Are Commercial Solar Panels Worth It?

With commercial solar becoming increasingly popular across the globe, more organizations than ever are curious whether adding solar panels makes financial sense for their business. Usually, the first question that comes to mind is whether commercial solar is worth it. Let’s take a closer look. 

Although a commercial solar system will start paying for itself as soon as it’s turned on, the upfront investment can sometimes be intimidating. The truth is, determining the cost of commercial solar projects requires an in-depth evaluation of your property, energy use, and goals. Once we’ve arrived at the cost, we can truly gauge whether commercial solar panels are worth the investment for your particular organization. 

In this blog, we’ll address the most common questions we get from people in the early stages of solar research, including reasons to invest in commercial solar, is commercial solar worth it, and how much commercial solar costs. If you'd like a more in-depth assessment specific to your organization, schedule a free commercial solar consultation today.

7 reasons to invest in commercial solar in 2024

Before we get into the nitty-gritty of whether commercial solar systems are worth it for your business, let’s look at 7 reasons why you might want to invest in commercial solar in the first place. 

1. Reduce operating expenses

Many organizations pay hundreds, if not thousands, of dollars in electricity bills each month. Depending on the size and type of business you run, this can add up to be a significant expense that affects your organization’s bottom line. Generating your own electricity allows you to lock in a predictable and significantly lower monthly energy expense.

Another added benefit of installing a commercial solar panel system is that it can shield you from rising energy costs. Each year, utility-generated electricity prices can increase by 2-5%, or more if inflation rates are higher. On the other hand, the cost of electricity from your solar panels and/or battery storage remains relatively fixed, offering a stable energy alternative to grid power. By investing in commercial solar panels, you can effectively lock in energy costs and protect your business from future price hikes. 

3. Reduce your carbon footprint

24% of greenhouse gas emissions are produced by the electricity industry, primarily due to its reliance on fossil fuels. Switching to renewable, solar-generated power is one of the most meaningful actions your business can take to reduce carbon pollution and contribute to a greener future. This won’t just give you peace of mind knowing you’re helping the environment, but can also help improve your business’s reputation and attract consumers or employees who are increasingly prioritizing sustainable businesses and lifestyles. 

As we all know, consumers decide and businesses respond. Because a product’s carbon footprint is impacted by the entire supply chain, many vendor and supplier agreements are now including sustainability clauses that favor partnerships with businesses committed to reducing emissions. This means switching to renewable energy could even enhance your competitive edge when bidding or renewing supplier contracts. 

4. Increase energy independence

According to the U.S. Department of Energy, power outages can cost American businesses around $150 billion each year. Other studies show that the average cost of downtime can cost $9,000 per minute for large organizations, and up to $5 million an hour for higher-risk industries like finance or healthcare. With this in mind, you can easily imagine the value of solar panels for commercial properties.

One of the main benefits of solar power, when combined with a battery storage system, is increased independence from the grid, allowing you to continue generating and using power even during outages. Depending on the size of your solar power system and battery storage, you could continue generating power for days or weeks during an outage, reducing any potential losses.

5. Increase the value of your commercial property

Not only can a solar energy system help your business save money, but if you own your commercial property it could also potentially increase its resale value. Many potential buyers will see solar-powered commercial buildings as a great asset that offers cost savings, energy independence, and additional perks like environmental-friendliness (and subsequent improved business reputation). 

6. Low maintenance

Solar panels are durable and built to last for decades. Aside from occasional repairs after an extreme storm or the rare electrical connector failure, most will require minimal maintenance to continue operating at peak efficiency for many decades. That said, to protect your investment and increase the lifespan of your solar energy system, it’s essential to choose a commercial solar installer that offers good operations & maintenance (O&M) terms. 

O&M agreements can warranty repair, performance monitoring, and even routine inspections. Your solar provider might alert you if your power output is impacted and make any necessary repairs to get you back on track. More importantly, O&M provides assurance that you’ll have ongoing support should anything go awry with your solar installation. When choosing a commercial solar provider, be sure to check they have favorable O&M terms, positive reviews, and ongoing support. Ask for a “Statement of Qualifications'' and find out which companies they’ve already installed for. Their commercial client list will tell you a lot about their capabilities and qualifications. 

At the same time, check how long the solar company has been in business for. This can indicate whether they'll be around for the lifetime of your solar system - there's nothing more frustrating than a commercial solar energy system with no support. 

7. Take advantage of tax incentives and rebates

Businesses who transition to solar power are eligible for various solar incentive programs that can greatly reduce the costs of installation. These include:

• 30% Solar Investment Tax Credit (ITC): The federal solar tax credit is available to all businesses and offsets up to 30% of a solar purchase in the form of a federal incentive tax credit. 
• Modified Accelerated Cost Recovery System (MACRs): Organizations who invest in solar are eligible for the MACRs method of depreciation, allowing businesses to recover their investment via annual deductions over five years. 
• Rural Energy for America Program (REAP): Agricultural producers in select regions are also eligible for REAP, which covers 25% of a solar investment up to $500,000 for qualifying businesses. 

To find out what solar incentives and rebates your business is eligible for, contact our commercial solar team for a free quote. 

Is commercial solar worth it?

