Commercial solar panels are one of the best solutions for businesses who want to reduce their electricity bills or carbon footprint. In fact, commercial solar installations alone have grown 15% between 2009 and 2021. This growth in adoption itself tells about its benefits.
However, many businesses still wonder: Are commercial solar panels worth the investment? Are their high upfront costs justified? Do they pay back their investment and provide savings? Is there any way of making them more affordable? Which type of commercial solar panels are good? Do they have any drawbacks? and so on.
In this handy guide, we will tell you everything you need to know about commercial solar panels including their benefits, costs, savings, maintenance, etc. We will also provide answers to all your questions and tell you in detail about all the things you need to consider before switching to solar.
What are Commercial Solar Panels?
Commercial solar panels are large panels used to provide the benefits of solar energy. They are larger, heavier and more cumbersome compared to the residential ones.
These panels along with some major components like inverters, monitoring systems, etc, together make commercial solar systems.
They help large businesses and commercial properties generate their own electricity to support lighting, machines, and air conditioning. They are installed on the rooftops of the buildings or on the open grounds. Some of the places where commercial solar panels are used include:
- Office Buildings
- Shopping Malls
- Hospitals
- Schools and Universities
- Retail Stores
- Industrial Warehouses
- Hotels and Resorts
Main Components of Commercial Solar Panels
Solar Panels: Solar panels are the most important component of a commercial solar power system. They are set up in areas like rooftops, and open grounds to capture sunlight, which is later converted into electricity.
Inverters: Inverters are used to convert the DC power obtained from the panels into AC electricity, which can power electrical devices like refrigerators, TVs, ACs, etc.
Power Optimizers: Power optimizers are used in the shady areas. They help to increase the efficiency of the panels by making sure that each solar panel is working independently and is in good condition.
Microinverters: In simple words, microinverters also convert DC to AC but they are used in each solar panel individually. They are also useful in areas where the sunlight is low or panels are shaded.
Monitoring Systems: These help in tracking the performance of the solar panels. Their main role is to identify any issue which needs improvement. Overall they help to maintain the work condition and efficiency of the panels.
How Much Do Commercial Solar Panels Cost?
The cost of commercial solar panels varies based on the factors like system size, location, type of panel, inverter and battery, energy consumption, and size of project. As of 2023, the average cost is $1.66 per watt, significantly lower than residential systems at $3.27 per watt.
Estimated Cost of Commercial Solar Systems (by size)
| System Size | Suitable For | Cost |
| 15 kW | Retail outlet, clinic, etc. | $24,900 |
| 75 kW | Farm, warehouse, etc. | $124,500 |
| 350 kW | Factory, hospital, school, etc. | $581,000 |
What are the Benefits of Installing Commercial Solar Panels
Commercial solar panels offer businesses a cost-effective way to generate their own electricity and have better control over their supply while reducing the bills. Here are some benefits you can avail by using commercial solar panels:
- Reduce Your Energy Costs: One of the main reasons most businesses install commercial solar panels is to reduce their electricity bills. With the help of these panels, businesses can generate their own electricity and power facilities like lightning, air conditioning, etc which can save their electrical expenses by over 75%.
- Reduced Cost Of Solar Panels: The cost of installing solar panels has fallen by more than 70% in the past ten years. Additionally, there are various tax credits and rebates available that further reduce their cost of installation, making them a good investment at a lower price.
- Energy Independence: Commercial solar panels reduce the dependency of businesses on the local utility grid or other external energy providers. This helps them to remain unaffected by the fluctuation in energy supply or prices or energy supply, providing them better control over manufacturing or other work.
- Increased Property Value: Buildings or properties with commercial solar panels easily attract buyers and tenants. These panels can even increase the value of properties making them more energy-efficient and reducing the long-term operating costs.
- Reduce Carbon Footprint: Commercial solar panels help companies reduce their carbon footprint by replacing fossil fuel-based energy with clean, renewable solar energy. This decreases harmful emissions and pollution which contributes to a greener planet and improves the image of the company among environmentally-conscious customers and stakeholders.
What are the Challenges in Installing Commercial Solar Panels?
