If you run or manage a business (no matter how big or small), you might have wondered about different ways to reduce your operating expenses.
And there’s one great way to do it—without cutting any headcount or scrimping on software and supplies.
Yep, you guessed it. By installing a commercial solar system! (You might also hear people referring to these as “commercial solar arrays”—same deal.)
Of course, there are a few important questions to ask first before determining whether this is actually a good idea for your business. (“Do I have to own my office building? How many solar panels do I need to have to make it worth it?”)
In this guide, we’ll walk you through the basics of commercial solar panels, including the benefits and disadvantages, different types of solar setups that businesses can choose from, and some common questions.
Let’s dive in.
- What’s a “commercial solar system” exactly?
- 3 key questions to ask before taking your business solar
- What are the benefits of having solar panels on commercial buildings?
- What about the disadvantages?
- 3 main types of commercial solar setups
- Your checklist for going solar
- 5 case studies of companies that have gone solar
- Commercial solar panel FAQs
First of all, what exactly is a “commercial solar system?”
As the name suggests, it’s essentially a setup designed for businesses to absorb solar energy and generate their own electricity in an eco-friendly way. (You can learn more about residential options here.)
The solar system as a whole includes not only the solar panels, but also potentially batteries, converters, and other elements that allow you to not only create electricity but also use it to power your devices, appliances, and lighting.
Being interested and willing to install commercial solar panels is great, but that’s only the first small step.
When thinking about how feasible it is for your company to generate its own electricity, think about not only the financial aspect, but also other elements that are less commonly thought about.
For example, “Am I located in a country or state that actually gets a lot of sun?” and “Is my building shaded or is there anything that could block the amount of sunlight we’d get on the roof?”
1. How will you pay for it?
The good news is, there’s actually a variety of different ways in which a sustainability-minded business can pay for their industrial solar panels.
Which is great because it ain’t cheap.
Let’s look at a few different sources of funding that you can look into if you’re not flush with cash and can’t just casually drop tens of thousands of dollars on a commercial solar system:
- Cash – The easiest, most straightforward way to pay for your solar panels, of course, is to just save enough to have the money up front. This way, you won’t have to pay interest, which will end up costing you more and lengthening your payback period. If a full-on commercial setup is too big of an investment for your business, there are also smaller, more flexible solar options out there.
- Property-assessed Clean Energy (PACE) loan – PACE is a loan that both homeowners and businesses can access to help them pay for a solar power setup. PACE is a program run by your local government where they pay for your commercial solar panels up front, and then you pay back your government via your property tax.
- Third-party loans – This one’s pretty simple. There are banks and lenders out there who will give you a loan to install your solar panel system. This is pretty much the same idea as getting a loan for your business for any other reason. Borrow the money, they charge you interest, you pay it back over a period of time.
- Commercial solar leasing – You go through a solar provider, who will install your panels and set it up for you without any upfront costs. However, you’ll make monthly payments to the provider, and you won’t own your solar setup—they will. As you can imagine, this is not the best deal for either homeowners or businesses, and this way of paying for a solar setup is becoming less and less popular.
- Power purchase agreement (PPA) – Similar to a regular lease, a PPA (usually about 20 to 25 years per term), won’t cost you much, if anything up front because you don’t own the solar power system or have to maintain it. But that also means you don’t get to take advantage of any tax incentives or benefits since the third-party provider owns it. Unlike a lease, you’ll pay this provider for the electricity that the solar power system generates (which should be lower than what you’d normally be paying the utilities; otherwise it’s not worth it).
|🌞 Pro-tip: Not every state allows PPAs. Only about 20 states do, so make sure yours does if you’re interested in financing through a PPA!|
One thing to note if you’re considering a loan, lease, or PPA arrangement is that you’ll need to have proof of good credit. (You might be able to use your building or property as collateral instead, but we highly recommend talking to a financial advisor to make sure.)
2. Is my type of business a good candidate for going solar?
Possibly! If your business has the roof space (or ground space) to hold your solar panels, and if you use enough electricity on a regular basis for it to be an expense that you want to cut down on, then solar could be a good option for you.
Here are a few examples of these types of businesses:
- Building management or landlords who own actual buildings on which you can place solar panels
- Hotels (The hotel industry is notorious for wastage, both in terms of stuff like bathroom products and electricity)
- Schools (Lots of roof space, and what better way to teach kids about sustainability than by seeing it in action?)
- Warehouses (Lots of roof space)
3. Who do you want to be responsible for regular maintenance for your commercial solar system?
Operations and maintenance (also known as O&M) won’t be too big of an issue with solar because solar power systems tend to be pretty hardy and durable.
