close up of solar panels installed on shingle roof

Residential Vs. Commercial Solar Energy: What’s the Difference?

Chances are when you think of solar energy, you think of a residential home powered by solar panels. However, there is another side to solar energy that is much less talked about, but just as significant; commercial solar energy systems. While there are many similarities between the residential and commercial sectors in solar energy, there are also some key differences that any business owner considering solar energy for their business should be aware of.

When it comes to the commercial use of solar panels, the benefits are quite similar to those of the residential industry. The advantages of solar energy for commercial buildings/industries include being extremely environmentally friendly, cutting costs (and therefore improving a business’s bottom line, increasing property value (if the commercial building is owned), and even potentially improving brand image by lending an image of “going green” and being environmentally friendly to the business. 

As with everything, there are both pros and cons to solar energy in the commercial world, and it’s best to be informed on both. Solar panels (both commercial and residential) come with a high upfront cost due to installation and parts purchases. There is also a high likelihood that commercial solar equipment will require a much larger amount of space due to the need to generate increased amounts of power when compared to residential systems. They may also make a business more dependent on weather and provide only intermittent energy sources (meaning that the business may still have to rely on the energy grid in some instances- after all, the sun does go down every night).

Commercial Solar Energy Companies

Pros and Cons Specific to Commercial Solar Energy


A key difference between solar panels meant for commercial use and ones meant for residential use is the efficiency of the two. Commercial panels are generally larger than residential and sit at around a 20% efficiency rate, making them about 2% more efficient than residential solar panels. Importantly, the actual price of the solar panel is calculated by the amount of power they produce, so on a kW basis, the two systems will be equal in price. In addition, commercial solar panels tend to be white, while residential systems can be either black or white (black usually means reduced efficiency). 

Another differentiation factor between commercial and residential systems is the installation process. While commercial projects tend to be more extensive than residential projects and take longer, the installation itself is actually easier. Commercial buildings tend to have flat roofs that allow the panels to simply be held in place using a ballast mounting system, while residential homes (more often having a pointed roof) require a penetrating racking to hold the system and bolt it to the roof. 

However, installation for commercial panels is likely to still take longer due to an increase in outside influencing factors such as extensive permitting, management approvals, and layout planning that is needed.


In terms of similarities between residential and commercial usage of solar panels, it’s crucial to note two major benefits they have in common; saving money, and saving the environment. 

While residential solar panels absolutely eliminate a large part of a homeowner’s carbon footprint, the implications of commercial solar energy use are much larger. The Energy Information Administration states that in 2019 the industrial sector (processes crucial to our functioning society such as food and mineral processing, oil recovery, and water desalination)  accounted for 35% of total U.S. end-use energy consumption and 32% of total U.S. energy consumption. Imagine the global impact that having even a quarter of these businesses switch to solar energy would have.

Solar Panel Companies During Sunset

However, you don’t need to be an oil conglomerate to have an impact by switching your business to solar energy. Simply being a business means you have an elevated carbon footprint compared to residential energy consumers. Consider the switch to solar as paying back the extra energy you consume. 

However, the switch to solar energy is not solely altruistic for those in the commercial industry. A business’s bottom line will improve with the installation of solar energy systems. In fact, EnergySage reports that the average business owner saw a 75% reduction in their monthly energy bill after solar panel installation (based on an average monthly bill of $1,950 pre-solar panels). 

Finally, commercial solar panels qualify for additional tax incentives such as the Business Energy Investment Tax Credit  (ITC) that allows for 26% of the total PV system cost to be offset, or the Tax Reform Bill that allows 100% depreciation (essentially allowing entities to deduct the entire allowable amount of the system in the first year of operation).

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