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As the world's population grows, so does the energy demand. However, traditional forms of energy, such as fossil fuels, are finite resources that contribute to climate change. This is where commercial solar panels come in. Not only do they provide clean and renewable energy, but they also offer long-term financial benefits for businesses. If you’re wondering about commercial solar panel cost, a 20-kW commercial system would require an upfront investment of $40,000 to $80,000, excluding any tax credits or incentives.
Highlights & Key Takeaways
- Commercial solar panels can provide businesses up to a 75% decrease in their monthly electricity bill.
- The commercial solar installation cost of a 20-kW commercial system would require an upfront investment of $40,000 to $80,000, excluding any tax credits or incentives.
- When looking for a commercial solar panel lender, businesses should consider factors such as interest rates, loan terms, fees, and the lender's experience and reputation in the industry.
- The solar panel industry is growing rapidly, with more and more businesses realizing the benefits of solar energy and taking advantage of state and federal financial incentives.
How Much Do Commercial Solar Panels Cost?
With energy consumption being such a high overhead cost, it’s no surprise that more and more businesses are turning to solar energy. Aside from moving to a new location, embracing solar power is one of the only ways businesses can protect themselves from rising energy costs. And though solar power can save companies significant energy costs over time, that upfront investment comes with a pretty hefty price tag.
Several elements influence the eventual cost of a PV (photovoltaic) system, such as its size, composition choices and arrangement, labor expenditures, permit expenses, and access to tax credits and incentives. The price of a solar electric system is determined in dollars per watt, with the current average industrial solar panels price being approximately $2 to 4 per watt. Hence, a 20-kW commercial system would generally cost $40,000 to $80,000, excluding any incentives or tax credits.
Factors that Affect Commercial Solar Panel Cost
The cost of a commercial solar panel system is influenced by various factors, with each element playing a significant role in determining the final price. The most common factors that impact the cost of a commercial solar panel system include the size of the system, mounting style, electrical infrastructure requirements, and seismic considerations. This section will delve deeper into the commercial solar cost breakdown.
The level of energy consumption is a key factor in determining the overall cost. The more energy production required, the greater the number of panels and equipment the system will demand, which can translate into higher expenses. As a result, businesses must weigh the balance between cost and energy production to determine their optimal solar panel system configuration. This analysis can help them identify the "sweet spot" that maximizes energy production while keeping costs in check.
Solar System Size & Capacity
Larger systems generally cost less per watt than smaller systems. This is primarily because larger systems enjoy economies of scale, with the cost of materials, labor, and equipment spread across more panels. The size of a solar panel system also affects its capacity and energy production, which can considerably impact the cost.
Smaller systems are less expensive but generate less energy, which could impact the long-term financial benefits of a solar panel investment. Larger systems can generate more energy, providing more significant savings over time and having a higher upfront cost.
Type of Solar Panel Used
Just as in residential use, two primary types of solar panels are used commercially.
Monocrystalline solar panels are made from a single, high-purity silicon crystal, which results in a highly efficient panel with a sleek black appearance. Conversely, polycrystalline solar panels are crafted from multiple silicon fragments, which give them a distinctive blue color and a lower efficiency rating. While monocrystalline panels are more expensive than polycrystalline panels, they also tend to have a longer lifespan and better performance in low-light conditions. Polycrystalline panels are more affordable but are generally less efficient and less durable.
Solar Panel Brand
When selecting a commercial solar company, there are numerous factors to consider. One critical aspect is brand recognition, as well-established companies with solid reputations are often better equipped to deliver high-quality systems and services. According to Solar Power World, some of the best commercial solar companies include AUI Partners, Sunshine Solar, and Standard Solar.
These companies have a reputation for quality products and services and extensive experience in the solar industry. However, it's worth noting that brand recognition can also play a role in the cost of commercial solar panels. Recognizable brands may charge a premium for their products and services due to their established reputation and successful track record.
According to SunPeak Power, the three most common mounting options for commercial solar panels are:
- Rooftop - Typically the most affordable option, as they require no additional land or infrastructure. However, they may require structural modifications to the roof and can be more challenging to install.
- Ground-mounted - Generally more expensive but provides excellent panel orientation and placement flexibility.
- Carport-mounted systems - Provides dual benefits by offering shade for vehicles and generating solar energy. However, these systems are often the most expensive of the three mounting options.