Either way, if you don’t plan to own your solar panels (for example, if you’re going with a PPA), you should confirm with your third-party provider that they’re actually going to take care of any repairs.
Okay. Let’s look at a few of the main benefits of investing in a commercial solar energy system.
It’ll help you save money
This is the benefit that’s on everyone’s lips: being able to generate your own electricity can help you save some serious coin (depending on factors like how much sunlight your building gets and how expensive electricity is for you, of course).
That being said, solar is an investment, and like many investments, it takes time for it to pay you back.
Using residential solar systems as a benchmark, most solar power systems will break even within about ten to 15 years. (Some take four to five years, especially if they’re in very sunny states like Arizona.) Which means that after that mark, you’ll be netting out at a positive by generating electricity for your business.
It makes you more immune to utilities jacking up prices
On a related note, being able to generate your own power also makes your business more resilient. As you’ve probably noticed, electricity rates are going up steadily each and every year.
Even though most businesses don’t generate 100% of their energy needs themselves with a solar power system, they can still generate a significant portion of it—enough to not be overly affected by these rising costs.
It can make your customers feel good about, well, being your customers
As we’ll see later on when we look at a few big companies that have gone over to the bright side, it turns out that many consumers are becoming more socially and eco-conscious with their purchases.
From buying fair-trade coffee beans to supporting businesses that pay their employees a fair wage, people are increasingly putting their money where their mouths are and supporting businesses that are doing some good in the world.
The bonus here is that it’s really a win-win situation. Not only are you lowering your own power costs, you’re also able to use this as proof that your business is reducing its carbon footprint and taking active steps to be more environmentally conscious.
For example, we host this blog with Green Geeks—and a big reason why we went with them is that they’re 300% green, meaning they’ve gone way beyond being just carbon neutral. They’re actually replacing three times the energy they consume, which is pretty incredible.
It could make your building more attractive to tenants
This one is only for businesses that own their own buildings or are leasing their spaces out, but it’s worth mentioning. You’ve probably heard of LEED-certified buildings, which can be both residential or commercial buildings. What LEED means is essentially that they meet a certain design standard that makes them environmentally friendly.
It can be in the materials used in the construction of the building, or certain efficiencies in terms of energy used by the building. Technically, it’s more of a mark of prestige than anything, but these types of buildings may be more attractive to rent compared to older or not-as-energy-efficient buildings. It’s not a make or break factor by any means, but it’s just something to consider.
Solar sounds pretty great, right? But there are a few small things to keep in mind. Personally, we don’t think these are significant to be true negatives for any companies that are interested in solar power, but to be objective, let’s just take a quick look.
The upfront costs can be hefty
Like the cost savings, which can be significant, the upfront costs of putting in a commercial solar power system can be pretty big too.
They’re not insurmountable, but if you don’t have a big cash reserve to dip into, it’s probably wise to look into different ways to finance those solar panels.
Again, leasing isn’t the best option, but PPAs and other tax incentives might be able options that can help.
You may not get enough sunlight to warrant solar power
Is solar worth it? It often is, but it’s not always the case.
When you’re thinking through your options, there are two main questions to think about: are you paying significantly more than you have to for electricity right now, and does your city or state get enough sunlight to actually generate enough usable electricity. (Not all states do—Arizona, of course, is a great place to have industrial solar panels, but Connecticut? Not so much…)
|🌞 Pro-tip: Heat isn’t always the biggest factor! Even in some not-so-hot areas, there’s enough sunlight and clear days in a year to make going solar worth it.|
You might have to do some work on your roof first
In the vast majority of cases, your solar panels will go on your roof.
That means your roof should be in good shape! If not, it’s better to do some work and fix up your roof first before installing solar panels.
Otherwise, you’d have to remove the solar panels, store them somewhere while you fix your roof, then put them back on. Not a great use of money or time.
If you already had plans to upgrade your roof, then you’re in luck. Some roofers are able to install the supports that you need to mount your solar panels up there, which might help you save some time because you don’t have to look for someone else to handle it.
On your roof
Most homes and businesses put their solar array on the roof. It’s easy to see why—there’s less likely to be trees or other objects blocking the sunlight on top of your building, and it doesn’t take up any extra real estate.
That is, of course, assuming that you have a big enough roof to fit enough panels to give you the electricity that you need. However, solar installation companies can work around the little quirks for most roofs. From different angles to mounting placements, they should be able to recommend a custom option for your building. (And of course, if your roof naturally slants toward the southwest, even better because it’ll get the most sun.)
If your building is too narrow, you may need to use more efficient solar panels—or you can look into the two alternatives below.
On the ground
If rooftop solar panels don’t end up being a good option for whatever reason (or if you need more panels than will fit up there), you can always place them on the ground if you have the space.
