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What to Know About Initial Commercial Solar Panel Costs

Switching to solar power is a sustainable and often financially preferable move for many businesses. Understanding this investment means not just knowing the numbers, but how the technology works, its long-term benefits, and factors that influence commercial solar panel costs. It''s also vital to consider the potential savings and incentives available.

The Initial Cost Breakdown

Understanding the types of panel technology, general equipment costs, labor costs, and inspection fees will paint a fuller picture of commercial solar panel costs. Getting an assessment from a professional renewable energy company will always be the most accurate route, so keep this in mind moving forward. 

Types of Solar Panel Technology

There are three main types of solar panels used for commercial installations:

  • Monocrystalline solar panels: Made from a single crystal of silicon, these are the most efficient but most expensive panels.
  • Polycrystalline solar panels: Made from fragments of silicon crystals melted together, these are cheaper but slightly less efficient than monocrystalline.
  • Thin-film solar panels: These use ultra-thin films of solar cell material on glass panels. They are lightweight and flexible but the least efficient type of panel.

Each commercial property has to evaluate its space, roof type, energy needs, and budget to choose the right solar panel technology.

Equipment Costs

The panels account for around 40% of the overall system cost for a commercial solar array. Panel prices depend on efficiency, underlying technology, and brand reputation, but crystalline silicon panels typically cost $0.80–0.90 per watt of capacity.

Inverters make up around 10% of costs. High-efficiency inverters that can handle larger systems cost more. Racking, wiring, and other electrical components also add to material expenses.

Labor and Installation Costs

Designing the system based on the property's needs, mounting and wiring the array, connecting to the building's electrical system, and testing proper function are the main labor tasks, which can account for 20–25% of commercial solar panel costs.
Roof type also impacts the labor. Pitched roofs often require more custom racking and effort than flat roofs, where panels can be ballasted down without penetrating the surface. More complex roofs or sites drive up labor expenses.

Permits and Inspection Fees

Securing the builder's permits for legal compliance and undergoing inspections from authorities to ensure proper system operation makes up 5–7% of the total costs. Permit costs vary based on system size and jurisdiction.

Factors That Influence Commercial Solar Panel Costs

There are several key factors that determine the upfront costs of installing a commercial solar panel system. Considering these variables can help commercial property owners budget properly and understand what drives pricing.

Size and Energy Needs of Your Commercial Building

One of the biggest factors is matching the solar system size to your building's energy needs. An undersized system won't be able to fully offset your energy usage, but an oversized system will lead to higher equipment and installation costs than necessary.
To properly size your system, you'll need to analyze past electricity bills to determine your average monthly and yearly energy consumption. Things like building size, operations, machinery, and appliances impact energy needs. A solar installer performs load calculations based on your consumption data to customize the system specifications.
In general, larger commercial buildings with intensive energy needs require larger solar systems, driving up overall costs. Fortunately, there are more opportunities for commercial solar panel cost savings with bigger systems as well.

Geographic Location and Sun Exposure

The average sunshine and temperatures of the region influence solar panel performance and appropriate system types. Areas with more sunny days and intense sunlight are better suited for solar.
Panels should also be oriented to maximize sun exposure. Rooftop systems aligned to face south (in the northern hemisphere) at angles that correlate to your site's latitude receive the most direct sunlight.

Ready for the next step in your solar journey? An assessment will give you a clear outline of what solar will look like for your business. Read this article to learn what to expect during an initial estimate.

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Savings and Incentives to Offset Initial Costs

While commercial solar panel systems involve considerable upfront investment, there are ongoing savings and incentives that improve ROI over the system's lifetime.

Energy Bill Savings

By producing clean power, you can slash your electricity bills. Monthly or annual utility bill savings depend on:

  • System size and how much of your energy needs it meets
  • Solar power rates/pricing in your utility service area
  • Electricity prices offered by your utility provider

Savings grow if electricity rates increase over time. With commercial solar, you can lock in lower, fixed pricing for the long haul.

Government Incentives and Grants

State, local, and federal government incentives aim to encourage renewable energy adoption. These can significantly offset your upfront investment via:

  • 26% federal tax credits through 2032
  • Cash rebates based on system specs
  • Sales tax exemptions on equipment
  • Renewable Energy Certificates (RECs) and Solar Renewable Energy Certificates (SRECs) to sell for added income

Consulting with a professional solar company on financing options can help you secure the most reliable tax credits and other incentives. 

California NEM 3.0

Net energy metering (NEM) policies dictate excess solar power compensation. California's recently updated NEM 3.0 program includes provisions like bill credits and rolling over month-to-month to incentivize commercial solar adoption.

Review all savings and incentives available to realize the payoff of your solar panel system. With a well-versed solar company, your investment in sustainability can succeed. 

Understand Your Commercial Solar Panel Costs With Pacifico Power

If you''re worried about rising interest rates, initial solar costs, and the bottom line for your business, turn to Pacifico Power. Our financing options and comprehensive solar services can bring your business to energy independence. Don''t let your energy bills get away from you. Contact Pacifico Power today.