Commercial Solar Panels for Businesses in California
If you're a business owner in California, installing a commercial solar panel system can help you reduce your energy costs, improve your environmental footprint, and increase your property value.
As of 2023, California is home to up to 1,977 solar companies. This number consists of 338 manufacturers, 897 installers/developers, and 742 others.
As of 2021, the Solar Energy Industries Association (SEIA) reports that the average cost of commercial solar panels is $1.45 per watt. This price is less than the cost of residential solar systems, which is $2.90.
However, the eventual cost of commercial solar power systems varies based on different size. As a general rule, the cost per watt tends to decrease as the system size increases.
Commercial solar installation cost by system size
|Clinic, retail outlet, etc.
|Farm, warehouse, etc.
|Factory, hospital, school, etc.
The costs given above do not include any incentives, which can significantly lower costs.
Note: These average figures cover a wide range of prices.. Multiple factors affect commerical solar installation prices, including location (state-specific pricing), system type, degree of installation difficulty, and others.
Solar permits are needed to install a commerical solar system in California. These permits are usually gotten at the municipal level.
Before you are given a permit, you must meet the local and state requirements. You will also need to submit plans and other important supporting documents for review and approval, as outlined in the California Solar Permitting Guidebook.
If you have a solar installer, they can assist you in getting the necessary permits. But if you plan to do a DIY solar system installation, you'll need to get the permits yourself.
Speaking with an experienced professional can be helpful, as installing photovoltaic panels without applying for the proper permissions may lead to serious consequences, such as fines or an order to remove the installed panels.
California offers several types of loans for commercial solar installations. They are mostly classified into secured and unsecured loans. Secured loans require you to provide collateral or some form of security. Unsecured loans do not require you to provide any collateral or security. Loan options are made available by banks, credit unions, communities, and states.
One of the financing options in California is the Property-Assessed Clean Energy (PACE) Program, regulated by the Office of Energy Efficiency and Renewable Energy. Under this program, the property determines whether the loan is approved. It does not consider personal or business credit. Hence, the loan remains attached to the property in the event of a sale, despite ownership being transferred to the new building owner.
Who Can Participate in PACE Programs?
Both residential and commercial properties can participate in PACE initiatives. US PACE programs allow commercial property owners and homeowners to fund solar energy and other energy-saving initiatives without incurring high up-front costs. Local or state government covers the project’s initial costs.
The property owner recoups their improvement costs through property assessments, which are secured by the asset being assessed and paid for by property taxes. It can be paid off over a five- to 30-year period or for as long as the home solar system lasts. Usually, the interest is determined by the length of the loan. Any default in payment is punished like a default in property tax payment.
C-PACE or commercial PACE programs are available for commercial properties. According to the Department of Energy, C-PACE has financed over $800 million in energy efficiency projects. C-PACE is available in California.
The number of solar panels needed for a business depends on several factors, such as the size of the business, its energy consumption, and the amount of sunlight it receives.
You can determine how many solar panels you need by dividing how much energy a solar panel can provide by how much electricity your business uses..
The following factors can help you determine how many solar panels you need for your business:
Determine your electricity consumption
How much electricity your business uses greatly affects how many solar panels you need to produce that much electricity. Most solar panel companies will examine your current energy usage using your bills, half-hourly data, or any other consumption information to determine how much electricity you use. Usually, this is in the total kilowatt-hours (kWh).
Calculate how much energy you could produce
Generally, figuring out how much electricity your property can produce with solar panels is the other component of the equation. Here, professional advice is a need. The amount of energy that each solar panel produces is influenced by its size, the type of panel it is, where exactly it was installed (such as the angle, pitch, and elevation), the size of your roof, your location, and the amount of daylight you receive, any site complexity, the age of the panels, and how well the solar array was installed.
Although it can cost more, a smaller, more efficient panel can produce more energy than a bigger, less efficient one. On the other hand, a higher-quality panel installed improperly or in a bad spot could perform worse than a cheaper panel in the best place.
Choose the panels for your business
No perfect solution exists. A solar panel solution may work well for one company but fail for another. Solar panels come in various sizes, types, outputs, and prices. Solar panels used for commerical installations typically range from 270 to 410 watts. Solutions may either come with monocrystalline panels or polycrystalline panels (the former being more expensive but more efficient).
Tip: If your business building has limited roof space, consider installing smaller-sized panels with higher output. You can also install more solar panels than you need if you intend to store excess energy in solar batteries and sell electricity to the grid.
Yes. An existing commercial solar power system can be expanded with batteries. However, the level of complexity is based on whether your system was designed to include batteries.
If the solar system is built to be storage ready, it can easily be expanded to include batteries in the future.
It is more expensive to expand a solar system that is not built to be storage ready to include batteries. This is because while the existing solar panels can be used, the system will need to be replaced or beefed up with additional parts.
