The Right-Sizing Principle Applies to Commercial Solar Too
When SPM talks about right-sized solar, the principle is the same whether we're working with a homeowner or a business: install a system that matches your actual, optimized energy load — not the largest system that fits on your roof, and not the smallest system that generates the most revenue for the installer.
For commercial buildings, right-sizing is more complex because the variables are more numerous: utility rate structure, demand charges, roof capacity, structural constraints, tax situation, planned load changes, and building efficiency all factor in.
The Inputs That Determine Right-Sized Commercial Solar
1. Actual Energy Consumption History
Twelve to twenty-four months of utility billing data is the foundation of accurate commercial solar sizing. This reveals seasonal patterns, baseline consumption, peak periods, and the demand component of your bill — all of which affect both how large the system should be and what economic benefit to expect.
2. Building Efficiency Baseline
A commercial building with outdated lighting, inefficient HVAC, or poor building envelope insulation consumes more energy than an efficiently operated building of the same size. Sizing solar around an inefficient building means the system is larger and more expensive than it needs to be.
SPM evaluates your building's efficiency profile before sizing a commercial system. For buildings with significant efficiency improvement potential, we'll discuss whether addressing those opportunities first changes the economics of the solar investment.
3. Planned Load Changes
Are you adding equipment that will increase electrical consumption? Installing EV charging, expanding production lines, adding HVAC capacity, or otherwise growing your electrical load? These planned changes should be included in the solar sizing analysis — sizing for today's load and then adding load later means the solar system may be undersized.
4. Utility Rate Structure and Demand Charges
Commercial utility rates are structured differently than residential rates. Many commercial accounts include demand charges — fees based on peak kilowatt demand during the billing period, separate from energy charges. Solar panels reduce energy consumption (kWh) but have limited impact on demand charges unless the system is specifically designed and sized to reduce demand peaks.
Understanding your rate structure — energy charges, demand charges, time-of-use pricing, and any special commercial rates — is essential to accurately modeling the economic benefit of a particular system size.
5. Net Metering and Utility Compensation
Illinois net metering policy allows commercial customers to receive credit for excess solar generation sent to the grid. The compensation rate, capacity limits, and program terms should be verified with your utility directly, as these details affect whether generating more than your consumption creates economic value or excess production that isn't fully compensated.
6. Roof and Structural Constraints
Available roof area, structural load capacity, rooftop equipment (HVAC, exhaust vents, skylights), and the roof's remaining useful life all constrain the maximum practical system size. Right-sizing must work within these physical limits.
7. Tax and Financial Situation
The economics of commercial solar include potential tax benefits — the Investment Tax Credit and accelerated depreciation — that affect the effective cost of the investment. How beneficial these are depends on your business's tax situation. A CPA should be involved in this analysis. The solar system size that makes the best economic sense can depend on how much of the tax benefit your business can actually use.
What Over-Sizing Looks Like for a Commercial Building
An oversized commercial solar system generates more electricity than your building consumes at a net metering credit rate that may not equal full retail value. It costs more upfront, and the payback period is longer than a right-sized system. Some commercial installers have incentive to recommend larger systems — they sell more equipment.
Oversizing may also be prompted by efficiency neglect: if the building's actual load is higher than it should be because efficiency improvements haven't been made, the system will appear optimally sized for current consumption while actually being oversized for the efficient building.
What Under-Sizing Looks Like
An undersized commercial system reduces your electric bill but leaves substantial ongoing electricity costs that the right-sized system would have offset. If you're planning to add electrical loads — EV charging, heat pumps, expanded production equipment — and the system doesn't account for them, you'll be purchasing electricity at full rate for loads that solar could have covered.
SPM's Commercial Right-Sizing Process
- Review 12–24 months of utility billing data, including demand charges
- Assess building efficiency — identify opportunities that would reduce the optimal system size
- Identify planned load changes that should be included in sizing
- Model production for your specific roof geometry, orientation, and shading
- Analyze utility rate structure to accurately project economic benefit
- Propose a system size that balances upfront investment, payback period, and long-term value
Ready to evaluate the right-sized commercial solar system for your building? Learn about SPM's commercial approach or schedule a commercial energy review.