Commercial Solar Information Hub

Solar electricity helps property owners reduce their energy costs and their environmental impact.

Solar panels on commercial roof with hills in background

How It Works

Solar electric systems, also known as solar photovoltaics or solar PV, convert sunlight into electrical energy through an array of solar panels that connect to a building's electrical system or directly to the electrical grid.

As you consider whether solar electricity is right for your building or business, you can familiarize yourself with how the technology works. The U.S. Department of Energy offers a video on the basics of solar.

System Components

Grid Connection

In a grid-connected solar electric system, a building’s solar panels are connected to the local utility’s electrical grid. The building can continue to get some or all of its electricity from the grid. It can also “export” energy from its PV system to the grid when the PV produces more than the building needs.

Panels

Panels are made up of a series of individual solar cells that convert sunlight into direct current (DC) electricity. The higher the intensity of the sunlight striking the panels, the more electricity they produce. Once the electricity is produced, it flows to the inverter.

Inverter

The inverter converts the direct current (DC) electricity produced by the panels into alternating current (AC) electricity, which is the form that can be used in the building. Inverters include a range of technologies, from central inverters that convert the electricity from many solar panels, to microinverters that are attached to each individual panel in a system. In grid-connected systems, inverters are designed so that if power from the utility goes down, the PV system will shut down, too - a critical safety precaution for utility workers and public safety personnel.

Electrical Panel

The electrical panel is where electricity enters a building -- from either the solar panels or the utility grid. The electrical panel will automatically draw additional power from the utility when the PV system is unable to meet the building’s electricity demand. If the solar electric system is producing more electricity than needed, the electrical panel will send the excess electricity to the utility grid through a device called a net meter.

Energy Storage (optional)

An energy storage system can provide short-term storage for the power produced by your solar electric system. Several on-site technologies for energy storage, most notably lead acid and lithium ion batteries, are now available as add-ons to a solar installation. Energy storage systems help ensure power reliability during grid outages and can provide opportunities for improved on-site energy management, such as shaving peak demand. Primary factors to consider when evaluating a storage system include price, capacity, voltage, and life cycle

Incentives

Federal Incentives: Under the Inflation Reduction Act, Commercial Solar systems can now choose in between the Investment Tax Credit (ITC) and Production Tax Credit (PTC). Direct pay options may be available for certain tax-exempt entities, and new transferability possibilities can provide increased flexibility around financing. Adders are also available if the project meets certain criteria. For more details, you may refer to the Inflation Reduction Act: Solar Energy and Energy Storage Provisions Summary provided by the Solar Energy Industries Association (SEIA).

Investment Tax Credit (ITC): Base ITC of 30% through 2033
Production Tax Credit (PTC): PTC currently set at $0.026/kWh, adjusted each year for inflation by the IRS

Modified Accelerated Cost Recovery System (MACRS) Business owners can depreciate solar electric systems over a five-year schedule.

Solar Massachusetts Renewable Target (SMART) Program: A production-based incentive that is paid directly by investor-owned utilities in Massachusetts to solar electric system owners. SMART was launched by the Department of Energy Resources (DOER) in conjunction with investor-owned utilities. The selected Solar Program Administrator, CLEAResult, accepts and processes applications. Please see the DOER SMART website and the program administrator's SMART website for more information and a downloadable calculator to estimate SMART project incentives. To view the SMART Solar Block Status Update, see the Solar Program Administrator log-in page.

Net Metering Allows customers to receive credits on their utility bill for excess generation in any given month. The credits can then be applied during times when the system is not generating electricity. Net metering credit values depend on a number of factors including system size.

Municipal Light Plant Solar Rebate Programs: If you are served by a Municipal Light Plant (MLP), please contact your MLP directly for the most up to date information on incentives and programs.

Cost and Performance

The cost of buying a solar electric system can vary based on system size, location, equipment used and other factors.

The dashboard below can help business or property owners to explore the cost and performance of solar PV systems installed across Massachusetts installed under various state programs (such as SMART and Solar Carve Out). Prices listed below are shown as median values, which may not reflect unique project parameters. Pricing may vary based on project-specific factors, such as site condition or chosen equipment. MassCEC recommends comparing at least three installer quotes to help customers determine their best option.

This dashboard is based on the data included in our Solar PV Systems in MA Report (Excel format). Data about the performance of solar electric systems in Massachusetts can also be downloaded as part of the SREC Capacity Factor Report. (Note: This 54 MB Excel file may be slow to download). The 11-year average net capacity factor for solar PV systems in Massachusetts is 13.05 percent (2010 to 2020).