The only thing to keep in mind is that you need not only the real estate on which you can fit a commercial solar array, but also clear air space around it. If there are other tall office buildings or trees that can throw shade onto your solar panels, then it will reduce the amount of electricity you can generate.
Finally, we have the most creative option: garages, or carports.
Parking lots take up an inordinate amount of real estate in North America—why not make that space work a little harder?
Instead of just sheltering a car from rain and snow, the roof of a carport can be a smart place to house a small commercial solar power system—or extend your existing solar power capacity.
Again, this is space on a building you already have, which means you don’t have to find more land to place your solar panels on.
1. Calculate your potential savings
First step is to look at how much sunlight you get on your roof. Google actually has a calculator called Project Sunroof that can estimate this for you:
2. Get your landlord’s permission
If you don’t own your building, now’s a good time to talk to your landlord and get their buy-in. If they’re not into the idea yet, which is understandable given the high upfront costs, try to highlight the long-term savings and different options for financing the solar panels.
3. Contract someone to come in and do an audit
After you’ve gotten your quotes (always compare quotes, and always look at both your local small businesses and larger big-name options).
The installer you go with should come to your building and walk you through where your industrial solar panels might go.
If you want rooftop solar panels, you’ll need to have the measurements of your roof taken down and if your building is a little older (say, from the midcentury), then you might need an engineer to provide insight on what the structural support is like. (For reference, one solar panel for a home weighs around 20kg, so that gives you an idea of how much extra weight could be going on your roof.)
4. Confirm the proposed plan
After this walkthrough, you should have a proposal that tells you not only the rough cost and specific products that’ll go into your commercial solar power system, but also what the array would look like.
From the angle of the panels, to the orientation on your roof, to a rough estimate of how much electricity it’ll be able to generate, you should have all the details you need to comfortably move on to your next steps.
5. Get your permits
Once the plans for the system are complete, all permitting requirements must be completed. Unfortunately, there is no standardized permitting process. Depending on the state, local government, and size and complexity of the system, this process can move along quickly or take a lot of time and money. Shadzi’s Cosmic Solar has its own staff member dedicated solely to permitting. At this point, the system owner or their installer will begin completing paperwork for rebates and incentives.
5. Get your solar panels installed
Each project varies and can take between two days to two weeks or longer depending on the size of the system. For the typical attached or hybrid system, holes are drilled into the rafters in alignment with the solar panel mounts. Thin pieces of metal are then placed over the mounts, preventing water leakage. The panels are attached to the rails and connected together. Finally, the solar panels are connected to the inverter.
5. Get your permits
The cost of getting a solar permitting varies from state to state, and getting a permit for a commercial building doesn’t cost the same as getting one for your home. (It costs more for businesses. Sorry.)
In Milwaukee, however, the fee for the “examination of commercial solar PV building plans” is $250.
Again, each state and city does things differently, and your installation company should be able to help you with this process.
6. Get your solar panels installed
Alright, you’ve done the audits, compared a bunch of different quotes, and gotten your permits.
Now, be prepared to have your team work from home or remotely for a few days (up to two weeks if it’s a more complicated or bigger project) while your solar panels and other equipment are mounted to your roof or wherever they’re being installed.
6. Inspection time!
Before you can officially flip the switch and start using solar energy, your city will likely need to come and do a final inspection. Again, like with permitting, each city and state does things differently.
For example, Cleveland “requires inspections take place during and after installation“—but they won’t charge you separate fees for that.
In California, “an inspector from the local enforcing agency” will physically come in to do the final inspection of your solar installation. They say explicitly that this inspection is the “last step before final project approval is granted by the local enforcing agency (note that a PV system cannot begin operating until it has received approval from both the local enforcing agency and the local utility).”
Check the regulations for where you live, and don’t miss this step!
7. Have a maintenance plan
As we’ve mentioned, having a solar power system doesn’t take a lot of work to maintain, and the panels themselves are very durable, especially if you go with a big name like LG, Panasonic, or REC.
Other than the occasional wiping down of the panels to make sure that there’s no dust or debris blocking your ability to absorb sunlight, there isn’t too much that goes into it.
|🌞 Pro-tip: While cleaning your solar panels regularly is a good thing, remember not to use harsh chemicals as it can damage your panels! A moist towel or microfiber cloth—and a bit of elbow grease—is generally good enough.|
Alright, let’s look at how some of the biggest companies in the US are making the switch to industrial solar power—and saving a ton of money while they’re at it. And as you’ll notice, each of these companies has an entire page on their website dedicated to their solar and renewable energy projects. (Remember what we said about marketing your sustainability initiatives to customers?)
At a capacity of 51.5 MW, Kohl’s commercial solar initiatives are beating out big names like Amazon, Macy’s, and IKEA.
