How it Works and Available Incentives

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.

Solar electricity is often a cost-effective way for property owners, developers, and businesses to reduce their energy costs, while also reducing their environmental impact. 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. Additionally, MassCEC has compiled a list of resources for commercial property and business owners interested in solar.

You can also see photos of commercial solar electric systems installed in Massachusetts on MassCEC’s Flickr page.



In a grid-connected solar electric system, a building’s solar panels are connected to the local utility’s electrical grid, where electricity is either sourced from the solar electric system or provided in part or full by the utility based on whether the building requires more or less electricity than the solar electric system is creating at a given time.


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 is sent to the inverter.


The inverter is responsible for converting the DC electricity produced by the panels into alternating current (AC) electricity, which 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 solar electric system will shut down as well - 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. The electrical panel will automatically draw additional power from the utility when the solar 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 being offered as add-ons to a solar installation. Energy storage systems help ensure power reliability during extreme weather events or power 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.


Available Incentives

There are many incentives available for commercial solar installations, detailed below. Note the solar installer will generally assist customers in applying for and/or providing information on available incentives. 

  • Federal Investment Tax Credit - A credit of up to 26 percent of qualifying project costs (Declining to 22 percent in 2021 then 10 percent in 2022 and beyond)