Commercial solar panels: Costs, benefits & best installers

Commercial solar panels are large-scale solar projects primarily used by businesses, organizations, and other large property owners. 

It’s more common than you think. In fact, commercial solar is now estimated to account for close to a third of solar power generation in the U.S., after growing in size over 15 times between 2009 and 2021. 

Commercial solar systems can cost anywhere between $24,900 and $581,000 – depending on how large of a project it is. 

In this blog, we’ll further explain the cost of commercial solar, its uses, benefits, and more.

What is commercial solar?

Commercial solar is the term used to describe solar panel installations in the commercial and industrial (C&I) sector.

It is a broad category that covers all solar power use outside of the residential scale (solar panels for home) or the utility scale solar (solar power plants aka solar farms). As such, commercial solar doesn’t just cover businesses, but government organizations and nonprofits, as well. 

Examples of businesses and organizations that use commercial solar energy systems installations include: 

• Commercial office buildings

• Farms, ranches, and vineyards

• Factories and warehouses

• Hospitals and clinics

• Schools and daycare centers

• Shopping malls and retail outlets

• Parking garages, parking lots, etc 

As you can see, there’s a whole spectrum of organizations that can take advantage of solar power.  

Where can commercial solar systems be installed? 

Here are some of the many locations where commercial solar panels can be installed:

• Commercial building rooftops and awnings

• Ballasted on a flat roof or other flat surfaces

• Barns and sheds

• Pergolas, gazebos, and patio covers

• Carports and parking shades

• Pole mounts

• Water bodies such as ponds and artificial lakes (‘floatovoltaics’)

Given the range of organizations that can use commercial solar panels - and the diversity of locations that they work out of - commercial solar systems are installed in a wide variety of different structures and settings. 

Solar projects can be installed on a much larger scale – which can account for a much larger price tag.

How much do commercial solar systems cost?

According to the Solar Energy Industries Association, also referred to as SEIA, commercial solar panel systems cost an average of $1.66 per watt as of 2023. This is almost half of the cost per watt to install on residential projects ($3.27).

Based on these average cost figures, we can estimate the cost of commercial solar power systems of various sizes:

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

Solar installation costs by market segment

Do bear in mind that the average figures hide a large distribution in prices. For example, cost per watt tends to fall as system size increases, thanks to economies of scale. There are also many other factors that can cause prices to vary, such as location (costs vary by state), type of mounting system, difficulty of installation, and more. 

These prices seem a bit intimidating, but keep in mind that these prices are before any incentives or upfront rebates are factored in. Incentives can dramatically reduce the high costs of solar. The section below will go into greater detail about incentives offered for commercial solar.

Commercial solar panel incentives and benefits

There are many compelling reasons for businesses, government organizations, and nonprofits to go solar. Here are the major incentives and benefits of commercial solar panel systems: 

• Solar tax credit and other incentives

• Electric bill offset

• MACRS depreciation

• Multiple financing options

• Green credentials

• Quick payback period 

We discuss each of these benefits below.

Solar tax credit and other incentives

The Clean Energy Credit - more commonly known as the solar tax credit - is equal to 30% of the cost of installing a solar panel system.

So if your organization pays $50,000 to install a solar power system, it will receive a $15,000 credit when it files its taxes. You can learn more about using the solar tax credit for commercial solar installations in this guide from the Department of Energy; just note that with the passage of the Inflation Reduction Act of 2022 the full 30% tax credit is now available through 2032. 

States, utilities, and local governments may provide additional incentives for organizations that go solar. Make sure to check what incentives are available in your area. 

Lower operating costs through electric bill offset

Commercial solar power systems can be designed to offset 100% of an organization’s electricity bill. 

Full electric bill offset is particularly easy if you install a grid-tied system, which allows you to export surplus power to the grid and import power to meet shortfalls when needed. Further, if net metering is available, you’ll even earn the full retail rate for the power you export!

Full electric bill offset means: 

• Protection against utility rate hikes: As you are producing and consuming your own power, you are less affected by any future electricity price increases.

• Positive cash flow: Many organizations that go solar see this benefit from Month One as the loan repayments (if you financed the panels) can cost less than the bill savings. 

• Free electricity: Once your solar panels are paid off, you’re essentially powering your organization for free.

MACRS depreciation

The cost recovery period for solar energy equipment under a modified accelerated cost recovery system (MACRS) is just five (5) years. 

This means that businesses will benefit from a large reduction in their tax liabilities in their first five years of owning the asset; this is extremely favorable considering solar panels have a warranted life of at least 25 years. 

MACRS can be used in conjunction with the solar tax credit. The project’s cost basis is reduced by half the value of the solar tax credit. So, if you use the 30% tax credit, you’ll reduce the asset’s cost basis to 85%.

Flexible purchase and lease options

The best way to purchase solar panels to get the greatest lifetime savings is to pay them off upfront in a cash purchase. However, organizations also have the option to finance their solar panels in one of three ways:

• Solar loan: You take a loan to purchase the solar panels and make monthly repayments over 5-20 years

• Solar lease (aka renting solar): You pay a solar company a fixed monthly rate (‘rent’) for the use of their solar panels

• Power purchase agreement (PPA): You agree to purchase the power generated from the solar panels at an agreed rate per kilowatt-hour (kWh)

Solar systems bought with a solar loan are eligible for the tax credit; this is not the case with solar leases and PPAs. Solar loans generally offer the best return on investment and are the preferred option for property owners. 

