How Much Does It Cost to Install Solar Panels on a Business?

Every business seeks three key benefits from any new investment – good returns, predictability, and long-term sustainability. One investment that delivers all these benefits and more is commercial solar installation.

Businesses across Canada and worldwide are rapidly adopting solar power. Experts even predict a future where solar energy becomes the default choice for all businesses and homes.

In the past, commercial solar installation was considered expensive, discouraging many business owners from making the switch. However, with significant advancements in technology and decreasing costs, solar adoption is now faster than ever.

You might still be wondering, “How much does it cost for a business to go solar?” While there is no single answer, here’s an attempt to break it down.

The Cost of Commercial Solar Installation

In general, a commercial solar installation ranging from 100-500 kW costs around $2.5 per watt of capacity installed. For example, a 300 kW system may cost approximately $750,000 (300,000 x 2.5).

As system size increases, the cost per watt decreases. Systems between 500 kW and 1 MW may cost around $2/W, meaning an 800 kW system could cost about $1.6 million. For installations exceeding 1 MW, costs decline even further.

These figures are average estimates for standard systems, but several factors influence pricing, which we’ll explore next.

Cost Breakdown of a Commercial Solar Installation

A commercial solar installation consists of multiple components and involves a detailed process. Here’s a breakdown of the costs:

1. Solar Panels

The most crucial component of any solar system, panels account for around 35-40% of the total cost. These panels capture sunlight and convert it into electricity.

2. Inverters

Inverters transform the DC electricity from solar panels into usable AC power. These typically constitute 20-25% of the total system cost. Some businesses opt for microinverters, which enhance performance but come at a higher cost.

3. Racking & Miscellaneous Equipment

Solar panels need to be securely mounted for optimal energy generation. Racking systems, along with additional components like cables, circuit breakers, and conduits, make up 20-25% of the total cost.

4. Engineering & Design

Before installing a commercial solar installation, expert engineers design the system using sophisticated software and site surveys. This phase accounts for about 5% of the total cost.

5. Labor & Logistics

Installation requires skilled technicians to mount and connect the system. Labor and logistics typically account for 15-20% of the system cost.

6. Permitting

Solar systems need approval from local utilities and municipalities. The permitting process takes time and effort, making up about 1-2% of the total cost.

Factors Affecting the Cost of a Commercial Solar Installation

The cost of commercial solar installation varies due to several factors:

1. Energy Consumption

The bigger the energy demand, the larger the solar system required, which directly impacts cost.

2. Roof Type

Roof condition, inclination, and weight-bearing capacity affect installation complexity and costs.

3. Equipment Selection

Different brands and technologies impact pricing. At Green Integrations, we use top-tier equipment for optimal value.

4. Battery Backup

Adding an energy storage system increases costs but provides backup power and cost savings during peak pricing hours.

Additional Metrics to Evaluate a Commercial Solar Installation’s Value

1. Payback Period

This is the time it takes for the system to pay for itself through electricity savings. Most commercial solar installations in Canada have a payback period between 5 to 12 years.

2. Levelized Cost of Electricity (LCOE)

LCOE calculates the cost per kWh of energy over the system’s lifetime, making it easier to compare solar energy with utility rates.

For example, a $500,000 system might have an LCOE of $0.05/kWh compared to a grid price of $0.09/kWh, resulting in significant savings.

A commercial solar installation is an investment that provides long-term financial benefits, reduces reliance on grid electricity, and promotes sustainability. With decreasing costs and available incentives, now is the perfect time for businesses to explore solar energy solutions.

Interested in learning more? Contact us for a free quote and discover how your business can benefit from solar power today.