Solar for your business
Thinking about installing solar for your business? There are two options to consider if you’re going solar. Get the basics from SMUD first.
SMUD offers two types of financial incentives for business customers to install solar electric systems. One is based on the system's expected performance, and is a one-time upfront buy-down. The other is based on the actual electricity produced over the first five years.
If owning a solar electric system is not a worthwhile option for your company, consider a lease or power purchase agreement (PPA). With either option, the solar vendor is responsible for installing and maintaining the equipment as you enjoy the electricity it produces.
SMUD has a new Solar and Storage Rate (SSR) for all commercial and agricultural solar and/or solar and battery storage customers approved to install solar or battery storage on or after March 1, 2022. This SSR is just an additional component to SMUD’s rate that allows compensation and incentives that are specific to customers with solar, solar and storage or storage only installed at their business.
SMUD’s standard rate for commercial and agricultural customers remains the same. However, commercial customer rates are based on demand and service voltage, while agricultural customers may elect to be on a non-Time-of-Day Rate, or an optional Time-of-Day Rate based on their demand.
Excess electricity rate
Effective March 1, 2022, excess electricity generated by customers on the Solar and Storage Rate for power they do not use or store in their battery can be sold back to SMUD at a rate of 7.4¢/kWh, no matter the time of day or season.
Along with SSR, there is a new one-time fee to connect new solar systems to SMUD’s grid to recover the cost of providing interconnection service. The interconnection fee will be applied to all new systems starting March 1, 2022.
If you have questions about solar for your business, please contact your Strategic Account Advisor.
Battery storage can help lower your cost of doing business. It can provide power for critical operations in the event of an outage, create bill savings and even help reduce carbon emissions. We offer qualified commercial battery storage customers an incentive to contribute to a healthier environment and reduce electricity costs with battery storage.Learn more
To install a solar electricity system for your business, you’ll need to work directly with a solar contractor, who will handle necessary permitting as well as the interconnection application process with SMUD and your local building department.
Step 1: Find out if solar is right for you
- Check your usage history
- Log in to view your account history
- See how much electricity your business used in the past 12 months
- See our business electricity rates
PV systems can be sized to offset up to 100% of the customer's annual electricity use. However in some cases, especially with Time-Of-Day rates, it is better to size the system based on your energy cost rather than energy use.
Step 2: Make your business energy-efficient
Your best savings will always be the energy you don't use. To maximize the benefits of having your own solar power system, make sure the electricity it generates is not lost to energy-inefficiency. Learn more about tools to help manage and control energy operations and costs or visit our business rebates page.
Step 3: Make the purchase
- Select a contractor. This may be your most important decision in the process. It's best to talk to more than one contractor to compare their price and expertise. View the list of contractor tips.
- Assess costs. Solar equipment costs have declined over the last few years. Installed system costs can be as little as $3/watt (CEC-AC rating) or perhaps even less.
- Ask SMUD. For more information about solar electricity for your business, email us.
PV production meters
PV Production meters are required and will be installed for all DG projects within the SMUD territory. SMUD will install a PV production meter at no cost to customer or contractor. Production meter stipends for interconnection projects were discontinued effective June 1, 2023.
PV and all DG applications begin by submitting an Interconnection Application using PowerClerk2.
If owning a solar electric system is not a worthwhile option for your company, consider a lease or power purchase agreement (PPA).
Leasing a solar electricity system is just like leasing a car. You pay monthly to use it over a specified period of time. You enjoy the benefit of electricity produced by the system. Ideally, you would pay less for the energy produced by the system over the term of the lease than you would have paid for the same amount of energy from SMUD.
PPAs are similar to leases because the business owner pays for the energy produced by the system, but not for the system itself. But whereas lease payments are about the same every month, PPAs vary each month based on the amount of energy produced by the system. And that is related to the amount of sunlight available. Under a PPA, a customer pays for only what is produced during a given month, and will therefore pay more in summer than in winter.