The amount of solar radiation available at a given location is influenced by various factors, including latitude, cloud cover, and elevation. Regions with higher solar radiation levels, such as those closer to the equator or with less cloud cover, will generally require fewer solar panels to generate the same amount of energy than regions with lower radiation levels. Furthermore, seasonal fluctuations in solar radiation can impact the efficiency and cost of solar panel systems. For example, regions with harsh winters may require more expensive snow removal equipment or experience reduced energy production during winter.
Several factors can influence the suitability of a site for solar installation, including shading, roof orientation, and local zoning regulations. A site with minimal shading and a south-facing roof is more suitable for solar installation. It may require fewer panels to generate the same amount of energy as a site with significant shading or an unfavorable orientation. Additionally, local zoning regulations can impact the permitting and installation process, potentially adding additional costs.
The location of existing electrical infrastructure and the electrical system's capacity can impact the solar installation's cost. Upgrades to the electrical infrastructure may be necessary to accommodate the solar panel system, adding additional costs to the installation process. Additionally, a longer distance between the solar panel system and the electrical grid may require more materials and labor.
Incentives And Tax Credits
Businesses investing in solar energy can benefit from various tax credits and incentives. According to the U.S. Department of Energy, several federal tax incentives are available to businesses that invest in solar energy, including the Investment Tax Credit (ITC) and the Modified Accelerated Cost Recovery System (MACRS).
The ITC allows businesses to deduct 26% of the total cost of a solar panel system from their federal taxes. In contrast, MACRS allows businesses to recover the cost of the solar panel system through depreciation deductions. Additionally, some states and local governments offer additional incentives, such as rebates or property tax exemptions, to businesses that invest in solar energy. These tax credits and incentives can significantly reduce the overall cost of a commercial solar panel system, making it a more affordable and financially attractive investment for businesses.
Cost to Insure
The cost to insure a commercial solar panel system can vary based on several factors, such as the size of the system, the type of panels, and the location of the business. Generally, the cost to insure a commercial solar panel system can range from 0.1% to 0.3% of the system's total yearly cost. It is recommended that businesses work with an experienced insurance provider to ensure they have adequate coverage for their commercial solar panel system, as it can provide financial protection in the event of damage, theft, or other unexpected events.
Breakdown of Average Commercial Solar Panel Costs
Let’s break down the average commercial solar panel costs based on various factors, including size, wattage, square footage, installation, and the system's total cost. Understanding the breakdown of these costs can help businesses make informed decisions when considering solar energy and ensure that they are getting the most value for their investment.
Average Cost of Commercial Solar by Size
The cost of a commercial solar panel system can vary significantly based on its size. According to industry averages, a small 25 kW system can cost around $52,500, while a medium 500 kW system can cost around $900,000. An extensive 2 MW system can cost around $3.5 million, while an extra-large 5 MW system can cost up to $8 million. These estimates depend on the panel type, mounting style, and site suitability. However, understanding the average costs of various system sizes can help businesses plan for their investment in solar energy.
Average Cost of Commercial Solar Per Watt
The commercial solar cost per watt typically averages between $2 to $4 (this is consistent with the cost per watt for residential solar systems). The cost per watt can vary depending on factors such as the size of the system, mounting style, and available incentives. Larger systems can have a lower cost per watt than smaller systems and commercial systems generally have a lower cost per watt than residential systems due to economies of scale.
Average Cost of Commercial Solar Per Square Foot
According to Freedom Solar Power, commercial solar panel cost per square foot ranges from $3 to $5. This cost includes the installation expenses, which may vary depending on several factors, such as the location, mounting style, size, and electrical infrastructure. On top of the solar panel cost per square foot, businesses should also consider additional costs associated with permits, interconnection fees, and taxes.
Average Cost to Install Commercial Solar Panels
The cost to install commercial solar panels can vary depending on several factors and may vary from vendor to vendor. According to Freedom Solar Power, the average cost for installation is around $2.50 to $3.50 per watt, which is relatively consistent with other estimates from $2 to $4 per watt. However, this can change based on the system's size and the installation's complexity.
Additional costs may include permits, engineering, and design expenses, adding another 10 to 20% to the total installation cost. Other factors that can impact installation costs include labor costs, equipment, materials, and any necessary upgrades to the electrical infrastructure.
Average Total Cost of Commercial Solar Panels
The average total cost of commercial solar panels can vary widely depending on system size, wattage, square footage, mounting style, geographical location, site suitability, electrical infrastructure, and more. On average, a small commercial solar panel system (10 kW) can range from $20,000 to $40,000, while a medium-sized system (100 kW) can cost anywhere from $100,000 to $200,000.
