What Most Business Owners Miss When Comparing Solar Proposals

The Price Per Watt Trap

Price per watt is the most common metric for comparing solar proposals. It is simple math: total cost divided by system size. A $300,000 system at 100 kW works out to $3.00 per watt.

The problem is that price per watt tells you almost nothing about long-term value.

Two systems at the same price per watt can perform quite differently over 25 years. One might use panels with lower degradation rates. The other might use equipment that loses efficiency faster. The cheaper system on paper may end up costing more over time.

Price per watt also ignores installation quality, warranty terms, and the actual performance you can expect from the system.

Bottom line: Use price per watt as a starting point for comparison, not your only decision factor.

Equipment Differences That Actually Matter

Solar proposals list equipment specifications. Most business owners skip over these because the numbers are meaningless without context. Here is what to pay attention to.

Panel Efficiency

Panel efficiency tells you how much of the sunlight hitting the panel gets converted to electricity. Premium panels typically run 20 to 22 percent efficiency. Standard-tier panels might be 18 to 20 percent.

Higher efficiency means more production per square foot of roof space. For buildings with limited roof area, this can be important. For buildings with plenty of space, the difference matters less.

Degradation Rate

All solar panels lose some efficiency over time. The question is how much.

Premium panels typically guarantee around 0.25 to 0.5 percent degradation per year. After 25 years, they should still produce around 85 to 90 percent or more of their original output.

Standard panels might degrade at 0.5 to 0.8 percent per year. After 25 years, they may be producing around 80 to 85 percent of original output.

The difference accumulates over the life of the system.

Inverter Type and Quality

Inverters convert the DC power from panels to AC power your building uses. They are typically the first major component to need replacement.

String inverters are less expensive but create single points of failure. If the inverter goes down, production stops across the entire string.

Microinverters or power optimizers cost more upfront but allow panel-level monitoring and keep other panels producing even if individual components fail. They can also perform better when panels experience partial shading.

Temperature Coefficient

Solar panels produce less power as they get hot. The temperature coefficient tells you how much production drops per degree Celsius above 25°C (77°F).

A panel with a temperature coefficient of -0.35 percent/°C loses 0.35 percent of output for every degree above the baseline. A panel at -0.29 percent/°C loses less.

In Minnesota, this matters less than in desert climates. But it still affects production on hot summer days.

Financing Structures Change Everything

The financing structure determines who gets the tax benefits, which can represent a significant portion of the total project value.

Purchase or Loan

If you purchase the system outright or with a loan, your business owns the equipment. You claim the Investment Tax Credit on your federal taxes (currently 30 percent of the project cost). You may also claim MACRS depreciation, which provides additional tax benefits over five years.

For businesses with sufficient tax liability, purchase or loan financing can deliver better long-term economics.

Lease or Power Purchase Agreement (PPA)

If you sign a lease or PPA, a third party owns the system. They claim the tax credit and depreciation benefits. You pay them either a fixed monthly lease payment or purchase the electricity at a predetermined rate.

For some businesses, third-party ownership makes sense. If you do not have sufficient tax liability to use the credits immediately, you cannot capture the full value anyway. A lease or PPA can provide predictable costs without the upfront capital investment.

Important consideration: Make sure you understand the escalator clause in any lease or PPA. Many agreements include annual rate increases.

Production Estimates: Realistic or Optimistic?

Every solar proposal includes a production estimate. This number drives the financial projections. If it is inflated, the expected savings will not materialize.

How to Spot a Potentially Optimistic Estimate

Compare to regional benchmarks. In Minnesota, well-designed commercial systems typically produce around 1,200 to 1,400 kWh per kW per year depending on orientation, tilt, and shading. An estimate significantly higher than this range deserves questions.

Ask how shading was accounted for. Trees, neighboring buildings, rooftop equipment, and parapet walls all create shadows that reduce production. If the proposal does not mention shading analysis, ask about it.

Look for the degradation assumption. A proposal showing flat production over 25 years is not accounting for panel degradation. Production should decline slightly each year.

Check the system derate factor. Real-world systems produce less than theoretical maximums due to various losses. Industry-standard derate factors typically range from 75 to 85 percent.

How to Verify an Estimate

Request the modeling software output. Professional installers use tools like Aurora, Helioscope, or PVsyst to generate production estimates. These reports show the assumptions behind the numbers.

Ask about the performance guarantee. Some installers guarantee a minimum production level in year one and will compensate you if production falls short.

Compare multiple proposals. If you have several quotes, significant variance in production estimates for the same roof space should prompt questions.

Understanding What You're Actually Getting

Beyond equipment specs and pricing, there are practical considerations that affect your experience over the system's lifetime.

Warranty Coverage

Ask what warranties come with the panels, inverters, and installation work. More importantly, understand who stands behind those warranties and what the process looks like if you need service.

