Top benefits of solar energy for commercial buildings 2025

As we approach , the integration of solar panels in commercial projects is no longer just an option but a strategic necessity. This blogpost delves into how solar energy works and the multifaceted benefits it brings to commercial buildings. Solar panels have been used on residential buildings for many years, but it’s only recently that they’re becoming more common in commercial construction.

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Solar energy is a cost-effective, dependable, eco-friendly way to power a business. It can power lighting, heating, air conditioning and water heating in commercial buildings. The panels can be installed on rooftops, parking lots and side yards.

In this article we discuss how solar panels work and the benefits of using solar energy in commercial buildings.

Use of Solar Energy Is Growing

Electricity costs in the U.S. are increasing, making it more expensive for businesses to operate and more challenging to plan ahead. Meanwhile, solar panel prices have dropped significantly in recent years as the technology and production processes have improved. 

The U.S. Energy Information Administration expects electric generation from solar to be the leading source of growth in the U.S. power sector through the end of , with 79 GW of new solar capacity projected to come online over the next two years.

In the EIA’s Short-Term Energy Outlook, the agency said it expects renewable energy’s overall share of electricity generation to rise to 26% by the end of .

Read also: 20 Eco-friendly & sustainable building materials for greener construction

How Solar Energy Works

Sunlight is captured and converted into usable energy through different methods, some more efficient than others. Today, solar panels can convert 20% of the sunlight they capture into solar energy, making it a more viable source of power for commercial buildings.

A solar panel, also known as a solar module, consists of silicon cell layers, a glass casing unit, a metal frame and wiring to transfer electric current from silicon. Silicon has conductive properties that absorb and convert sunlight into usable electrical power. The sunlight causes the silicon cell electrons to set in motion, creating an electric current.

This photovoltaic effect, first discovered in , comprises three steps:

• The photovoltaic solar cell absorbs solar radiation.
• When the silicon interacts with the sun rays, the electrons start to move and create a flow of direct electric current (DC).
• The wires feed this DC electricity into the solar inverter and convert it to alternating power (AC).

One of the challenges of using solar energy is how to store more of it to produce more power from it.

How Solar Energy Is Stored

There are several ways to store solar energy:

Battery Storage

When solar energy is fed into an electrochemical battery, the chemical reaction on the battery components keeps the solar energy. In a reverse reaction, the current exits from the battery storage for consumption.

Thermal Storage

Thermal storage uses mediums such as molten salt or water to retain and absorb the heat from the sun. The heated mediums are then stored in an insulated tank until the stored energy is needed for consumption.

Mechanical Storage

Mechanical storage converts the surplus electric power to mechanical power, then converts it back into electricity for later consumption.

There are three primary types of mechanical energy storage systems:

Flywheel

This method uses surplus electricity to spin a flywheel, generating electricity during peak demand times.

Pumped-Storage Hydropower

Water is pumped to a reservoir using surplus energy from solar panels and sent upstream of the turbine generators. Then water is allowed to flow through the turbines to generate electricity.

Compressed Air

This system stores compressed air in large vessels such as tanks or natural formations (e.g., caves), then releases the air to generate electricity.

Benefits of Solar Energy for Commercial Buildings

1. Saves Money, Cuts Operational Costs

Electricity is one of the biggest ongoing expenses that commercial buildings have. Solar panels significantly reduce energy costs. While the initial investment can be high, overtime the cost of installing solar panels is recouped by the money saved on electricity bills.

2. Increases Property Value

Energy efficiency is tremendously popular these days. Installing solar panels can increase the value of commercial buildings and help them sell faster.

3. Gives Access to Tax Breaks

There are two tax federal credits available for businesses, nonprofits and local and tribal governments that purchase solar energy systems:

• The investment tax credit (ITC) reduces the federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year.
• The production tax credit (PTC) is a per kilowatt-hour (kWh) tax credit for electricity generated by solar and other qualifying technologies for the first 10 years of a system’s operation. It reduces the federal income tax liability and is adjusted annually for inflation.

Solar systems that are placed in service in or later and begin construction before are eligible for a 30% ITC or a 2.6 ¢/kWh PTC if they meet labor requirements issued by the Treasury Department or are under 1 megawatt (MW) in size.