Alignment of generation and consumption

Solar power generation and electricity consumption tend to align closely in commercial solar panel installations. That’s because most organizations consume electricity during the day, when the sun is out and solar panels are generating power. 

This alignment results in a higher degree of solar power self-consumption. This means that in commercial solar, there is generally:

• Less need for energy storage - a good thing, as battery solutions increase solar’s upfront costs and payback periods

• Increased savings in places where net metering (full retail rate for solar exports) is unavailable

This is in marked contrast with what happens in homes and the grid in general, which see a major spike in electricity consumption after sunset, exactly when solar panel output drops. This imbalance is known as the Duck Curve, and often needs to be addressed with expensive battery solutions. 

Quick payback period

The combination of incentives, utility bill savings, and the MACRS depreciation tax benefits means that commercial solar payments can offer a great return on investment - offering an average payback period between three and seven years.

That is a very short payback period, especially considering how long solar panels are designed to last. You can expect your solar panels to last at least 25-30 years, which is the amount of time most performance warranty periods are offered on current solar panel models.

Just keep in mind that you’ll have a shorter payback period with a cash purchase versus financing your panels.

Green credentials

It’s well-known that businesses that listen to what their consumers want thrive - and, conversely, those that don’t are doomed to fail. And when it comes to climate change and the well-being of our planet, the majority of consumers feel very strongly:

• 60% of U.S. adults believe that climate change is a major threat to the nation

• 74% of consumers care about the environmental impact of the products they buy

Companies need to show that they’re responsive to these concerns by demonstrating their commitment to clean energy and sustainability. A great way to achieve this is by installing commercial-scale solar systems. It’s a win-win scenario – organizations can save money on electricity costs while also taking part in reducing their carbon footprint.

Corporate giants like Apple, Amazon, Google, Target, and Walmart have caught on to this fact, and are installing massive amounts of solar capacity while announcing ambitious plans to completely transition to clean energy.

You also don’t need to come from a giant corporation to take part in a solar project. The image below shows ground-mounted solar panels on a farm. They generate clean energy, while also providing shade and protection to the plants!

Compared: residential, commercial, and utility-scale solar energy

Many of our readers have knowledge about solar panels for homes, or even about solar farms, but are less familiar with commercial solar.

Here is how commercial solar compares to other segments of solar: 

	Residential	Commercial	Utility
System size	3-10 kW	10 kW-1 MW	>1 MW
Typical panel size	60-cell (39" x 66")	60-cell (39″ x 66″) /  72-cell (39″ x 77″)	72-cell (39″ x 77″)
Typical panel wattage	375 - 420 W	450 - 550 W	450 - 550 W
Total space requirements	140-700 sq ft	700 sq ft – 6 acres	>6 acres
Cost per watt	$3.25* / $2.60 - $3.25**	$1.64*	$0.96-$1.08*
Eligible for 30% tax credit	Yes	Yes	No
Depreciation tax benefits	No	Yes	Yes
Permitting time	Weeks	Months	Months to years

_{*SEIA average cost figures - Q2 2023}

_{**SolarReviews average cost figures - 2023}

If you want to learn more about residential solar installations, do check out our blog or our advanced solar calculator, which can tell you everything you need to know about installing solar panels for your home, including cost and savings figures. 

Best commercial solar companies

Over the years, SolarReviews has compiled the best online resources for unbiased consumer reviews of solar companies. 

Based on their review scores, here are the most highly-rated solar companies performing commercial solar installations:

Rank	Company name	State(s)	Rating out of 5.00
1.	Affordable Solar Roof & Air	FL, TX	4.96 (420 reviews)
2.	Arizona Solar Wave	AZ	4.95 (347 reviews)
3.	Renova Energy	CA	4.93 (399 reviews)
4.	Lumina Solar	MD, PA	4.92 (352 reviews)
5.	Synergy Solutions LLC	NH, RI, MA	4.90 (90 reviews)
6.	Solar Energy World	DE, FL, MD, NJ, PA, VA	4.88 (507 reviews)
7.	Stellar Solar	CA	4.85 (185 reviews)
8.	Harvest Power LLC	NJ, NY	4.81 (221 reviews)
9.	Shine Solar, LLC	AR, LA, MO, OK	4.77 (580 reviews)
10.	Solar Bear	FL	4.74 (702 reviews)
11.	Solar Power of Oklahoma	OK	4.74 (45 reviews)
12.	Long Island Power Solutions	NY	4.72 (131 reviews)
13.	Shinnova Solar	KS, MO, NE	4.69 (35 reviews)
14.	Purelight Power	IA, KY, MT, OH, OR	4.68 (84 reviews)
15.	Renu Energy Solutions	GA, NC, SC	4.68 (219 reviews)

Many installation companies offer both commercial and home installations. But, if you're looking for larger utility-scale installations you'll likely need a company that specializes in megawatt-sized installations. However, Tesla does offer commercial solar installations in addition to home solar panels in California.

When calculating review scores, SolarReviews gives higher weightage to more recent reviews, to ensure that review scores give a more accurate reflection of the company’s current performance.