If you are switching to solar energy and may want to include battery storage in the future, you should install a solar system that can accommodate a battery.
A growing number of solar systems now offer solar battery storage solutions. Solar batteries offer several advantages, including the capacity to use more solar generated power in the event of outages, and higher energy savings.
SunPower is considered the largest commercial solar company in California. It is located in Silicon Valley, California. In 2021, it had an annual revenue of $1.323 billion. SunPower is a market leader in the commercial solar industry.
The largest solar farm in California is the Topaz Solar Farm. It is a 550-megawatt solar power station. Its Net Megawatt-hour (net MWh) is 1,300,790. It is located in San Luis Obispo County.
Yes. Eversource offers net metering credits to its customers. Eversource net metering is a renewable energy rate scheme provided to its customers who use their renewable energy system to generate electricity.
The program calculates the difference between the amount of electricity a customer’s system produces and sends back to the grid compared to the amount of electricity the customer uses from Eversource’s grid. Renewable energy-generating systems eligible for net metering are solar systems, wind turbines, cogeneration systems, and microturbines.
The monthly electric bill of a customer may be reduced with net metering credits. When installing a customer’s solar system, Eversource replaces their current electric meter with a new meter that measures how much electricity is coming in and out of the house. The meter assists them with calculating the customer’s net metering credits.
Eversource offers services in Massachusetts (Eastern and Western Massachusetts), Connecticut, and New Hampshire. The net metering program is available to customers from these states, although the requirements and rates differ depending on the state.
You can sell electricity generated by your commerical solar panel system back to the grid in California through net metering. Your business is powered by the electricity your solar panels produce during the day.
On sunny days, your system may generate more electricity than you use. When this occurs, if you have interconnection approval, you can sell this excess energy to your utility company by transmitting it to the grid. You will be paid in “credits.” At the end of each billing cycle, the amount of electricity you transmitted (sold) to the grid will be deducted from the amount of electricity you used from the grid.
The result is your “net” amount. Net metering helps you get paid for extra energy that your system generates and reduces your monthly utility bill costs.
You must be a customer of Pacific Gas and Electric (PG&E), San Diego Gas and Electric (SDG&E), or Southern California Edison (SCE) to be able to participate in net metering.
Yes, solar panels are worth it for commercial buildings for the following reasons:
Reduced electricity bills and operation costs
Effective commerical solar panel installations have the potential to lower electricity bills, which in turn lowers operation costs for the business. A sizable portion of energy bills in business buildings are caused by using appliances like air conditioners and water heaters. However, using a solar panel can significantly reduce your electricity costs. Solar panels can be expensive to install initially, but they help lower your electricity bills in the long run.
Reduced reliance on the local power system
Solar panels reduce your reliance on the local grid. You will have electricity even if there is a power outage or blackout. Hence, you will be able to always maintain the smooth operation of your company and the satisfaction of your clients.
Solar power is environmentally friendly
Solar energy produces no hazardous emissions, unlike coal-fired power facilities. Solar energy is renewable. The sun is the primary source of solar energy, and it never gets depleted. Fossil fuels are not used to generate solar energy, preventing environmental pollution. Using solar panels rather than relying on fossil-fueled electricity supply from the grid, you are lessening greenhouse gas emissions that can damage the environment and contribute to environmentally friendly actions. Your solar panels show that you care about the environment and the general welfare. They aid in differentiating you from your rivals and drawing in clients that value eco-friendly living.
Reliability and low maintenance
Solar panels need little maintenance. A solar panel is made of high-quality aluminum and covered in protective glass. They are reliable and can endure and resist different weather conditions, including rain, snow, and hail. They are not brittle by nature. Furthermore, they have a warranty that covers replacing any defective components. Solar warranties are usually for 25 years.
Solar panels offer a great return on investment
Businesses considering solar energy for their commercial buildings should consider it an investment, not an expense. The return on investment from solar energy is very high, especially when you consider the yearly savings for the total 25-year lifespan of the panels.
Although choosing solar energy requires a high upfront cost, you will recoup this investment within 10 years of operation. In addition, many incentives and credits are available that reduce the upfront cost of buying and installing commercial solar panels. Furthermore, you can enjoy benefits like net metering, which allows you to get energy credits for the excess electricity you send to the grid.
Improves commercial brand with a greener image
Going solar shows a business’ commitment to clean energy and environmental sustainability.
The amount of electricity your commercial solar panel produces depends on many factors. Every solar system is different, and outputs vary. The overall efficiency of your solar panels is affected by the following:
The size of the system
The size of your commerical solar panel system will depend on your annual average energy demand and your unique energy profile. The system’s capacity determines how much energy is produced. Basically, the larger the system, the more energy it produces.
Larger systems will be needed for larger, more commercially intensive operations, like solar panels for industrial buildings. These buildings usually have the required roof space for installation. For an office building, a system of 100kWp size, with roughly 300 solar panels and a sizable roof surface area, may be needed.