Generally, project owners cannot claim both the ITC and the PTC for the same property, although they could claim different credits for co-located systems, like solar and storage.  

In addition to these tax credits, the Tax Cut and Jobs Act of offers the option of a 100% bonus depreciation on solar systems. Furthermore, some states and utility companies offer additional tax credits or rebates for commercial solar systems. 

4. It’s Good for the Environment–and Your Brand

Solar energy is a renewable resource that does not produce greenhouse emissions; therefore, using solar energy helps the environment by reducing reliance on fossil fuels.  

Consumer demand for environmentally friendly products and services has increased in recent years. By installing solar panels, a brand shows that it cares about the environment and is making an effort to reduce its carbon footprint. 

5. It Protects Against Power Outages

Buildings that rely entirely on electric grids are vulnerable to power outages that occur during bad weather or electrical system malfunctions. Solar panels installed with battery systems allow commercial buildings to continue to function during power outages.

Read also: Life sciences construction: A rapidly changing landscape

6. Low Maintenance Costs

Solar panels require very little maintenance throughout their lifespan–a wash every once in a while, depending on where you live and how much debris accumulates on the panels. They have no moving parts, so they’re not likely to break down. Made of tempered glass and non-corrosive aluminum frames, solar panels can withstand rain, wind, hail and snow. The photovoltaic cells are designed to last 25 years or more.

Final Word

The advantages of using solar panels to power commercial buildings are likely to multiply as solar energy technology continues to develop. Rather than being an afterthought, solar panels should be considered during the design and construction phase of commercial projects.

According to the Solar Energy Industries Association (SEIA), commercial solar installations are steadily growing in popularity, with a 17% bump in installation volume from to alone. But what is commercial solar installation, exactly? What can it be used for, how much does it cost, and, most importantly, is it worth it? In this guide, we’ll explain all of that and more so you can decide if installing solar on your commercial building or property is a good option.

What is commercial solar installation?

Plain and simple: commercial solar installation is the process of installing photovoltaic (PV) equipment on commercial buildings or properties to provide clean, affordable electricity. 

Just like residential solar arrays, commercial solar applications include panels and inverters to generate power and convert it to usable electricity. They can also include solar batteries, EV chargers, and other add-on products, depending on the purpose and scale of the system.

How does a commercial solar system work?

A commercial solar system uses solar panels to collect sunlight and generate DC electrical current. That electricity is then converted to an AC electrical current via microinverters or inverters, which the building can then use for electricity rather than pulling power from the grid. Any solar electricity your building uses results in savings on your electrical bills. 

Electricity from solar panels must be used as it’s generated or it will be sent to the electricity grid. If you generate less solar power than your building consumes, you’ll still have to use energy from the grid, but it will be less than if you didn’t have solar. 

Any excess solar electricity generation is sent to the grid through a bidirectional electrical meter. Depending on where your commercial property is, that excess power could be “lost,” or you may get compensated for it with bill credits for future use. If you install a storage system, excess generation from your solar panels can be stored for you to use later instead of getting sent to the utility. 

How much does commercial solar installation cost?

According to the most recent data available from the SEIA, the average cost per watt for commercial solar installations is $1.46. You can use this average to get an estimate for your project if you know roughly what size commercial solar installation you need.

System size

Project

Inventronics Product Page

Average cost

1–5 kW

Parking meters and exterior lights

$1,450–$7,300

50–100 kW

Small commercial buildings, schools

$73,000–$146,000

100–250 kW

Mid-sized buildings

$146,000–$365,000

250–500 kW

Hospitals, warehouses, factories

$365,000–$730,000

>500 kW

Industrial parks, shopping malls, or large campuses

$730,000+

Commercial solar installation costs vary more widely than residential installations because there’s more variability in the use case and system size for commercial applications. You could pay under $1,000 for something like a single pole-mounted panel to provide power to a parking meter or flood light, while a larger rooftop system with batteries to power an entire warehouse building could total over $500,000.

In most cases, you won’t know what size solar array you need for your purposes, so it’s best to have a solar installer who handles commercial solar applications assess your property and project and design a system that will suit your needs.

