrystalline panels are less expensive but also less efficient.
- Thin-film panels are the cheapest but require more space.
- Assembly: Pre-assembled solar systems generally cost less than purchasing individual components.
- Brand & Quality: Higher-quality components from established brands are pricier but tend to have longer lifespans and warranties.
- Insurance: Installing a solar system increases property and liability insurance costs.
- Maintenance: Solar panel cleaning typically costs $12 to $24 per panel on average. Ongoing maintenance, including inspection, cleaning, and repairs, is crucial for optimal performance and longevity.
- Removal: Replacing old panels incurs removal costs of $240 to $600+ per panel, depending on system size and complexity.
Installation Types and Locations
Commercial solar panels can be installed in several ways, depending on the property. Generally, fixed panel installations are more cost-effective than advanced tracking systems. Here are some common installation options:
- Rooftop: The most common choice for commercial solar installations.
- Flat Roof:
- Ballasted Solar Racking: Uses gravity to hold panels without penetrating the roof, reducing the risk of leaks.
- Single-Tilt Mounting: Ideal for large warehouses and factories.
- Dual-Tilt Panels: Optimizes space for smaller flat roofs.
- Sloped Roof:
- Rail Mounting Systems: Secure panels via rails attached to the roof.
- Rail-less Mounting Systems: Attach panels directly to the roof without rails.
- Parking Lot:
- Solar Carports or Canopies: Utilize parking space to provide shade while generating energy.
- Vacant Land:
- Ground-mounted and Pole-mounted Systems: Suitable for businesses with unused land.
- Agrivoltaics: Combine solar energy production with agricultural use on the same land.
- Ponds & Lakes:
- Floating Solar Panels (FPV): A newer technology designed to float on calm water bodies.
Tax Credits and Other Solar Incentives
Numerous incentives are available to help offset the substantial cost of a commercial solar system. While federal tax credits are universally available, other incentives can vary significantly by state, utility, and local governments. The table below outlines some of these incentives.
Commercial Solar Incentives
Incentive Type | Description |
Federal Investment Tax Credit (ITC) | The ITC reduces federal income tax liability for a percentage of a solar system installed during the tax year. Systems installed after 2022 and projects starting before 2033 are eligible for a 30% ITC. |
Production Tax Credit (PTC) | A per kilowatt-hour (kWh) tax credit for renewable electricity generated for the first 10 years of operation. This credit reduces federal income tax liability and adjusts for inflation each year, offering 2.75 ¢/kWh PTC for eligible systems. |
Property & Sales Tax Exemptions | If the solar panel installation increases the business’s property value, the added value (or a percentage) is exempt from property tax. Many states also do not require sales tax on solar panels and system components. |
Solar Renewable Energy Credits (SRECs) | In some states, businesses can sell excess energy to the SREC market, which is used by public utilities to meet renewable energy generation requirements. |
USDA Rural Energy of America Program (REAP) Grant | Agricultural producers and rural small businesses can secure guaranteed loan financing and grant funding for solar energy systems or efficiency improvements, with a maximum grant size of $1.2 million for renewable energy systems and $600,000 for energy efficiency projects. |
Modified Accelerated Cost Recovery System (MACRS) | This accelerated depreciation method allows businesses to deduct up to 102% of the entire system cost over a 5-year period, which can be used in conjunction with the federal solar investment tax credit. |
Net Metering | Businesses receive credits on their electric bill for the excess energy sent back to the public grid, though net metering is not available in all states. |
Ways to Pay for Commercial Solar
While paying cash upfront for the entire installation yields the most financial benefit, businesses without sufficient capital have several financing options to go solar with little to no money upfront.
Commercial Solar Financing Options
Financing Method | Eligible for Solar Incentives? | Description |
Power Purchase Agreement (PPA) | No | The business pays a guaranteed fixed rate for the electricity used during the contract term (typically 10 to 20 years). The business does not qualify for tax credits or incentives as the utility or solar company owns and maintains the panels. |
Solar Loan | Yes | The business borrows funds from a bank or solar company, making payments over time. Although the total cost is higher than a cash payment due to interest, energy savings often exceed the monthly payment. |
Solar Lease | No | This option allows business owners who rent their space to go solar. The business pays a monthly fee—typically lower than public electricity rates—to power their operations with the solar energy generated. Similar to a PPA, the solar company owns, installs, and maintains the equipment. |
Commercial Property Assessed Clean Energy (C-PACE) Model | Yes | The debt for financing the solar system is tied to the property rather than the business entity and is transferable to future buyers willing to accept it. C-PACE is ideal for businesses uncertain about remaining in their current location long-term. |
Commercial vs. Residential Solar Panels
Commercial solar panel systems are generally larger than residential systems due to the larger property sizes and greater electricity demands typical of commercial buildings. Consequently, while commercial systems often have a higher total cost, they may be more cost-effective on a per-watt basis because of economies of scale.
Before tax credits or incentives, residential solar panels cost $3.60 to $5.40 per watt installed on average.
Both commercial and residential solar energy systems are eligible for the federal tax credit, which helps reduce the overall cost for both types of installations.
Commercial solar panel installations often require longer completion times, primarily due to the extensive research, planning, design, and permitting processes involved. These factors can add complexity and duration to commercial projects compared to residential installations.
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Commercial vs. Residential Solar Panels
Commercial solar panel systems are generally larger than residential systems due to the larger property sizes and greater electricity demands typical of commercial buildings. Consequently, while commercial systems often have a higher total cost, they may be more cost-effective on a per-watt basis because of economies of scale.
Before tax credits or incentives, residential solar panels cost $3.60 to $5.40 per watt installed on average.
