Solar Energy and Your Business: Time for a Second Look?

Like many, you may think of solar panels as an investment for idealists — those business owners who want to do something environmentally positive even though it can take over a decade to see financial payback.

After all, purchasing and installing a  system of solar photovoltaic panels generally requires an upfront investment of $8 to $10 per watt, or upwards of $30,000 for many businesses. Those businesses might shave only $1,500 or $2,000 annually off their electric bills. It’s not exactly the ROI most business owners seek.

solar energy panels

But the economics of solar energy are brightening, and it might make sense to take another look.

One reason is a new momentum nationally for solar energy production. The Obama administration unveiled plans recently to give $2 billion to two U.S.-based solar plants. The hope is to greatly bolster production of solar energy, while simultaneously creating more than 1,500 new green jobs. This kind of federal promotion of solar energy is helping increase competition among producers of solar panels and bringing the price of solar installations down.

Already, businesses can receive a tax credit of 30 percent of the cost of installing solar panels; the credit is available through 2016.

But there are other encouraging developments. Several states and local governments are using federal stimulus dollars to roll out new incentives, such as tax rebates, for businesses that install solar-power systems. Massachusetts, Delaware and  Florida are among the states to do so. In recent years, states have also been bolstering their net-metering laws, requiring utilities to buy excess energy produced by customers with solar power. (A good place to check for solar incentives and net metering laws in your state is

More utility providers are also starting to push solar incentives. Rocky Mountain Power, for instance, provides Utah commercial customers a $2-per-watt rebate for installing solar panels, while CPS Energy offers its Texas commercial customer $3 per watt. Many of these utility programs cap their annual payout.

But even with all these various incentives combined, many business owners are probably wondering whether it makes sense to buy solar panels right now. It’s a good question. While incentives may abound, the price of solar is likely to decline in coming years. A good place to start is by finding out what the upfront cost of installing solar panels would be for your business and then what incentives are currently available to defray that cost. Also factor in your business’s electric bills and how much you are likely to save annually with solar energy.  Some businesses will now find paybacks of five years or less, while others may still have to wait more than a decade.


Kelly Spors Kelly Spors is a former small-business and entrepreneurship reporter and blogger for The Wall Street Journal who has also written for Yahoo!, Entrepreneur, NFIB's MyBusiness magazine and The New York Times. Kelly is now a freelance editor and writer based in Minneapolis and has previously managed communications for an environmental non-profit that helps businesses find ways to be greener.

7 Reactions
  1. Question: As we design solar panels that are more and more efficient at capturing the sun’s energy, doesn’t that contribute to global warming since some of that solar energy would have been reflected? Kind of like how a parking lot soaks up heat whereas a field of grass or trees would have reflected a lot of it.

  2. Kelly,

    You bring up some great points. Is it time for small business owners to really start taking a serious look at solar energy?

    I think that solar power will prove to be one of “the answers’ that we are all looking for. I hope that enough money is being spent on R & D to produce the best solar power solutions for all.

    The Franchise King

  3. Martin Lindeskog

    Kelly Spors: How much sunlight do you need in order to make the investment worthwhile? Do you have a “sun map” of the United States of America?

    I am thinking of getting an extra iPhone battery that is powered by solar cells.

  4. If you are considering having solar installed on your home or business.never give a deposit more than $1000. Contractors are prevented by law from requesting or collecting deposits more than 10% of the contract amount or $1,000, whichever is less. After your deposit is made it is customary to make partial payments as materials are procured and work is performed; these payment amounts should be specifically listed in the contract. Be sure that your contract has a provision for holding back a reasonable amount (5% or 10%) until you are satisfied with the work, but do not hold back that money unless you have good cause. If the contractor is carrying your rebate for you, then a hold-back may be unnecessary.

  5. I’m looking at a ROI factor 7 to 10 years form home solar panels. it looks like my best bet would be to start with a solar water heat and move on tp solar panels. What do you think