Although there are many benefits of commercial solar panels, still some businesses face issues like high upfront costs, etc which makes them reconsider their decisions. Here are some challenges most businesses face along with the solution:
1. High Initial Costs
Problem: A high upfront cost is required to install commercial solar panels, which is a major challenge, especially for small-scale businesses with financial limitations.
Solution: You must take advantage of federal and local incentives other tax credits, or rebates to reduce the installation cost. You can also apply for solar loans and PPAs to take the initial burden off your shoulders.
2. Limited Space Availability
Problem: Commercial solar panels take up a lot of space on the roof or ground. Providing this space can be a limitation for some businesses like those who operate in big cities.
Solution: You can use solutions like flexible solar panels, solar carports, vertical installations, or install some high-efficiency panels. With the help of them, you can generate more energy in a smaller area.
3. Dependency on Location or Sunlight
Problem: The efficiency of commercial solar panels depends on many factors like sunlight availability, shading, and roof orientation.
Solution: You can talk to the solar panel installers in advance, let them analyze the site, and provide solutions for your problem. They can use things like tracking systems or tilt adjustments etc.
Is Solar Energy the cheapest way to get home/business power off-grid? Learn here!
How Do Commercial Solar Panels Work?
Commercial solar panels are designed to capture sunlight and convert it into electricity which helps in running different equipment. Here is how they work:
Step 1: Solar Panels are Activated By Sunlight
Solar panels are made of many layers of silicon cells, which are covered in a protective glass casing, with a metal frame and wiring over it. These panels are placed on rooftops or open areas where there is abundant sunlight. When sunlight hits the panels, it activates the solar cells and begins the process of generating electricity.
Step 2: Solar Cells Generate Electricity
The main part of the solar panel is solar cells. Each solar cell has two layers of silicon – one is positively charged and the other is negatively charged. When sunlight hits the cells, electrons in the cells move which creates an electrical current.
Step 3: Converting DC to AC Electricity
Solar cells produce the direct current (DC). However, an alternating current is used to power the electrical devices. So, after this, the DC produced by the solar cells is converted into AC using a device called an inverter.
Step 4: Distributing Converted Electricity
At last, the AC is distributed into the entire property. It powers all the equipment like TV, AC, computers, etc. Commercial solar panels are also connected with the grid, batteries, and generators helping to maintain a constant supply even during low sunlight days or at night.
Step 5: Net Metering
Commercial solar panels generate a high amount of electricity. You can also send the excess electricity back to the grid and enjoy the benefits of net metering. In return, you will receive credits on your energy bill. These credits will help you lower the cost of your energy bills, offering financial benefits.
Learn more about the concept of Net Metering and NEM 3.0 here!
Different Types of Commercial Solar Panels
There are four types of commercial solar panels. You can choose for your business depending on your needs, budget, roof space, and features you want.
- Monocrystalline Solar Panels: These solar panels are made from single-crystal silicon and have the highest efficiency of 17-20% or more. These are durable and perform well in various weather conditions. These panels also have a long lifespan of more than 25 years. They are best for places where there is less space and high energy requirements. The high efficiency and long lifespan of these commercial solar panels make them more expensive compared to others.
- Polycrystalline Solar Panels: Polycrystalline Solar Panels are made of multiple silicon fragments. They have a moderate efficiency of 15-17%. These panels have a lower cost but they need more space to produce the same amount of energy. These panels are known for their blue color and Lower cost but they are less efficient in low sunlight.
- Thin-Film Solar Panels: As the name suggests, these commercial solar panels are slim, lightweight, and flexible. These are made to fit different roof designs. They have a lower efficiency between 6 to15%), depending on the type you choose like Amorphous Silicon (A-Si), Cadmium Telluride (CdTe), Copper Indium Gallium Selenide (CIGS), etc.
- PERC Solar Panels: PERC solar panels are an advanced version of monocrystalline panels with an added passivation layer. It offers the highest efficiency of around 25% and performs well in minimum space. They are more expensive than monocrystalline panels but deliver quick ROI.
Learn in detail about the different types of solar panels here!
So, Which Commercial Solar Panels Are Best For Your Business?
- If you are looking for affordability, weight limitations, or odd roof shapes: Thin-film solar panels are the best.
- If you want efficiency: PERC solar panels have the highest efficiency.
- If you want panels that fit in small spaces: Monocrystalline or PERC panels are space-efficient.