Solar + Storage

Energy storage, or batteries, can be a great complementary technology to install with solar PV. The pairing of solar PV system with energy storage is often referred to as solar + storage. With recent updates to state policies and incentive programs, combined with the potential electric bill savings and resilience benefits, solar + storage has become an increasingly attractive option for commercial property owners in Massachusetts. If you are interested in pursuing energy storage as part of a solar PV project, be sure to discuss your options as part of installer inquires and as you compare installer quotes.

MassCEC is actively involved in advancing energy storage as part of its Net Zero Grid focus.

Learn More about Storage Programs

Financing Options

Business or property owners have many options when it comes to financing the installation of solar electric systems. The more common financing options and their benefits are described below.

Direct Purchase

Direct purchasing involves buying the solar electric system outright, without the need for a loan or other financing mechanisms. This is typically the least expensive path to solar ownership, and provides the highest return on investment over time. While purchasing a solar electric system has the largest up-front cash requirement, several programs and financial incentives are available to help defray up-front costs.

Loans

Many business owners opt to take out a loan to finance a solar electric system purchase. Financing a solar electric installation provides the system owner with many of the benefits of a direct purchase with a lower up-front investment, though interest payments and other fees may apply. In recent years, loans dedicated to solar installations have become popular in Massachusetts.

While loans can be a cost-effective option, loan terms can vary widely. Businesses should be sure to understand all charges and fees before agreeing to terms. In particular, you may want to ask lenders and their representatives about:

Dealer fees or other closing costs associated with financing
What happens if payments are missed, particularly for ‘same-as-cash’ financing arrangements
Whether interest paid is tax deductible
Whether the lender takes a security interest

Solar Leasing

Under a solar lease, a property owner agrees to pay a pre-determined monthly bill to a solar company, which installs, owns and operates the solar electric system. The property owner then has access to the electricity generated by the system, lowering the property owner's monthly utility bill. A solar lease provides the opportunity for a business owner to benefit from solar electricity with little or no up-front cost.

Power Purchase Agreement (PPA)

A PPA is similar to a solar lease, in that the solar company will own and operate the system on the property owner's roof. Rather than a fixed monthly payment, however, the property owner agrees to purchase the electricity generated by the system at an agreed-upon per-kilowatt-hour price, often lower than typical utility rates. Like a solar lease, a PPA allows a business owner to begin saving money immediately, with little or no up-front cost.

When considering a solar lease or PPA , review the contract carefully to understand all terms and conditions. While contractual terms may vary, items to consider are:

The length of the contract
Who benefits from incentives like tax credits and solar renewable energy certificates
Whether there is an option to buy the system at a later date
The initial electricity price and any applicable price changes over time
What happens at the end of the contract term
What happens if you move out of the house or business

The Solar Project Builder, a tool developed with support from the US Department of Energy's Sunshot Initiative, can help you compare the benefits of different financing options for your project. 

Procurement Guidance

MassCEC has developed procurement guidance to help project managers understand different procurement approaches and how to release a competitive bid to receive the best price offers.

Go to Procurement Guidance

Other Resources

Note that some details in the provided resources may not apply directly to Massachusetts, and given the constantly-evolving policy and regulatory environment, the information provided may become outdated. If you have a specific question about the resources or on a topic not covered in these resources, please review the Frequently Asked Questions. Solar installers are also great resources for many topics, such as site assessment, understanding incentives, and analysis of financial feasibility.

General On-Site Solar

On-Site Commercial Solar PV Decision Guide: Better Buildings

Solar Energy Systems for Small Commercial Businesses: Minnesota Renewable Energy Society

Solar on Leased and Rental Buildings

Promoting Solar PV on Leased Buildings Guide: Better Buildings

Sharing the Sun: Solar Solutions for Landlords and Tenants: MassCEC

Solar for Apartments: Solar Market Pathways (Note: This guide has considerations relevant to Massachusetts, although it was developed as a California-specific resource)

Finding an Installer; Interconnection

Finding a Solar Installer: Clean Energy Lives Here, MassCEC

Seven Steps to Selecting a Commercial Solar PV Provider: Better Buildings

Distributed Generation and Interconnection in Massachusetts: Massachusetts Department of Energy Resources

Contracting

Model Lease and Power Purchasing Agreement: Solar Energy Industries Association

SEIA Consumer Protection Resources: Solar Energy Industries Association

FAQs

How do I identify a reputable solar installer?

Review MassCEC's guidance for finding a solar installer.

You can also find a list of installers who have previously installed solar electric systems in Massachusetts and view summary information about completed projects, on MassCEC's Cost and Performance dashboard.

As with the selection of any service provider, there are many sources online for reviews and customer testimonials, as well as marketplaces or other procurement services that can help to solicit and compare quotes for your system.

