Breaking down commercial solar panel costs

Commercial solar panel costs for a rooftop installation can be less expensive than other options

If you've ever considered taking your business solar, but were worried by the cost, you may find yourself in luck. The price of solar panels has absolutely crashed over the last yeara reduction in price enabled by both advancing technology and economies of scale. As it stands, commercial solar panel costs now put renewable energy within reach of many businesses.

The actual dollar amount for a commercial solar power system is going to vary based on several factors. First, there's the purchase of the panels and associated equipment. Next, there's the cost of installation, and finally maintenance. A number of purchase strategies and government incentives can bring down the up-front cost of solar purchase and installation, and net metering* can potentially help offset your investment. Let's look at how this all works.

The cost of solar panels stays the same—but everything else is getting cheaper

According to Tracking the Sun IX: The Installed Price of Residential and Non-Residential Photovoltaic (PV) Systems in the United States, the installed cost of solar panels has dropped between 6 and 12 percent every year since 1998, with the most dramatic decreases taking place after 2009. Here, "installed" refers to the entire cost of solar panels: equipment, installation and maintenance.

Interestingly, most of the total reduction in residential and commercial solar panel costs has little to do with the panels themselves. While technological advancements will continue to make panels cheaper, these advancements take a while to filter into the marketplace. Therefore, the cost of solar panels alone has held steady since about 2012.

What's changed is everything else. For example, solar panels produce direct current, but our electric grid runs on alternating current. The inverters that turn DC into AC have reduced in price, which reduces the cost of the solar installation as a whole.

There's also the fact that since solar installations have increased dramatically, solar companies have become better and faster at designing and installing commercial solar power systems. In short, the reduced costs of equipment and expertise have driven the installed cost of solar down to an average of $3.57/watt.

How can businesses bring commercial solar panel costs down even more?

The average corporate campus can fit in about 500 kW worth of solar. At the average solar price, this works out to about $18,000 up front—but that figure only tells half the story. Right off the bat, businesses can apply for a solar investment tax credit that can potentially offset up to 30% of their system cost via a credit that can be applied to owed Federal taxes.** There are also purchasing strategies that can bring this cost even lower.

Just as an example, the rising popularity of solar energy means that you're probably not the only business in your area that's thinking about going solar. Other businesses and municipal organizations probably have the same idea—and this can give you an advantage.

If a bunch of organizations from the same town or county all buy into solar power projects from the same provider, they can acquire equipment at bulk rates. Group solar purchasing cooperatives have grown in popularity, and they're a great way to get more information about ways for business to go solar. One program in Wisconsin recently let homes and businesses save an average of $1000 per participant on solar installations.

Net metering: A business incentive to go solar

With time and tax credits bringing the cost of commercial solar panels lower and lower, now might be the perfect time to invest. Not only is the up-front cost of solar as low as it's ever been, net metering agreements allow utilities to buy back any excess energy that's generated by commercial solar.* 

Net metering agreements vary between utilities and from state to state, and depending on weather conditions and elevation, the amount of sunlight varies too. Depending on these factors, a commercial solar panel system could significantly offset the cost of the electricity an organization pulls from the grid when the panels are not producing energy. Under certain conditions, this might reduce the utility bill to zero—or at least unlock massive electricity savings.

 

*Utility credits and incentives vary depending on your location, and occasionally change. Check out the dsireusa.org website—a great resource with detailed solar policy information.

**Depending on your organization's individual circumstances, you may or may not qualify. Consult your tax advisor regarding the solar ITC and how it applies to your specific circumstances. Tax credits are subject to change. Please visit the dsireusa.org website for detailed solar policy information.


Related links:

Is commercial solar right for your organization?

INFOGRAPHIC: How commercial solar panels work

The advantages and disadvantages of businesses going solar

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