Written by

Tara Farmer

July 8, 2024

Edited by

Jennifer Carlson

Fact-checked by

Kristen Cramer

Average cost of commercial solar panels

Commercial solar panels cost $2.50 to $3.50 per watt installed before incentives. With tax credits and other incentives, solar panels for commercial buildings cost $1.20 to $1.75 per watt, depending on the location, size, and complexity. Saving up to 75% on electricity helps offset the commercial solar installation costs.

• The cost for commercial solar panel systems has decreased by 50%+ in the last 10 years.

• The commercial solar sector includes most non-residential properties, including office buildings, retail businesses, factories, warehouses, schools, hospitals, clinics, government organizations, non-profits, religious organizations, agricultural businesses, and parking garages and lots.

Commercial solar cost factors

The table below details a typical cost breakdown for a commercial solar system installation. Keep in mind these are averages and the specific costs for each business vary depending on many factors.

Several factors influence the cost of a commercial solar panel system including:

• Electricity usage – The more energy you consume the bigger the more solar panels you'll need to offset the costs.

• Off-grid vs. grid-tied – For total energy independence, you'll need to factor in the extra costs for battery storage and generators. A 30kW off-grid solar system costs $120,000 to $150,000 to power a small business. Check local laws before investing, as some areas may require maintaining connection to the grid.

• Location & market – The number of sunny days impacts the size and number of panels needed. Location also affects labor rates, regulations, requirements, permitting fees, interconnection fees, and available incentives.

• Interconnection point – The distance from the solar panel system to the point of interconnection affects the cost. The farther away the system is, the higher the installation cost.

• Solar panel type – Monocrystalline is more expensive but is the most efficient option, best for businesses working with limited space. Polycrystalline is cheaper but less efficient. Thin-film is cheapest but needs the most space. Most commercial panels are large—72-cell or 96-cell panels—and use larger inverters.

• Assembly – Pre-assembled solar energy systems typically cost less than buying all the components separately.

• Brand & quality – Higher quality components from well-established brands cost more but tend to last longer and often come with longer warranties.

• Insurance – Adding a solar system to your business means increasing your property and liability insurance.

• Maintenance – Solar panel cleaning costs $10 to $20 per panel on average. Ongoing maintenance includes inspection, cleaning, and periodic repairs to keep the system performing efficiently and maximize its lifespan. Some systems come with annual inspection and cleaning rolled into the installation contract.

• Removal – If you have existing panels that have reached the end of their lifespan and need replacing, solar panel removal costs $200 to $500+ per panel, depending on the system size and job complexity.

Installation type and location

You can install commercial solar panels on a roof like most residential solar panel systems. However, you may have several other options as well, depending on the property. In general, fixed panel installations cost less than responsive tracking systems requiring advanced equipment and technical expertise to install.

Installation possibilities to consider:

• Rooftop – Rooftop installation is the most common choice for commercial solar panels.

  • Flat roof – Ballasted solar racking uses gravity—instead of traditional roof-penetrating methods that increase the risk of leaks and roof damage—to hold the solar panels in place. Single-tilt mounting is popular for large warehouses and factories. Dual-tilt panels are the best use of space for smaller flat roofs.

  • Sloped roof – Rail mounting systems secure the solar panels in place via a line of rails attached to the roof with roof-mounted assemblies. Rail-less mounting systems attach the solar panels directly to the roof instead of to a line of rails.

• Parking lot – Solar carports or solar canopies take advantage of parking lot space by using solar panel arrays angled to provide shade to the cars underneath while simultaneously generating solar energy.

• Vacant land – Ground-mounted and pole-mounted systems are viable options for a business with a lot of unused land space, or when roof-top installation is not structurally feasible. Additionally, agrivoltaics, or solar sharing, uses shade-loving crops to help reduce the cost of a solar farm on the same land space.

• Ponds & lakes – Floating solar panels (FPV) are a newer technology that uses a mounting structure designed to float on calm water.

Tax credits and other solar incentives

There are many incentives to help offset the prohibitive cost of a commercial solar system. While the federal tax credits are available in all states, the other available incentives and requirements for commercial solar vary by state, utility, and local governments. The table below details some of these incentives.

Ways to pay for commercial solar

While paying cash up front for the entire installation yields the most financial benefit, businesses that don't have the capital have several financing options to go solar with little to no money up front.

Commercial vs. residential solar panels

Commercial solar panel systems are typically larger than residential systems as the property size and electricity needs are larger than most single-family homes. As such, most commercial systems cost more overall, though they may cost less per watt due to the economies of scale.

• Before tax credits or incentives, residential solar panels cost $3.00 to $4.50 per watt installed on average.

• Both commercial and residential solar energy systems are eligible for the federal tax credit.

• Commercial solar panel installations often take longer to complete due to the extensive research, planning, design, and permitting processes.

Top commercial solar companies

The table below shows Solar Power World's top 10 commercial solar contractors of 2023. These companies installed the most kW for commercial solar energy systems in 2022.

