The ROI of Solar Panels for Businesses—Is It Worth It?

All over the globe, people are switching to cleaner energy sources. They realize the benefits of sustainable energy solutions as well as positive ROI from lower electricity bills. However, many businesses are still thinking about installing PV panels. The upfront cost and lack of incentive information make them hesitant to decide if solar panels are worth it.

You should be aware that PV panel power is evolving into more than just a fleeting trend; it has the potential to significantly transform businesses. According to EIA, the U.S. electric power industry added a record 37 gigawatts (GW) of solar capacity in 2024, and predictions indicate that they will add another 26 GW in 2025.

Furthermore, business owners who recognize the need to cut down on their energy costs and carbon footprint. They should seriously consider sustainable investment sooner rather than later. But is the solar energy return on investment (ROI) worth it? In this blog, we discuss how these panels can be a worthy investment for business, highlighting the long-term financial and operational benefits and positive environmental impact they can provide.

Every state contributes to power production.

Businesses can lead sustainability and innovation while saving money on electricity bills by taking advantage of the renewable energy trend. According to EIA, Utility-scale green energy projects made up 61% of capacity gains in 2024 and are expected to reach 32.5 GW in 2025. States such as Texas and California are leading the way, as they contribute nearly half of the new capacity. Other states, including Indiana, Arizona, Michigan, Florida, and New York, will add 7.8 GW of sun power in 2025.

What is solar panel ROI? Let’s find out

When your businesses generate their own electricity, you get a financial return from installing PV panels, which results in significant savings on utility bills over time. Furthermore, you can attain potential tax incentives, rebates, and grants, and your commercial property value increases. Even operators can save money and sell excess energy to the grid. So, the total monetary advantages, which surpass the installation costs, are referred to as solar ROI (return on investment).

How to Calculate Commercial Solar ROI

Check your solar ROI with these steps:

Total Investment Cost:
Sum all expenses, panel costs, installation, and maintenance.

Lifetime Savings & Earnings:
Calculate annual energy bill savings and grid power income.

Net Benefit:
Deduct your investment from your panel savings.

ROI Formula:
ROI consists of net profit divided by the initial investment.

ROI = (Net Profit / Cost of Investment) x 100

Example Commercial ROI Calculation

If a small business building were to invest half a million dollars in Xova Energy solar panels and their energy savings in the monthly bills, it would be $75,000 per GW. These panels have an average health of 25 years. Let’s calculate solar power return on investment.

• Solar Installation Cost: $500,000
• Annual Energy Savings:1.2 GW ($75,000 in savings per GW)
• Estimated Lifetime (Warranty): 25 years

Total Savings:

1.2 GW × $75,000 × 25 = $2,250,000

Net Benefit:

$2,250,000 – $500,000 = $1,750,000

ROI Calculation:

($1,750,000 / $500,000) × 100 = 350% ROI

With this example, we can see that the ROI is 350%. This estimation is for a commercial solar installation over its estimated 25-year lifetime. This means it will return 3.5 times the initial investment over time. This showcases the potential financial benefits of going solar.

Figure out the payback period:

Average commercial solar systems pay for themselves in 3–7 years. However, this period also depends on a variety of factors. For instance, location, energy consumption, size of panels, and incentives. This shows that PV module installations can give businesses a quick ROI.

Example:
The payback period can be determined from the above example. Divide the initial investment of $500,000 by the yearly energy savings of $75,000. In this case, you can obtain the payback term, around 6.7 years. What this means is that the installation of the system will pay for itself in 6.7 years thanks to the money saved on energy bills.

Factors that Impact Solar Energy return on Investment

The first thing you do is your overall cost analysis. There are several federal and state programs that reduce upfront costs. Then you need to check your optimal panel placement. As the panels should be installed at the best angle and direction. So you can get maximum sunlight exposure.

Furthermore, next steps are towards high-efficiency equipment and energy storage solutions. You can add a battery (like Xova Core) that can store excess energy and increase savings. Make sure you get the right size of system according to your requirements.

Remember, professional installation is important. For the best system performance and cleaning maintenance tips, work with an experienced installer like Xova Energy.

Therefore, several factors influence the solar panel ROI for businesses, which include:

• Initial installation cost
• Electricity savings
• Government incentives
• Maintenance expenses
• Local energy rates
• Sunlight exposure

Financial Benefits of Commercial Solar Panels

There are many advantages that come with investing in commercial PV panels. Through green power, companies can greatly lower their electricity costs. They can even make extra money by selling extra energy back to the grid.

Additionally, businesses can take advantage of 30% tax incentives and rebates offered by the government, such as the Investment Tax Credit (ITC), to further increase their return on investment. The Inflation Reduction Act solar tax credit also contributes its benefits.

Moreover, your commercial buildings with solar power ROI often have higher market value. Your commercial apartments, office spaces, or warehouses with PV panels can attract environmentally conscious buyers. Who are ready to spend more on sustainable features. This can lead to increased occupancy rates. Besides, property owners can get potentially higher income opportunities due to improved energy efficiency in their property.

1. Reduced energy costs due to reduced reliance on utility companies.
2. Tax Incentives and Rebates Save 30% on your commercial solar panel installations.
3. Increase property value and attract eco-friendly investors and buyers.

Environmental and Brand Benefits

Energy from the sun is a sustainable solution for businesses, as it reduces greenhouse gas emissions and helps meet CSR goals. It’s a strong marketing asset, as consumers prefer companies that prioritize sustainability. Solar panels also have a positive environmental impact and boost brand reputation.

1. Sustainability and Carbon Footprint Reduction
2. Positive Brand Image

Potential Downsides of Solar for Businesses

1. High Upfront Costs
Despite tax reductions, the initial investment can be significant.

2. Roof Space Requirements
Not all commercial buildings have rooftop panel space.

3. Weather Dependence
Solar efficiency depends on weather and location.

Conclusion: Is Solar Power Worth the Investment?

Absolutely! Investment in rooftop power lowers electricity bills, increases property value, and cleans the planet. Additionally, businesses can use government rebates and incentives to reduce startup costs. PV Panel electricity can also set you apart from competitors by attracting eco-conscious customers. You can get customized sustainable solutions with maximum efficiency and long-term savings from Xova Energy!

Frequently Asked Questions:

How to calculate ROI for solar?

Total photovoltaic (PV) panel energy savings divided by the initial investment cost multiplied by 100 gives a percentage of solar ROI. Consider government incentives, electricity rates, and maintenance costs when calculating.

Do solar panels have ROI?

Yes, roof-mounted panels pay off. PV panel ROI depends on various factors; those are essential to consider when you check your PV panel ROI, like geography, consumption of energy, and incentives.

What is the average ROI for solar panels?

Installing PV panels takes 3–7 years to pay off. However, these numbers may vary because they depend on various factors, like your local utility rules, your location, the system type you are using, etc.

What happens on cloudy days?

PV panels still generate electricity, but at reduced efficiency.

More questions? Schedule a quick chat with our team!