The number of panels
This depends on the output of each panel in the system. Smaller and more efficient panels can produce the same amount of energy as larger and less efficient panels. An installation crew can assist a business in determining the optimal balance between surface area, panel count, and system output while considering the available roof’s budget and overall size.
The position of the panels
The direction and angle of your solar panels on your roof are also important. Commerical solar panel installations do not generate a uniform and constant supply of electricity. Rather, their efficiency is influenced by their position and the amount of sunlight they can absorb and convert.
To receive the most sunshine that can be converted into usable energy, your business’ solar panels should be mounted on a south-facing roof at a 35-degree angle. However, you will be relieved to learn that your installation need not exactly adhere to these specifications to achieve excellent results.
Your solar panels can still receive plenty of sunlight, more than enough to make it a profitable investment, even if it is on an East or West facing roof or tilted between 10 and 60 degrees.
The quantity of shade that might be cast over your solar panels should be your primary concern when placing them. Assessing how much shade typically falls over the proposed site during an average day is one of the first tasks for any potential installation. Roofs that are persistently overshadowed by other buildings do not always make the ideal candidates for a solar panel installation.
The number of peak daylight hours
Regardless of how well-positioned and built a system is, it can only operate at peak efficiency with enough sunshine to convert. Your commercial solar panels need at least four hours of daily sunlight. Naturally, this is majorly dependent on the season and weather. It is impossible to manage the local climate or the number of daylight hours, but it is possible to ensure that the panels are not in the shade at particular times of the day or year.
Due to longer days and better skies in the summer, solar panels typically perform at their best during this time. Contrary to popular belief, however, cold weather does not stop the performance of solar panels because they operate on light rather than heat and can function if there is some daylight.
The rating of your panels
You can get your solar panel’s power rating in watts by multiplying the efficiency of the cells with the size of the panel. The capacity of the solar panel to produce more power increases with its rating. The power rating of a solar panel is expressed in watts and is based on its dimensions and efficiency. A typical solar panel might have a 250-watt rating, while more advanced models may have ratings as high as 520 watts.
Solar panels need some maintenance even though they will last for years with little to no maintenance if built properly. Damage, dust, or debris can lower their output. When installed correctly, solar panels will work well for years with very little maintenance – but they still require some maintenance.
Solar renewable energy certificates (SRECs) are solar incentives that enable you to earn additional income from producing solar electricity and selling it to your utility provider. Home and business owners can earn one SREC for every megawatt-hour (MWh) or 1,000 kilowatt-hours (kWhs) of electricity their solar system produces. The value of an SREC depends on the state’s laws.
SRECs were made possible by state laws called renewable portfolio standards (RPS) regulations. These regulations oblige utility providers to generate a certain proportion of their electricity from renewable sources. To comply with these requirements, utility providers must purchase renewable energy certificates (RECs), also known as renewable energy credits.
With the help of these certificates, utility providers can demonstrate that they have either produced renewable electricity themselves or have paid someone else to “count” their production of green electricity as their own. RPS seeks to promote the use of renewable energy. SREC markets, where solar certificates are sold, only exist in states with a solar carve-out. The policy “carves out” a certain portion of a state’s renewable portfolio standard for solar technologies. It stipulates that a certain amount of power must be generated from solar energy only.
If you are wondering, “what is the difference between SRECs and RECs?”, SRECs are a type of REC that only apply to electricity generated by solar technology.
Just as RECs are bought and sold to transfer the right to count renewable electricity, SRECs can be bought and sold to transfer the right to count solar electricity. The accounting is the same (i.e., one megawatt-hour of solar energy creates one REC or one SREC).
Generally, SRECs can only be sold in the state where you currently live. You can sell SRECs by using online marketplaces like Sol Systems and SRECTrade. However, it is only some states that have an SREC market.
In those that have SREC markets, the prices fluctuate as stock prices do. New Jersey, Massachusetts, and Washington, D.C. have top SREC markets. There is an option of cross-listing your SRECs with other states; however, not all markets will accept them.
California does not have a solar carve-out scheme because it does not have an SREC market. However, California has a tradable renewable energy credit (TREC) market. The California Public Utilities Commission approved the TREC market in 2010.
The Western Renewable Energy Generation Information System (WREGIS) tracks RECs in California. Some electricity providers may require residential and business owners with solar systems to register with WREGIS.
Many solar energy supporters are optimistic that the California TREC market will further inspire more people to switch to solar energy and open the door for an SREC market in the state.
Although there is no market for SRECs in California, you can sell any extra energy your solar system produces back to PG&E. At the end of every billing cycle, PG&E will reimburse you for any excess energy at the present market rate. Through their meter, PG&E monitors both your energy consumption and the energy that is sent back into the electrical grid. They calculate whether you have returned more than you used at the end of the year and pay you accordingly.