Benefits of commercial solar panels

Installing a commercial solar panel system offers many benefits and few drawbacks. While solar energy is sun-dependent and installation often requires roofing and system upgrades which add to an already expensive upfront cost, the positives tend to outweigh the negatives in many cases.

• Improved company image – Many people prefer working with companies who are committed to eco-friendly business practices.

• Reduced carbon footprint – Solar panel systems contribute to a company's corporate social responsibility (CSR) and sustainability goals.

• Reduced electricity expenses & reliance – Most commercial solar systems can offset electricity use by at least 75%, often saving a business thousands per month and enjoying less reliance on potentially unstable utility power in some areas.

• Locked in electricity rate – While the public electricity rates continue to increase, the 25+ year lifespan of a commercial solar panel system means the company will enjoy reduced (or free) electricity rates for many years.

• ROI – The breakeven period for a commercial solar system ranges from 3 to 7 years on average.

• Instant savings – Some companies see electricity savings higher than their solar loan payment, realizing significant savings from day one.

• Tax credits & incentives – Businesses can often deduct up to 85% of the total system cost. Some financing options for businesses also offer system installation with little to no down payment.

• Balanced energy / reduced storage needs – Many businesses operate during the day, so a solar panel system contributes to a balance of generating and consuming energy in the same time frame, meaning less need for battery storage—especially helpful in areas that do not offer net metering.

• Increased property value – Properties with solar power typically sell faster than those completely dependent on public utilities.

Commercial solar panel FAQs

Are commercial solar panels worth it?

Commercial solar panels are worth it in most cases, depending on the business's location, size, energy usage, electricity rates, and available solar incentives. With a payback period of 3 to 7 years on average, going solar can potentially provide a business with 20+ years of free electricity.

How many solar panels do I need for my business?

Commercial solar panel systems typically use 72 to 98 cells. In comparison, residential solar panels are smaller and less powerful. Follow the steps below to calculate how many solar panels you need for your business:

1. Determine your business's monthly energy usage and how much of it you wish to cover with solar power.

2. Look online for the average hours of peak sun at your place of business. Keep in mind that the panels' direction and orientation will affect how much sun they receive.

3. Use the following formula to find what size kW system you need to offset your business's energy use: Monthly electricity use (in kWh) ÷ Monthly peak sun hours = kW system needed

4. Then, divide the result from step #3 by the estimated output of the panels you choose. The result is the number of panels you need. Average system size needed (in kW) ÷ estimated panel wattage output = the number of panels you need.

How long does it take to install commercial solar panels?

Installing commercial solar panels takes 2 to 4 months on average, from planning and design to onsite construction and inspections. The physical installation takes 2 to 4 weeks for most commercial projects, depending on the size, complexity, and location. Small businesses take less time than average.

How long do commercial solar panels last?

Commercial solar panels last 25 to 30 years on average, depending on the type, quality, location, and how well you maintain them. Even in perfect conditions, a solar panel's performance degrades over time. Most good quality panels have a 25-year warranty that guarantees 80%+ performance throughout the warranty period.

Getting estimates from commercial solar contractors

When searching for a commercial solar panel contractor near you, be sure to:

• Look for solar contractors with North American Board of Certified Energy Practitioners (NABCEP) accreditation and membership with relevant professional organizations, such as:

  • Solar Energy Industries Association (SEIA)

  • American Council on Renewable Energy (ACORE)

• Choose a licensed, bonded, and insured solar company that has experience with large-scale commercial installations.

• Check out their profiles and customer reviews on HomeGuide and Google.

• Compare 3 to 5 quotes from reputable solar companies. Get quotes that detail all parts of the installation, the number of watts per panel, the cost per watt, and any incentives or rebates factored into the estimate.

• Get a contract and warranty confirmation in hand before the project begins.

• Beware of the extremely low bids to avoid lack of experience or lower-quality work. Solar panels should last 2+ decades, and proper installation is essential.

• Questions to ask a commercial solar panel installer {#ask}

Ask these important questions to help you select the best company for your commercial solar panel installation:

• How long have you been in business in this area?

• How many NABCEP-certified installers do you have?

• Are you a member of any other professional solar or renewable energy organizations?

• Is my property suitable for a commercial solar panel system?

• What type of solar panels do you recommend for my property, and why?

• What size system do I need to eliminate the business's electric bill?

• How do you calculate what size solar system my business needs?

• Is the roof in good enough condition to add solar panels?

• Is the current electrical panel sufficient for a new commercial solar panel system?

• Will there be room to add more panels later if the energy needs change?

• Does the estimate include all necessary system components, installation, permit and interconnection fees, and cleanup?

• What other features or services do you offer to further reduce the business's energy costs and improve energy efficiency?

• How long will the installation take, and how soon can you get started?

• Will installing commercial solar panels void the roof warranty?

• What rebates or incentives does this system qualify for, and will you help me obtain them?

• How long is the warranty, and what exactly does it cover?