- If you want a large installation on a budget: Polycrystalline panels are good.
Things to Consider Before Installing Commercial Solar Panels
- Energy Requirements: Start by assessing your business’s electricity usage. You can take an average of your monthly bills, it will help you determine the size and type of solar panels you need to fulfill your energy needs.
- Available Space: Check the size and condition of your roof or the place where you are planning to install solar panels. Make sure there is enough space for the type of panel you are choosing. If you roof has less space, irregular shapes, and low weight capacity, you can choose thin film panels.
- Check Your Budget: Set a proper budget for solar panel installation. You can take solar quotes from different installers to pick the one that matches your budget. Also, note that just saving money is not your goal, consider long-term savings, efficiency, etc while choosing the panels.
- Regulations and Permits: There are various rules regarding permission to install solar panels. Make sure that you take proper permits before installing the commercial solar panels.
- Reputation of Your Installer: Lastly, before installation check the reputation of your solar panel installer. you can use part reviews, ratings, and case studies to examine it.
Learn more about different types of commercial solar systems like on-grid, off-grid and more here!
What are the Tax Credits & Rebates for Commercial Solar Panel Installation?
Commercial solar installations under 1 MW qualify for a 30% federal investment tax credit, with possible 10% bonuses for energy community projects that meet the domestic requirements, or installations in low-income or tribal areas.
Additionally, incentives like the USDA REAP grant which covers up to 50% of installation costs for eligible rural businesses, and Solar Renewable Energy Credits (SRECs), which generate extra income in certain states are also available. These help in reducing the upfront cost of commercial solar panel installation for businesses.
What are the Financing Options for Commercial Solar Panels?
Businesses can pay for commercial solar panels through cash, solar loans, Power Purchase Agreements (PPAs), or solar leases. These options provide flexibility based on business needs and budgets. For Example:
- Solar loans work like traditional business loans, often obtained from banks.
- PPAs let another company install and maintain the system, with the business paying for the electricity generated.
- Solar leases are of two types: capital leases, where the business takes ownership and tax benefits, and operating leases, where the lessor owns the system and handles maintenance.
Final Thoughts: Should You Install Commercial Solar Panels?
Are you tired of high electricity bills that impact your profit and budget? Do you want to reduce this cost by making an investment that offers long-term savings? Do you want to create a good brand reputation by using solar energy? Does the idea of energy independence appeal to you? Are you looking for ways to increase the value of your commercial property? If you’ve answered “yes” to all or most of these questions then you must plan to install commercial solar panels.
Investing in commercial solar panels is a smart choice for most businesses. Although the high upfront costs, may seem unviable, it provides long-term savings and pays back its initial cost already in advance. With proper planning, tax incentives, and the right financial options, solar energy can provide your business with lasting savings, a greener footprint, and an improved brand image. Here are few last-minute tips:
- Adding batteries can maximize solar efficiency by storing excess energy for nighttime or peak usage.
- Design your solar system with scalability in mind, accommodating potential business growth or energy needs.
- Consider the low upkeep requirements of solar panels, as they only need occasional cleaning and periodic checks to ensure optimal performance.
Let’s Get Commercial Solar Panels
FAQs
- How efficient are commercial solar panels?
Commercial solar panels have an efficiency of 6 to 25%, depending on their type. PERC are the most efficient solar panels with an efficiency of 25%. - What is the best solar system for commercial use?
The best system for commercial use is a grid-tied solar system, often paired with energy storage for optimal efficiency and reliability. - Do commercial solar panels produce power when the sun is not shining?
Commercial solar panels do not generate electricity in the dark but can utilize stored energy from batteries or rely on grid power during such times. - How much energy do commercial solar panels produce?
The energy output of commercial solar panels depends on the system size, panel efficiency, and sunlight availability. Most commercial solar panels produce between 250 and 500 watts of power. On average:A 15 kW system produces around 60 kWh per day.A 75 kW system generates approximately 300 kWh per day.A 350 kW system can produce up to 1,400 kWh per day. - What is The Average ROI for Commercial Solar Panels?
The average ROI for commercial solar panels in 2024 is 16.2%. This ROI is largely front-loaded due to significant tax credits, depreciation, and possible USDA grants received in the first year or two of operation. However, the average payback period for commercial solar panels is 9.5 years.