In addition, several organizations including the Solar Energy Industries Association (SEIA) and the Interstate Renewable Energy Council (IREC) have developed consumer protection resources with questions for consumers to ask of their installers, including:

How will I know if my site is suitable for solar?

A suitable space requires a large, flat and open roof area, a southwest to southeast facing roof surface, or a large, open land area. The perimeter surrounding the roof space should be free of trees or other obstructions that may cause shading on the roof or ground surface. If roof obstructions are present (e.g. piping, venting, HVAC equipment), properly locating the equipment can minimize the impact on the solar electric system.

A solar installation professional is the best source to provide you with an in-depth feasibility assessment for your site. Some free tools are available to the public, one of which is the National Renewable Energy Laboratory’s PVWatts website.

I was told solar doesn’t work for my property. What other options do I have?

Not a good solar candidate? Don’t worry! To start, we always encourage interested parties to request multiple quotes from installers, as some may have unique solutions for your site. If your last solar site assessment was more than two years ago, it may be worth getting a new site assessment as pricing and technology innovations are constantly changing the market. You may also have opportunities to join a community solar project, options for clean heating and cooling technologies (such as heat pumps or solar hot water), or the potential for energy efficiency measures through Mass Save.

Will a rooftop solar electric system affect the maintenance or accessibility of other rooftop equipment (e.g. HVAC)? Will it affect rooftop drainage?

A reputable solar installer will assess the existing drainage routes and rooftop equipment prior to designing the system. A well-designed system will ensure that roof drainage is not affected, and that qualified individuals can gain access to the solar electric system and all rooftop equipment to provide the appropriate maintenance.

What operations and maintenance (O and M) does a solar electric system require?

Like many appliances, solar electric systems may require annual maintenance to ensure efficient performance and reliability over the system's lifetime. However, solar electric systems contain limited moving parts, resulting in low O and M costs compared to many traditional energy investments. The ownership model (i.e. direct ownership vs. third-party) will influence what method of O and M is employed. O and M activities may include monitoring, safety, cleaning, inspection, and any additional annual maintenance.

For a direct ownership model – While the system owner is generally responsible for O and M of the system, in-house management of the O and M can help reduce the overall cost of maintaining a system. A qualified individual is required.
For a third-party ownership model – System maintenance is often provided through an O and M contract provision, which may include monitoring, annual inspections, and preventative maintenance services. Costs may fall around $15/kw-yr for systems under 1 MW in scale, depending upon the level of service required.

Is glare a concern for solar electric systems?

Glare is rarely an issue as the panels face upward at an angle of 10 to 45 degrees (for many systems, but depends on site conditions) and any incidental glare can be addressed through proper siting and pre-construction modeling. Solar panels are designed to reflect only about 2 percent of incoming light, so issues with glare from panels are rare. For more information, please see:

How long will it take to install a commercial solar electric system?

A number of steps are involved in installing a solar electric system, including system design, contracting, permitting, installation, and interconnection with the utility. While physical construction can often be completed within a few weeks, steps such as permitting and interconnection involve working with local officials and their respective queue/schedules. This often results in the entire process taking three to six months or more, depending on the location, motivation of the purchaser, and complexity of the site or permitting requirements. A solar installer can provide a more detailed timeline after considering the complexity of your installation and local jurisdiction.

Can I install a solar electric system on my condo or rental property?

Yes, many of the same conditions that make a commercial property a good candidate for solar, apply to condominiums or rental properties. Condo owners will likely need approval from their condo association before installing a solar electric system.

For more information, please download Massachusetts Department of Energy Resource’s Solar Guide for Condominium Owners and Associations in Massachusetts, or this reference for landlords and condos developed for the city of Cambridge. 

For more information on solar for rental properties please see MassCEC's Sharing the Sun: Solar Solutions for Landlords and Tenants. 

Is my solar PV project exempt from municipal property tax?

Commercial property owners with a solar electric system may be eligible for a property tax exemption on the value added by the system. Property owners are encouraged to discuss this with their installer and the local tax assessor’s office.

What are the benefits of installing energy storage along with a solar electric system?

Energy storage is an emerging technology that can be paired with solar electric systems (new or existing). Energy storage can provide back-up power in case of an emergency and enhance energy savings from solar electric systems. Depending on the configuration of an existing system, there can be considerable costs to retrofit a storage installation. However, if your facility’s utility rate includes demand charges, the energy savings from solar and storage may have a competitive return.

Please consult your solar installation professional for further information about storage retrofits or a new solar and storage project. Under certain circumstances both Solar and Storage can qualify for federal tax credits. Please consult your installer and a tax professional for detailed tax advice.

For more information on solar, storage and the investment tax credit, please see this National Renewable Energy Lab (NREL) Resource

For an overview of demand charge management, please see this NREL Resource on Demand Charges