Both commercial and residential solar energy systems are eligible for the federal tax credit, which helps reduce the overall cost for both types of installations.
Commercial solar panel installations often require longer completion times, primarily due to the extensive research, planning, design, and permitting processes involved. These factors can add complexity and duration to commercial projects compared to residential installations.
Top Commercial Solar Companies
The table below showcases Solar Power World’s top 10 commercial solar contractors of 2024. These companies installed the most kilowatts (kW) for commercial solar energy systems in 2024.
Top Commercial Solar Companies
Company | Headquarters | Primary Service | Total kW Installed in 2024 |
Radiance Solar | GA | EPC | 215,908 |
ACE Solar | MA | EPC | 176,362 |
Next Generation Solar | NY | Installer | 119,417 |
MBL-Energy | CA | Installation Subcontractor | 105,060 |
DCE Services | NC | Installation Subcontractor | 81,683 |
Ameresco | MA | Developer | 78,214 |
PowerFlex | NY | Developer | 76,719 |
Knobelsdorff | NM | EPC | 73,370 |
Coldwell Solar | CA | EPC | 72,875 |
Standard Solar | MD | Developer | 59,688 |
Benefits of Commercial Solar Panels
Installing a commercial solar panel system offers numerous advantages and few drawbacks. While solar energy is dependent on sunlight and the installation often requires roofing and system upgrades—adding to an already high upfront cost—the positives tend to outweigh the negatives in many scenarios.
- Improved Company Image: Many consumers prefer working with companies that are committed to eco-friendly business practices, enhancing the company’s reputation.
- Reduced Carbon Footprint: Solar panel systems contribute to a company’s corporate social responsibility (CSR) initiatives and sustainability goals, helping to lower overall emissions.
- Reduced Electricity Expenses & Reliance: Most commercial solar systems can offset electricity use by at least 75%, often saving businesses thousands of dollars per month and reducing dependence on potentially unstable utility power.
- Locked-in Electricity Rate: As public electricity rates continue to rise, the 25+ year lifespan of a commercial solar panel system allows businesses to enjoy reduced (or even free) electricity rates for many years.
- Return on Investment (ROI): The breakeven period for a commercial solar system typically ranges from 3 to 7 years, providing significant long-term savings.
- Instant Savings: Some businesses may realize electricity savings that exceed their solar loan payments, allowing them to benefit from substantial savings right from the start.
- Tax Credits & Incentives: Businesses can often deduct up to 85% of the total system cost, and some financing options allow for system installation with little to no down payment.
- Balanced Energy / Reduced Storage Needs: Many businesses operate during the day, so a solar panel system can help balance energy generation and consumption in the same timeframe, reducing the need for battery storage—especially beneficial in areas without net metering.
- Increased Property Value: Properties equipped with solar power systems typically sell faster than those entirely dependent on public utilities, enhancing their market value.
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Question Answer
Frequently Asked Question
The cost of installing commercial solar panels has significantly decreased over the past decade, dropping by more than 50%. Currently, the price ranges depending on the size and type of the business:
- Small Businesses (15 – 25 kW): $45,000 – $105,000 (after tax credits: $21,600 – $52,560)
- Small-Medium Businesses (26 – 50 kW): $78,000 – $210,000 (after tax credits: $37,440 – $105,000)
- Medium Businesses (51 – 100 kW): $153,000 – $420,000 (after tax credits: $73,440 – $210,000)
- Large Businesses (101 – 250 kW): $303,000 – $1,050,000 (after tax credits: $145,440 – $525,000)
- Extra-Large Businesses (300 – 350 kW): $900,000 – $1,470,000 (after tax credits: $432,000 – $735,000)
Several factors can affect the cost, including:
- Electricity Usage: Higher energy consumption requires more panels.
- Location: The number of sunny days and local incentives can impact costs.
- Type of System: Off-grid systems are more expensive due to battery requirements.
- Installation Method: Rooftop installations are typically more cost-effective than ground-mounted options.
Yes! Various federal and local incentives are available, including:
- Federal Investment Tax Credit (ITC): Offers a 30% tax credit on the installation cost.
- Net Metering: Allows businesses to receive credits for excess energy sent back to the grid.
- Property & Sales Tax Exemptions: Many states exempt solar installations from property and sales taxes.
Businesses can save up to 75% on their electricity bills after transitioning to solar. This significant reduction helps offset the installation costs over time.
There are several financing options available:
- Power Purchase Agreement (PPA): Pay for the electricity used at a fixed rate; the solar company owns the system.
- Solar Loan: Borrow funds to purchase the system, with monthly payments typically lower than energy savings.
- Solar Lease: Rent the solar system with monthly payments, which are generally lower than utility rates.
Commercial solar systems are generally larger and more cost-effective on a per-watt basis due to economies of scale. While residential systems cost between $3.60 and $5.40 per watt, commercial systems average around $1.66 per watt.
- Reduced Electricity Expenses: Save thousands of dollars monthly.
- Improved Company Image: Showcase commitment to sustainability.
- Reduced Carbon Footprint: Contribute to corporate social responsibility.
- Increased Property Value: Solar-equipped properties tend to sell faster and for higher prices.
The typical breakeven period for a commercial solar system ranges from 3 to 7 years, leading to significant long-term savings.
Installation methods include:
- Rooftop Installations: Most common, suitable for various building types.
- Ground-mounted Systems: Ideal for businesses with vacant land.
- Floating Solar Panels: A newer option for water bodies.
Evaluate energy consumption, the suitability of the installation site, and available incentives. It’s also crucial to consider the long-term financial benefits against the initial installation costs.
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