Commercial solar is a bit of a mystery. Commercial solar — or C&I solar, as it’s sometimes called, referring to commercial and industrial scale — comprises a wide range of customer types, solar systems, and project sizes, falling between the more well-known residential and utility-scale solar business sectors. In some important aspects, it varies from residential solar.
“In the jargon-heavy world of solar-speak, C&I conveniently condense commercial and Industrial into a snackable sub-section of the PV business,” says Ian Clover, Manager of Corporate Communications for Hanwha Q Cells. But, as far as subsections go, the C&I space has the most versatility, with options ranging from ground-mount to creative rooftop use.”
What This Article Is About
Commercial solar has been sluggish to take off for a variety of reasons that we’ll discuss in this article, but there are indicators that this sector is primed for major development. And the benefits for those who can negotiate the complexities of these initiatives can be substantial.
This is the first in a series of articles exploring various facets of commercial solar panels to help solar professionals better grasp the industry’s dynamics.
In today’s article, we give a quick overview of commercial solar, its size, and some of the constraints that have limited its growth, as well as projections for future growth.
Other articles in this series cover the many parties engaged in commercial solar projects, how to market a commercial solar project, and how to finance these projects.
What Is Commercial Solar and How Does It Work?
Commercial solar, as opposed to residential solar for residences, may appear to be uncomplicated. Commercial solar, on the other hand, covers a wide range of customers and projects. Governments, schools and universities, and even nonprofits can be “commercial” solar customers, in addition to enterprises of all sorts, from major multinationals to local small businesses.
Commercial solar projects can range in size from kilowatts to megawatts, and can be installed on buildings’ rooftops or on the ground. The C&I solar projects that his organisation facilitates can range in size from 50 kilowatts (kW) for small churches and synagogues to 300-400 kW for large schools, according to Joe Naroditsky, Director, Solar & Operations at the Community Purchasing Alliance (CPA), an organisation that connects nonprofits with solar bids.
Solar Business Opportunity
Researchers at UC Davis used Aurora solar software to investigate the real-world solar potential of some of the country’s largest commercial buildings.
The largest commercial building in the United States, a Texas-based aerospace business with 770,000 square metres of rooftop, could generate 88 million kilowatt hours (kWh) of clean energy, according to their analysis. “That’s enough to power nearly 5,200 houses for a year, offset 47,800 metric tonnes of CO2, and save up to 388 acres of land,” according to the Washington Post.
Obviously, this is at the far end of the range, where building rooftops approach utility-scale projects in scale, and this site has not been constructed with solar. It does, however, demonstrate the huge range of potential project sizes in a market where the buildings and customers are so diverse.
The Commercial Solar Market’s Constraints
When you start reading about commercial solar, one of the most common refrains you’ll hear is that it hasn’t developed as quickly as residential or utility-scale solar. “The commercial and industrial (C&I) solar industries have been a relative struggle for solar companies to exploit,” according to PV Magazine.
Commercial vs. Residential Electricity Costs
C&I has lagged behind residential solar for a variety of reasons. For one thing, business electricity prices have generally been lower, making solar economics a little difficult.
The average cost of energy for residential consumers in February 2021 was 13.3 cents per kilowatt hour (kWh), while the cost for business customers was 11.9 cents per kWh, according to the US Energy Information Administration.
Persuading building owners to buy
Another impediment is that the occupant of many commercial properties is not the building owner. Because the building owners who would make the decision to install solar are typically not the ones who pay the electricity bills, solar energy savings are less of an incentive for them.
Commercial financing can be complicated.
Financing in the solar power packs is considerably more complicated, and according to some contractors we spoke with, less accessible. That is beginning to change, however, as financial actors gain a better understanding of the funding mechanisms for this space and there are more successful projects for financiers to assess risk.