An extensive system (500 kW) can cost between $500,000 and $1 million, while an extra-large system (1 MW) can cost upwards of $2 million. The cost per watt can range from $2 to $4, and the cost per square foot can range from $7 to $9.
The total installation cost can also vary significantly depending on the project's complexity and the contractor's experience and reputation.
Tips to Manage the Cost of Commercial Solar Panels
Managing the cost of commercial solar panels can be challenging, but businesses can reduce costs and maximize the benefits of their solar investments in several ways. Here are some tips to help manage the cost of commercial solar panels:
- Choose the right solar panel type and size for your business needs and budget
- Consider leasing or power purchase agreements (PPAs) to avoid upfront costs
- Take advantage of tax credits and incentives to reduce the overall cost
- Optimize your solar panel installation by selecting the right mounting style and ensuring site suitability
- Explore net metering options to offset electricity costs and potentially earn credits from excess energy production.
How to Finance Commercial Solar Panels
Investing in commercial solar panels can have a significant upfront cost, but it can lead to long-term savings for businesses. Fortunately, there are several financing options available for commercial solar panels.
- Leasing - Businesses can lease solar panels from a provider and pay a monthly fee. This can be a good option for businesses that can't afford the upfront costs of purchasing a system.
- Power Purchase Agreements (PPAs) - PPAs allow businesses to purchase the power generated by solar panels rather than the panels themselves. This is a good option for businesses that want to avoid upfront costs.
- Energy Service Agreements (ESAs) - Similar to PPAs, ESAs allow businesses to purchase the power generated by solar panels, but they also include maintenance and monitoring services.
- Tax Equity Project Financing - This option involves selling the tax benefits of the solar panel system to a third-party investor, who then finances the system and receives the tax benefits.
- Debt Financing (Loans) - Businesses can obtain loans to finance the upfront costs of purchasing a solar panel system. This option may offer tax benefits and the potential for long-term cost savings.
Are Commercial Solar Panels Worth the Cost?
The cost of a commercial solar system is worth it for many businesses. While the initial investment can be significant, the long-term benefits can outweigh the costs. Not only do solar panels reduce energy costs and provide a reliable source of electricity, but they also have a positive impact on the environment. In addition, many states offer tax incentives and rebates to help offset the cost of installation. Investing in commercial solar panels depends on the individual business and its goals, but the potential benefits make it a worthwhile consideration.
How Much Money Can Be Saved with Commercial Solar Panels?
Installing commercial solar panels can lead to significant savings for businesses. A business can save up to $200,000 over 20 years by installing solar panels. The savings will depend on factors such as the size of the solar panel system, energy usage, and local utility rates.
In addition to cost savings, businesses can benefit from tax incentives and credits for renewable energy. Installing solar panels can increase a business's property value and reduce its carbon footprint.
What Are the Benefits of Installing Commercial Solar Panels?
Commercial solar systems offer numerous benefits to businesses.
- Lower energy costs and reduced electricity bills
- Protection against rising energy costs
- Improved bottom line and increased profitability
- Enhanced brand image and corporate social responsibility
- Increased property value and attractiveness
- Potential for additional revenue through net metering or selling excess energy back to the grid
- Improved energy security and independence
- Long-term savings and return on investment
- Reduced carbon footprint and positive impact on the environment
What’s the ROI on Commercial Solar Panels?
ROI, or return on investment, for solar panels is calculated by dividing the total savings over the solar panel system's life by the system's initial cost.
Here's the formula:
ROI = (Total savings over solar panel system's life) / (Initial cost of solar panel system)
To estimate the total savings, businesses must consider the energy the system will generate each year, the cost of electricity in the area, and any incentives or tax credits that may apply. Factors such as inflation and system maintenance costs should also be considered. The ROI for solar panels can vary based on these factors. Still, businesses can expect long-term financial benefits, increased property value, and reduced carbon emissions.
Investing in commercial solar panels can offer substantial financial benefits for businesses, including reduced energy costs and potential tax incentives. Consider financing options and choose a lender with competitive rates and flexible terms. Additionally, businesses should work with experienced and reputable solar installers to ensure the best return on investment. Despite the initial investment, the long-term benefits of commercial solar panels make it a worthwhile consideration for businesses looking to reduce their carbon footprint and save on energy costs.