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Aug 27, 2014  | Paul Grana  | 0 Comments

Making the jump from residential to commercial solar

Guest contributor Paul Grana discusses how sales and engineering changes when installers expand from residential to commercial solar projects

A growing number of residential solar installers are expanding their services to offer commercial solar projects. This additional service helps to diversify and expand the company’s topline revenues and can provide a compelling opportunity in a period of declining system prices. However, these new commercial jobs represent both an opportunity and a challenge.

On the positive side, these installers already know their communities well and are often in the best position to offer solar to local businesses. And the revenue from the bigger-ticket projects can greatly enhance the company’s bottom line. On the other hand, many aspects of the sales, design, and deployment process differ significantly between residential and commercial systems. Primarily, this is due to the fact that commercial solar projects are much larger than residential projects: compared to a 5KW residential project, many commercial system sizes are between 50KW and 500KW–an increase of as much as 100x.

With a bigger system size and completely different customer set, it’s no surprise that the sales process for commercial projects differs greatly from the residential approach. If installers can navigate the transition to commercial projects effectively, these larger projects can help companies markedly enhance their revenue stream and diversify their cash flow.

We have assembled an overview of the main business processes that should be adapted to help make the transition as smooth as possible for installers looking to take on commercial projects.

Sales cycle and customer sophistication. The requirements of commercial customers are more complicated than those of residential clients. Energy costs typically represent a larger proportion of a small business’ budget, and business owners have more control over their energy use than the average homeowner. Businesses tend to have specialized managers, each with a specific focus. For example, the facilities manager needs to know the PV system’s maintenance requirements, while the finance manager wants to ascertain the system’s capital expenditure requirements and financing options. With a multifaceted customer group, another obvious difference is that commercial projects have longer lead times than residential. A residential customer can make a decision in a matter of hours or days, while a commercial project often takes weeks or months to close.

Customer input. Commercial customers usually want to have input on the design of their solar array. They may prefer carport canopies with a specific aesthetic style or rooftop systems with considerations for maintenance or system access. A developer may have a broader energy initiative (such as net-zero development) in which the solar array plays a critical role. Sales engineering teams are often required to redesign a commercial system multiple times based on customer input.

Demand charges. The economics of residential and commercial system sales also differ. Many commercial energy users have a two-part energy charge: one for usage (paying by the kilowatt-hour used), and the other for the “demand” charge (based on the maximum energy used at any point in the month). A solar array’s production primarily drives value with the usage charge, although with some careful usage planning and/or pairing with storage, the system can also reduce the peak electricity demand and therefore the demand charge. Yet this requires hourly (or even 15-minute) analysis during the sales process to quantify the solar array’s impact on the facility’s peak demand–and may even require a change to the facility’s tariff rate to optimize the value. Both of these issues necessitate a more careful sales process than a residential system requires.

When designing commercial systems, there are many additional equipment decisions that must be made: 60- or 72-cell modules, many different racking products, and varying AC operating voltages. In addition to the variety of hardware available in commercial systems, there are also important, often overlooked engineering process differences.

Layout tools. Many of the design and layout tools used for residential-sized projects do not scale well to much larger commercial projects. The design choices inherent in wire routing and combiner boxes get more complex–and more valuable for getting them right. These complexities are the main reason why most companies either switch to a CAD-based layout approach or adopt commercial-specific design tools. A typical installer, for example, might use Modsolar for its residential system design, but then switch to HelioScope for commercial-scale layouts and system designs.


Engineering parameters. Because commercial systems are generally installed on a flat roof (or even a ground-mount section), there are several new design parameters that must be taken into account.

–Module tilt and spacing. In residential projects, the orientation of the module is never a question, since they are almost always installed flush on a sloped roof. However, in commercial arrays, there is a tradeoff: tilting the modules higher will increase the yield—yet keeping the tilt low will reduce inter-row shading (which can also be mitigated by increasing the spacing between the modules). Finding the optimal tilt and spacing can improve a project’s economics by 10% or more.

–Inverter topology. Commercial systems have more options for inverter topologies, including central inverters, string inverters, and microinverters. Each inverter architecture has a different cost, design approach, and installation requirements. On a commercial-scale system, selecting the right inverter is critical for keeping installation costs low.

–Wire sizing. Although thinner wires are less expensive, they increase electrical losses. The optimal gauge depends on the cost of the wires, the distances covered, and the value of the system’s electricity.

Given the size and cost of a commercial system–the overall price of a commercial installation can easily exceed a million dollars–this means that these parameters suddenly have a much larger value tradeoff and are worth optimizing. By evaluating design alternatives, system engineers can save tens of thousands of dollars on a single project.

Performance modeling. PV Watts remains the primary tool used for predicting the energy yield of residential systems. The program is relatively easy to use and does a good job of estimating the amount of sunlight that will reach a system based on its location and orientation. However, the tool largely ignores the internal details of system behavior such as module efficiency or mismatch effects, reducing them to a single value entered by the user for the efficiency of the array (typically 77-82%). This approach may be overly simplistic for commercial systems, particularly when calculating design tradeoffs. Instead, simulation-based software should be employed, so that the physical performance of the array is actually calculated, based on the physics of the modules, wires, and inverter. This requires higher-quality tools such as PVsyst or HelioScope.

The most successful commercial installers don’t just extend their residential practices to commercial projects. They adopt an entirely new set of practices for these larger installations, and as a result, increase their sales and diversify their businesses. While the expansion to commercial projects seems daunting, the revenue opportunity makes it well worth it.

Paul Grana is vice president of sales and marketing at Folsom Labs, based in San Francisco. Before starting Folsom, he ran product management for Tigo Energy, a module-level electronics manufacturer in the solar industry. An expert in market demand based on discrete choice analysis, he has also authored a number of articles and white papers on system design and performance. Paul holds an SB in Mathematics and Economics from the University of Chicago and an MBA from Harvard Business School.


Sources: Paul Grana, Folsom Labs, SolarCurator

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