Post-Installation Support

What happens after the system is turned on? Some installers provide ongoing monitoring and maintenance services. Others hand you the keys and move on. Ask about monitoring capabilities, maintenance recommendations, and how service calls are handled.

Local Presence and Experience

A solar system will be on your roof for 25 years or more. An installer with established local presence and a track record in your area is more likely to be available if you need support years down the road. Ask how long they have been operating in Minnesota and how many commercial projects they have completed locally.

System Monitoring and Transparency

Can you see real-time production data? Will you be alerted if the system underperforms? Good installers provide monitoring systems that let you track performance and catch issues early. Ask what monitoring platform they use and whether there are ongoing fees.

The Hidden Costs Nobody Talks About

Some proposals look attractive until you dig into what is not included.

Utility Interconnection Complexity

Not all installers have the same relationship with your utility. Some have streamlined processes and know exactly how to navigate interconnection requirements. Others are learning as they go, which can add months to your timeline.

Ask how many projects they have completed with your specific utility and what their average interconnection timeline looks like.

Roof Condition and Structural Requirements

If your roof needs repairs or reinforcement, who handles that? Some installers coordinate everything. Others require you to hire separate contractors and manage the timeline yourself.

A thorough site assessment should identify these issues upfront, not after you have signed a contract.

Ongoing Operations and Maintenance

Solar panels require minimal maintenance, but they do require some. Panel cleaning, inverter monitoring, vegetation management, and occasional repairs all factor into long-term costs.

Ask what the recommended maintenance schedule looks like and what those services typically cost.

Frequently Asked Questions

What is included in the price and what is not?

Permitting fees, utility interconnection costs, trenching, electrical panel upgrades, and structural reinforcements can add costs if not included in the original proposal. Always ask for a breakdown of what the quoted price covers and what additional costs might arise.

What is the timeline and what causes delays?

Commercial solar projects typically take 6 to 12 months from contract signing to system activation. The timeline includes engineering and design, permitting, equipment procurement, utility interconnection approval, installation, and final inspection.

The most common delays come from permitting and utility interconnection, which are outside the installer's direct control. Ask for a timeline and understand which phases have the most variability.

Who handles the utility paperwork?

Interconnection applications, net metering enrollment, and incentive paperwork involve documentation and coordination. Some installers handle everything as part of their service. Others expect you to manage these applications or charge separately. Clarify this upfront.

Can I see examples of similar projects you have completed?

Experience with your specific building type, roof configuration, and utility helps. Ask for references from clients with similar installations. Speaking with past customers provides insight into the installer's performance and communication.

Questions to ask references: Did the project finish reasonably close to the timeline and budget? How was communication during the process? Have there been any issues, and how were they resolved?

How do I know if the production estimate is realistic?

Request the modeling software output. These reports show assumptions behind the production numbers, including shading analysis and system losses.

Compare the estimated annual production per kW to regional benchmarks. For Minnesota, reasonable estimates typically range from 1,200 to 1,400 kWh/kW/year for well-designed systems.

Ask if the installer offers a performance guarantee.

What financing option is best for my organization?

For for-profit businesses with tax liability: Direct purchase or loan financing often delivers better long-term value because you can capture the Investment Tax Credit and MACRS depreciation benefits.

For non-profit organizations: Leases or PPAs often make more sense since you cannot directly use tax benefits.

Cash flow considerations: A PPA or lease requires no upfront investment. Loan financing requires less upfront cash than a direct purchase.

How do I compare proposals with different system sizes?

Bigger is not always better. A larger system is not necessarily superior just because of its size.

Compare the estimated first-year production to your actual annual electricity consumption. A system that offsets a significant portion of your usage typically provides good economics, though specific optimal sizing depends on your situation and utility rates.

Check if your utility has caps on net metering system size, as exceeding these may affect the value of excess production.

What should I know about monitoring and performance tracking?

Ask what monitoring system comes with your installation. Can you access production data from your phone? Will you receive alerts if production drops? How granular is the data—system-level only, or can you see individual panel or inverter performance?

Some monitoring platforms require ongoing subscription fees. Others are included at no additional cost. Clarify this before signing.

Making the Right Decision

Commercial solar is a long-term investment. The decisions you make now will affect your business for 25 years or more.

The goal is not necessarily to find the cheapest proposal. It is to find the right balance of equipment quality, realistic projections, solid support, and fair pricing.

Take the time to understand what you are comparing. Ask questions until the answers make sense. Request references and modeling reports. Look beyond the bottom-line price to understand what you are actually getting.

Need Help Evaluating Your Proposals?

At Greenway Solar, we have been helping Minnesota businesses navigate commercial solar decisions for over a decade. We understand that comparing proposals can feel overwhelming when this is not your area of expertise.

If you would like a second perspective on your proposals or want to discuss what matters most for your specific situation, we are happy to help.

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