4 factors affect commercial solar installation costs

There’s such a large range when it comes to the cost of commercial solar because there are many factors that can have an impact on your total. Here are four of the biggest features that will impact commercial solar installation prices:

• System size: System size is the biggest cost factor to consider when pricing out a commercial solar array. A small, 1- to 2-panel system to run exterior flood lights will cost a tiny fraction of what a 500 kW array that powers an entire building will total. Ultimately, the more panels you need, the higher your material and labor costs will be.

• Installation location: Where you install your panels will affect the type of mounting equipment you need and also the labor involved in setting up your array. Rooftop solar installations are the most popular, but there’s even some variability there, depending on the slope of your roof, the type of roof you have, how your panels get attached, and more. 

• Add-ons: On-site storage can add tens of thousands of dollars to your system costs, but it might be necessary for projects on hospitals where outages can be catastrophic. Adding other options, like EV chargers in parking lots, can also significantly drive up installation costs, as can custom additions like solar carports.

• Available incentives: Much like with residential solar applications, you can take advantage of federal, state, and local solar incentives to make your system more affordable. For example, the federal investment tax credit (ITC) can effectively reduce your installation costs by 30% by providing a solar tax credit for that amount. 

Use this solar caluclator to find out how much solar panels cost in your area

Where can commercial solar panels be installed?

Commercial solar panels can be installed on rooftops or as ground-mount systems, just like residential arrays. Commercial solar panel installations come with some additional options. 

Building owners can install panels on carports or on the roofs of parking garages for large-scale solar projects. For small, dedicated power for exterior lighting or parking meters, commercial panels can also be pole-mounted.

Rooftop solar arrays are the most common option, but many commercial buildings have flat roofs that don’t pitch toward the sun for optimal energy absorption and energy production. 

Luckily, it’s possible to install special angled racking systems on flat roofs to get the panels to lie at the ideal angle toward the sun, making them just as beneficial as they are on pitched residential roofs. Building owners can also maximize solar electricity generation by using sun-tracking racks that turn panels toward the sun automatically throughout the day.

What are the pros and cons of commercial solar installation?

Installing solar on your building comes with some appealing upsides, but there are also some important drawbacks to consider.

Advantages of commercial solar installations

• Reduced operating costs: One of the main reasons building owners consider going solar is the reduction in electric bills they’ll see. Commercial solar panels can offset a good portion or even all of your electricity consumption, which means savings each month on utility bills.

• Positive consumer opinion: Customers and clients who care about the environment may have a more positive opinion of companies that align with their own beliefs about climate change and renewable energy.

• Available incentives: Federal and state governments, and even local municipalities and utility companies, offer incentives for solar conversion that can boost your long-term savings when converting to solar.

• Additional tax savings: Businesses can receive additional tax savings by using the modified accelerated cost recovery system (MACRS), which allows you to accelerate depreciation on assets like commercial solar power systems in the first five years to reduce taxes even further.

• Environmental benefits and sustainability: Of course, one of the most significant benefits is the reduction in your building’s carbon footprint. Converting to solar reduces pollution, emissions, and your contribution to climate change.

Disadvantages of commercial solar installations

• High upfront cost: Commercial solar applications can be extremely expensive, sometimes topping $500,000 for large-scale installations with on-site energy storage. Clean energy systems often pay for themselves over time, but the upfront cost can be a major barrier to entry.

• Space requirements: Solar panels, batteries, and other PV equipment take up space and need direct access to sunlight. If you don’t have available roof space or a convenient, sunny place to install ground-mount panels, solar may not be an option for your building.

Are commercial solar installations worth it?

With a potentially astronomical price tag, most commercial property and business owners will, understandably, ask if commercial solar installation is worth the investment. Provided your solar power system is sized properly for your needs and installed by a reputable solar contractor, your array will pay for itself and then provide net savings over time.

Average commercial solar savings are difficult to estimate due to project variability, but with rising electricity costs and favorable solar incentives for commercial applications, commercial solar installations are almost always worthwhile.

There are a few things to consider that can help you decide if it’s a good option for your building.

Should you go solar in your building?

It’s impossible to say with certainty if solar is a good option for your commercial building because there are so many factors that affect cost, long-term savings, and the benefits you’ll see. While solar is worth it for most commercial applications, you should consult with a local solar company to get an estimate for system size, cost, and savings over time to see if it’s a good fit.

If you are looking for more details, kindly visit Commercial Solar Energy System.