Today, they have a whopping 200,000+ solar panels on top of not only their stores, but also their distribution centers and corporate offices. Their biggest solar array system is located at Kohl’s Edgewood, Md. e-Fulfillment Center, and it generates 2.3 MW of power with over 8,000(!) panels.
Even with all these solar panels, it’s interesting to note that each rooftop system provides only 20 to 50% of the building’s energy needs. Imagine how much electricity they must use!
At 79.4 MW of capacity, Apple doesn’t generate that much more energy compared to Kohl’s, but its global facilities are powered by 100 percent clean energy, which is very impressive.
And not only do they have solar panels, Apple also has numerous other solar projects too, like:
- Wind and solar projects across six provinces of China that generate over 485 megawatts of power
- The biggest LEED Platinum-certified office building in North America in its HQ, which is powered by 100 percent renewable energy from different sources like a 17-megawatt onsite rooftop solar installation and four megawatts of biogas fuel cells
- Data centers around the world that run on renewable energy
Walmart is one of the biggest retailers in the world, with sprawling parking lots and buildings that are perfect opportunities to make use of industrial solar panels. They’ve signed a whopping 46 PPAs to transition more of their energy usage to solar, and lands at #3 with a shade under 150MW of solar capacity.
Like Walmart, Target has a ton of space on which it can place many, many solar panels. In fact, they have so much space, they even made an art installation out of them:
With over 200 MW of solar capacity, Target is one of the companies that’s really leveraged solar energy and made meaningful steps toward sustainability. Three of their newest “solar sites?”
You guessed it: Arizona, which has over 20 rooftop solar projects; Hawai’i, which gets a lot of sun; and Colorado—which is cold, but gets enough sun to allow Target to produce 3,800 megawatt hours of renewable energy every year.
If you haven’t heard of Prologis, that’s totally understandable. They’re a real estate investment trust—and what that means is that they own buildings. Lots of buildings.
This is a big reason why they’re able to have over 210 MW of solar capacity, overtaking Target for the #1 spot.
How much does a commercial solar system cost?
It really ranges because commercial solar PV systems can range from 10kW to 30kW and more.
Freedom Solar Power suggests using this simple calculation to calculate roughly how much you can expect to pay (not counting tax incentives and other financial reimbursements):
If you want to find out how big of a solar power system you need to satisfy all of your electricity usage, multiply your building’s square footage by 16 kWh and then divide that number by a “conservative solar production multiplier of 1,400.”
(Remember, most companies don’t power 100% of their needs with solar—to store energy that you generate during the day, you need batteries and those cost a lot, which makes it very difficult for most companies to go completely off the grid.)
Then, to calculate roughly how much you’d have to pay for an average solar power system of that size, multiply that system size in kW by $2.00 per watt.
So, a 30kW system (which is about medium-sized) would cost roughly $60,000.
How big is a commercial solar panel?
Typically, a commercial solar panel measures about 77 by 39 inches, or 6.5 by 3 feet. And yes, they’re heavier than residential solar panels, so your roof should be in top-top shape before you install these panels up there.
How long do commercial solar panels last?
Quite a long time!
Most reputable solar panel manufacturers, like LG and Panasonic, have very generous 25-year warranties.
Two types of warranties to keep in mind: equipment warranties and performance warranties. One is to protect you from the equipment physically breaking over those 25 years, and the other is a guarantee of continued performance.
Since these are long-term investments, you don’t want to buy something that deteriorates after a few years and stops generating as much electricity. Again, LG and Panasonic have excellent performance warranties that guarantee 85 to over 90% of the initial performance, even after 25 years of use.
Is my building or site right for solar?
To answer this question, you’ll need to bring in a professional.
For larger or older buildings, hire an engineer or find a solar installation company that can send one in to do an audit and evaluation of your building and site.
If they decide that a roof isn’t the best place, they might be able to suggest an alternative placement, like on top of your carport or even on the ground.
Other than solar panels, what other equipment should I budget for?
Two big ones:
- An inverter or converter to convert the DC power that sunlight gets absorbed as into AC power for your appliances and devices)
- Solar batteries or generators to store the excess power that you generate during the day so that you can still power your building at night (or on cloudy days). The downside is that they’re expensive and can add significantly to your cost. Keep an eye on the solar battery market and when new innovations and cost reductions start happening, that’s the best time to really get a jump on getting solar batteries.
There are others as well, but chat with your solar installation company to get the details on what other gear you might need.
Think your building is ready for commercial solar panels?
Congrats on being forward-thinking about having a positive impact on the environment!
To start moving toward this sustainable source of energy, review the steps in this article, and start looking into the laws and regulations in your city.