How Commercial Solar Can Help Your Business

Updated Sept. 2024

Solar energy has become increasingly popular in the United States. This includes increasing applications of solar and battery storage for commercial properties. Commercial solar helps businesses reduce monthly utility costs and offer increased support for sustainability.

The U.S. Energy Information Administration reported 1.6% of all commercial buildings in the u.s. have installed small-scale solar. As this number continues to rise, thanks to government incentives and increasing electricity costs — Enact supports businesses in their transition to clean energy. Commercial solar benefits not just businesses — but nonprofits, houses of worship, schools and government buildings.

Going solar offers numerous benefits for businesses and other organizations. As the demand for electricity and utility prices rise, solar energy offers businesses an attractive alternative. Solar provides sustainable, clean energy that can reduce operating costs, see a good return on investment and appeal to consumers.

While solar seems expensive, it will pay for itself over the system’s lifetime. Solar panels have warranties up to 25 years, making commercial solar a long-term investment in savings. A commercial solar system can cut overhead costs and reduce your dependence on unstable fossil fuel prices. Over time, the electricity cost offset by your system will surpass the installation cost — and make you money. Paybacks for solar projects can range depending on the various factors.

1. Loans for short or long-term from a range of providers, which includes banks, credit unions and specialty lenders, including the PACE loan option (“Property Assessed Clean Energy”).
2. Leasing options that offer 10 to 25 year repayment terms and allow the tax credit and depreciation benefits to be used by a third party owner.
3. Power purchase agreements (PPA) whereby the solar asset belongs to a third-party that sells the energy to the business customer for long-term contracts up to 25 years and retains the tax credits and depreciation benefits.

More businesses are concerned about climate change and improving corporate sustainability. Commercial solar and storage systems are an investment into savings, security and sustainability. Corporate sustainability can increase your company’s responsibility to its stakeholders and community.

Your business can position itself as a responsible, sustainable business. There is a significant consumer market for environmentally-conscious products, services and companies. Solar energy is a renewable energy source, producing electricity from the sun with no carbon emissions. This can help your company reduce their carbon footprint, which can enhance your brand. Going solar can help your business attract and serve customers, build customer loyalty and foster goodwill among your community.

Storage batteries store excess solar energy — or energy from the utility grid — for later use. Solar energy is a “use it or lose it” form of energy. Without a battery, excess energy is sent to the utility grid. A storage battery system helps businesses maximize their investment in solar — and allows you to use solar-generated energy around the clock.

Commercial solar systems also protect businesses from rising utility costs. When energy costs rise, your company can see stable energy costs from your solar system.

The investment tax credit (ITC) is a tax credit that reduces the federal income tax liability for a percentage of the solar system cost. Meaning during the tax year, you can write off a percentage of the solar cost from your taxes. The current ITC allows businesses to write off 30% of solar expenses.

In addition to the ITC, there are depreciation benefits for commercial solar projects which improve the financial return. The Modified Accelerated Cost Recovery System (MACRS) is an depreciation system used for tax purposes. MACRS allows the capitalized cost of an asset to be recovered through annual tax deductions over a specific period of time

MACRS incentivizes private investment in property, such as solar energy. Solar equipment can be eligible for a cost recovery period of five years. If you used the ITC, you must reduce the project’s depreciable basis by half the value of the 30% ITC — meaning you can deduct 85% of your tax basis.

Some states, like California or Massachusetts, offer incentives for residential and commercial solar projects. For example, Massachusetts offers the Solar Massachusetts Renewable Target (SMART) Program. The SMART Program is a production-based incentive that is paid directly by utility companies to solar electric system owners.

For more information about your state, check the Database of State Incentives for Renewables & Efficiency. Additionally — counties, cities, municipalities, utility companies and nonprofits may offer incentives, rebates or grants.

While the science remains the same, there are differences between solar systems that power homes and systems that power commercial buildings. The Enact process remains similar for both homeowners and businesses as we offer customized solar solutions for our customers. Differences range from size, installation, cost, time, color, placement and financing. For both residential and commercial customers, going solar offers financial and environmental benefits.

Commercial solar projects are often larger. Not only do commercial buildings require more electricity, but commercially sized solar panels and storage batteries are larger. This is to capture more sunlight and provide more power to the building. Commercial projects for small businesses may be similar to residential projects. Residential solar projects are typically smaller, limited by roofspace and designed to meet household usage. 

Installation details can be different based on your situation, but the process is the same. Residential systems are often smaller and are installed on slanted, pitched roofs. Commercial solar projects are often larger and typically installed on flat roofs. Flat roofs can be easier for solar panel installation, as it allows the owner more control of the solar panel angles and direction. For buildings in the Northern Hemisphere, the best direction for solar panels is facing south.

While commercial solar systems can have higher costs, they typically have a lower cost per watt on par with residential systems. When comparing panel to panel, commercial panels have higher costs due to their larger size. Commercial solar systems with storage also have the ability for more storage space (due to larger building sizes). However, panels are bought individually and can be determined by their power calculation.

Installation times for commercial solar projects are generally longer than residential projects. The longer installation time is due to larger-sized projects and a longer, more detailed approval and permitting process. Additionally, commercial solar projects are typically more unique — Enact aims to meet the exact needs of our commercial customers. While commercial solar projects have larger scale and technical complexities, once approved are typically straightforward. Enact remains involved throughout the installation process.

Solar panels often come in black or white, with commercial panels tending to be white. Residential panels can come in black or white but are often black due to manufacturer choices and homeowner preferences.

Commercial properties have more solar installation options — such as rooftop solar, ground-mounted solar and solar-paneled carports. Commercial properties are often bigger and can have more room or options for solar panel placement. Residential solar panels are typically limited to rooftops based on home size and neighborhood regulations.

The Inflation Reduction Act of 2022 expanded the investment tax credit for solar and battery storage projects — which includes nonprofits. Nonprofits with no tax liability can apply for direct payments equal to the value of the tax credit. The current ITC is 30% — meaning the government will provide direct payments consisting of 30% of the solar project. This includes solar, solar plus storage and storage-only projects.

The White House offers a great resource outlining direct payments and explaining eligibility.

Solar can be a great asset for small businesses. If your small business owns property, solar systems with or without storage can provide lower energy costs and more energy stability. For the same reasons above — reduced utility bills, lower carbon emissions and energy security. Small businesses can also see returns on investment for solar panels due to government incentives, nonprofit grants and panels pay for themselves over time.

Using our design and documentation software, we create free customized solar energy system designs to meet the needs of our customers. This can include energy storage and electric vehicle solutions if desired.

After agreeing to the perfect design for your business, we coordinate the entire installation and permitting process to save you time. Our end-to-end service takes you through the process step by step for a simple, solar experience.

After installation and proper government and utility permitting, we also offer a solar and storage monitoring platform Enact Consumer App. The Enact Consumer App empowers clean energy owners to understand their system’s performance and quickly identify maintenance or repair problems.

All we need to set up a free consultation is your name, the company’s name and address. Send us a copy of your latest electricity bill before your consultation so we can design a proposal. More electricity consumption information, such as monthly kilowatt-hour consumption or green button data, is also helpful.

Commercial projects are unique, Enact provides custom solar solutions for our commercial partners. Enact’s team of energy advisors use our solar design software to create the right system for your business. Businesses in California are usually quoted with an energy storage battery due to the impact of  NEM 3.0.

Sign up for a free consultation to get started on your organization’s solar journey. During an Enact consultation, our energy advisors will get to know your company and energy needs — and create a custom proposal. An Enact proposal outlines your system, estimated performance and forecasted savings.