Solar for small business: roofs, rates and process

A small business has more reasons to look at solar than a typical household and more pitfalls. You may have a big flat roof, daytime electricity use and a finance department, or at least an accountant. You may also have a landlord, a demand charge and a lease with five years left. This guide walks through the pieces. It is general information, not tax, legal or financial advice, so confirm specifics with your own advisers.

Start with the tariff

Commercial customers are often on different rate structures from households. Look at a recent bill and find:

• The energy charge per kWh, which may vary by time of day.
• Any demand charge, billed on your highest short-term draw in a month.
• Fixed monthly charges.
• Whether your account has a size limit for generation and any export rules.

Solar reduces kWh purchased from the grid. It does not reliably reduce peak demand, because the highest draw can happen on a cloudy afternoon or at a time when panels are producing little. If demand charges are a large share of your bill, solar’s savings will be smaller than a simple per-kWh calculation suggests. Batteries can help shave peaks, though they add considerable cost. Our guide to time-of-use rates and solar explains how time-based pricing affects the value of midday production.

Does your load match the sun?

Retail shops, offices, clinics and light manufacturing mainly use power during the day, which suits solar. Restaurants and some service businesses peak in the evening. Cold storage and refrigeration run around the clock. A system that produces at midday saves most when your load is high at midday. If you export much of the output, the value depends on the credit rule. Net billing and net metering variants differ, so verify the current terms for commercial accounts with your utility.

The roof

Many commercial buildings have large flat or low-slope roofs. They can offer plenty of space, but check:

1. Structural capacity, including snow loads.
2. The roof membrane’s age and warranty, since panels can complicate repairs.
3. Whether ballasted racking or penetrating attachments are used, and what the roofer thinks.
4. Fire access and setback requirements under local codes.
5. Shade from rooftop equipment, parapets and neighbouring buildings.

If the roof needs replacing within a few years, do that first or at the same time. Our guide to solar and roof types covers flat roofs and other materials.

If you rent the premises

Solar is hard to justify when you do not control the roof. If you lease, ask:

• Will the landlord consent in writing?
• Who owns the system, you or the landlord?
• Who pays for roof repairs, insurance and removal?
• What happens to the system, and to any payments, when the lease ends or the building is sold?
• Which meter does it connect to, and who receives the savings?

Get a lawyer to review any agreement. Where the landlord benefits from the investment, you may negotiate a rent or cost-sharing arrangement. A lease term shorter than the payback period is a red flag.

Financing and ownership models

Options range from paying cash to bank loans, equipment financing and third-party models such as leases or power purchase agreements. Each has trade-offs. A loan keeps ownership with you, while a PPA may require no upfront cost but binds you to a long contract and can complicate the sale of the building. We outline the key questions in solar leases and PPAs and compare choices in solar financing in Canada. Compare the total cost over the whole term, not only the monthly figure.

Tax and incentives

Tax treatment of business solar, including how equipment costs are written off and whether any clean-technology measures apply, depends on your business structure and on rules that change. We cannot advise on that. Ask your accountant, and check current guidance from the Government of Canada and the Canada Revenue Agency. Programmes for commercial customers exist at federal, provincial and utility levels, and they open and close often. Treat any figure you see online as out of date until you have confirmed it with the programme administrator.

Process and timing

A typical commercial project follows these steps:

1. Collect twelve months of bills and interval data if available.
2. Get a site assessment and a design from at least three qualified installers.
3. Review quotes line by line, including the assumptions behind production numbers. Our guide to choosing an installer has a checklist that works for businesses too.
4. Confirm landlord, insurer and lender requirements.
5. Apply for permits and utility interconnection, which can take longer for larger systems. See the interconnection process.
6. Install, inspect, commission and start monitoring.

What numbers to expect

As a rough guide, installed costs for commercial systems vary with size, roof type and region. Larger systems often come in at a lower price per watt than a house system, perhaps somewhere around two to three dollars per watt in CAD, but that is a planning idea only. Payback depends on your rate, your load and any incentives, and may be shorter or longer than the 8 to 15 years often quoted for homes.

A sensible first step

Before calling anyone, gather your bills and write down your building’s ownership, roof age and operating hours. Ask for a quote that shows system size, expected annual kWh, assumptions about degradation and electricity prices, and warranty terms. If a number looks too good, ask to see the workings.

Related property types, such as agricultural buildings, are covered in solar for farms, and the special cases hub lists the rest. A good business case is one you can check yourself, with your own bills and an honest view of risk.