So, you’ve read about the numerous benefits of commercial solar - but is it generally worth it? Our honest answer is that it depends on the organization looking to go solar. While we'd like to see every commercial building with a rooftop full of solar panels, the truth is that it doesn't always turn out to be financially advantageous for some organizations. 

A few factors we take into consideration to determine this are:

• How much energy your organization currently uses. Higher energy users tend to have a more favorable return when going solar. 
• Whether or not you own the building. A renter cannot legally add solar to a commercial building. 
• The financial state of your business, including tax liability (to maximize incentives). 

During your free commercial solar consultation, we evaluate your organization's unique circumstances to determine if solar is worth it for you.

For many organizations we've helped go solar, including PepsiCo, Sub-Zero Group Inc., and Voya Financial, the numerous benefits have made solar a wise investment. These companies have improved their bottom-line performance by reducing their monthly energy costs. They're also reaping the positive PR impact of becoming a green and environmentally-friendly organization. 

So, to determine if solar is worth it, start by asking if you want to reduce operating expenses while improving your organization's environmental reputation. If the answer is yes to one or both, read on.  

Will commercial solar add to your bottom line?

This is the biggest factor that’ll determine whether or not commercial solar energy systems make sense for your organization. When you’re producing your own clean, affordable energy with solar panels, you’ll be saving money by offsetting the amount of electricity you have to purchase from the local utility.  By reducing your reliance on utility power, you’ll be locking in predictable energy costs for decades while also shielding your business from annual rate increases. 

Both of these factors will free up money that you can then use to grow other areas of your business. Many businesses with solar panels reinvest the money they save into high-profit sectors, like sales or marketing, that aid with expansion. The money you save on monthly energy bills can also be used to pay off any loans or financing you have for your commercial solar system.

Every business has unique energy usage patterns and goals. Solar might not make sense from a pure cost-savings perspective if your organization's current energy usage is already fairly low. But if your company consumes lots of energy and runs during the 9-5 period (when the sun is at its strongest), you’ll find commercial solar to be an excellent investment. 

For help determining whether solar can impact your organization’s bottom line, don’t hesitate to contact us at Sun Valley Solar Solutions for a free commercial solar quote.

Do you value having an environmentally-friendly reputation?

Today’s consumers are growing more environmentally conscious and taking a stand against climate change. They’re being more choosy with which companies they support and many are consciously choosing companies that demonstrate environmental and corporate social responsibility. In turn, organizations all across the globe are transitioning to more environmentally-friendly practices. 

Installing solar panels on your commercial property will appeal to this growing audience of environmentally-conscious customers. As one Business Wire report demonstrates, 85% of consumers have become more 'green' in their purchasing decisions, opting for companies embracing sustainable, eco-friendly practices. If your organization operates in an industry where your consumers value your dedication to environmentally friendly practices, adding solar could be a big boon. 

Do you own your commercial property?

If you own your commercial property, installing solar panels can help increase its resale value. While this may not be the primary reason why you choose solar, it’s an added benefit that can be a great asset and improve your organization’s overall value. 

Several studies show that homebuyers are willing to pay more for a residential property with a solar energy system, and the same can be said of commercial properties. Many commercial property buyers will be attracted to solar-powered buildings that offer the opportunity to reduce operational costs and shield against the certainty of utility rate increases.  

Would your organization benefit from shaded parking?

Arizona summers are brutal. If you're already considering adding shade structures to your parking lot, consider taking an extra step and turning those into solar carports. These offer the dual benefit of providing covered parking and mounting solar panels without taking up any additional space. 

In states like Arizona and Nevada, the desert sun can create searingly hot cars in the summer. Many organizations find that adding solar shade structures helps them save money and adds value to their employees and visitors. Not burning your hands after work on a summer’s day can be an added perk of solar carports! 

How to finance your commercial solar installation

There are various options when it comes to financing commercial solar panels, namely cash, loans, and power purchasing agreements (also called solar service agreements). Let’s briefly look at each of these options:

• Cash: This is the most straightforward to pay for commercial solar, but isn’t always feasible for a business. It involves paying for your solar panels outright.

• Loans: Outside an all-cash purchase, low-interest loans or lines of credit with an existing banking relationship generally offer the fastest and most lucrative returns. Commercial solar loans usually come with a 20-year repayment period. We generally recommend financing only the necessary portion of the net cost after tax incentives are applied to achieve the best payback.

• Power purchase agreement (PPA): With a PPA, a solar developer pays for, installs, and maintains solar panels on your property and agrees to sell you solar power at a fixed, reduced cost. Unlike cash and loan payment options, with a PPA you don’t own the solar system yourself. At Sun Valley Solar Solutions, we offer PPA programs exclusively for qualified 501 (c)(3) non-profits, municipalities, and schools.

Summary: Are commercial solar panels worth it?

In short, whether or not commercial solar panels are worth it for your organization is more complicated than a simple ‘yes’ or ‘no’ answer. While solar is a smart investment with numerous benefits, it might not be a financially wise decision for your business. While it is an investment that’ll start paying you back from day one, you want to be sure it makes sense for your organization first.

If you'd like to learn more about the various factors that make up a solar purchase, we invite you to download our free Commercial Solar Guide. If you're ready to talk to a member of our commercial team, you can request a free, no-obligation consultation here.