If you’ve ever considered taking your business solar, but were worried by the cost, you might find yourself in luck. The price of solar panels has steadily dropped, thanks to continually advancing technology and growing economies of scale. As it stands, the cost of commercial solar panels now puts renewable energy within reach of many businesses.
Of course, the actual dollar amount for a commercial solar power system will vary based on several factors. First, there’s the purchase price of solar 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 upfront cost of solar purchase and installation, and net metering* can potentially help offset your investment. Let’s look at how all this 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% every year since 1998, with the most dramatic decreases taking place after 2009. Here, “installed” refers to the entire cost of commercial 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 continue to make panels cheaper, these advancements take a while to filter into the marketplace. Therefore, the cost of solar panels alone has held relatively steady since around 2012.
However, almost everything else has changed. For example, solar panels produce direct current (DC), but our electric grid runs on alternating current (AC). The inverters that turn DC into AC have dropped in price, which reduces the cost of the solar installation as a whole.
In addition, as 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 down the installed cost of solar to an average of $2.58 to $3.38 per watt.
How can businesses bring commercial solar panel costs down even more?
The average corporate campus can accommodate approximately 500 kW worth of solar. At the average solar price, this works out to about $18,000 up front—but that figure tells only 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 reduce this cost even further.
For 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 several 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. For example, one program in Wisconsin helped homes and businesses save an average of nearly $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 upfront 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 different states in the U.S. (and depend on factors such as weather conditions, elevation and average amount of sunlight). Based on these factors, a commercial solar panel system could significantly offset the cost of the electricity an organization draws 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.
A great time to get started with commercial solar energy
When you’re just starting to think about going solar, it’s natural to wonder, “How much does solar cost?” Although there are a wide range of variables to consider, the price of solar panels plays a major factor. The good news is that prices continue to fall as innovation in solar technology rises. In the meantime, you can also check out a solar panel cost calculator to get an approximate idea of what to expect.
*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.