What to expect from a leasing/PPA agreement
A lease or PPA agreement should:
- Guarantee the amount of energy that will be delivered per year, and over the life of the contract, in exchange for the lease payment or PPA price. Since the amount of electricity a solar electricity system generates declines gradually over time, the power guarantee should take this into account.
- Specify that the vendor will operate, maintain, and repair the system in a way that ensures that you get the energy yield promised over the life of the contract.
- Provide a clear statement of what you will pay per kWh produced by the system. A PPA agreement will state the amount but the number needs to be calculated for leased systems. Estimate the value of net metering at your current level of electric use.
- Specify the process and costs of removing the system and restoring your roof when the contract terminates.
- Specify what you will be required to pay if you move or decide to remove the system prior to termination of the contract.
Choosing a vendor - what to look for
- At least two years of installation experience
- A current C-10 or C-46 contractor license, or a B license if accompanied by additional solar certifications
- Certification from the North American Board of Certified Energy Practitioners (NABCEP)
- Customer references
It is always best to get more than one bid. Select your contractor not only on price, but also on their experience and expertise. System prices can vary in a wide range.
Consider, too, who will own the system if the solar vendor ceases operations. In most cases, ownership would be assumed by one or more financial institutions that capitalized the business and the lease or PPA contract would most likely remain in effect. System removal and roof restoration can be costly, so the owner of the system would have an incentive to keep it operating.
Cost-benefit analysis: Leasing vs. owning
If you are considering ownership, you may want to compare ownership costs to a lease or PPA. Calculations vary, but some generalizations are possible.
If you buy a system, either with cash or financing, the average cost of energy produced by the system will decline steadily the longer you operate it. This is because the initial investment will be spread over an ever increasing amount of energy produced. It will take years for the average cost of energy produced by the system to fall to the same level you would pay from the start of a lease or PPA. But when you own a system, you would eventually reach a break-even point after which your return on investment would be greater than with a leased system or PPA.
Factors to consider in your analysis include:
- How long you intend to be in your current location and the corresponding benefit from the system
- Total costs of ownership, including finance costs
- Financial risks of premature termination of the lease or PPA agreement
- The value of purchasing a third-party-owned system at the end of the lease or PPA agreement
Submit generator interconnection request
Before adding new generating facilities to the local grid, SMUD must examine the likely impacts the proposed project could have to the entire system. How your project request is handled will depend on the type of project.
Small generator interconnection requests
These are for projects that would connect into SMUD's distribution system. Typically, projects 20 MW and smaller will follow the small generator interconnection process. See the Small Generator Interconnection Application. You will also want to reference the Interconnection Guidelines.
Large generator interconnection requests
These are for projects that will connect into SMUD's high voltage transmission system. Large generator interconnections are typically projects larger than 20 MW. See the Large Generator Interconnection Requirements.
Submit a service request
Connecting generation to SMUD's system will require you to submit a service request to SMUD. Your project will need service power to provide for station loads when your project is not generating. See the Feed-in Tariffs for Business section below for more information. Call 916-732-5700 for a service extension application.
For transmission to places outside the SMUD service area
If you are interconnecting your generator to SMUD's system, but are intending to sell the output of your project to a utility other than SMUD, you'll need to submit to SMUD a request for point-to-point transmission. Please note, if your project interconnects to SMUD's distribution system, you will be subject to a distribution wheeling charge to get your power to the high voltage transmission system, as well as a high voltage transmission charge.
If your project is interconnecting at 69 kV or lower AND has a capacity of 20 MW or less, please reference SMUD's Distribution Wheeling process in the following documents:
If your project is interconnecting at 115 kV or higher, OR has a capacity greater than 20 MW, please see the Application for Transmission Service below.
Application for transmission service
Click for an Application for Transmission Service. If you don't know the Point of Receipt (the point where your project will connect to SMUD's system) then indicate the geographic location of your project (property address, or cross streets). If you want SMUD to deliver project power to PG&E's system, the Point of Delivery will be Rancho Seco. If you want SMUD to deliver project power to the Western Area Power Administration System, specify Elverta as the Point of Delivery. Include with your application a deposit of one month's transmission service charge.
There are two ways you can ask SMUD to purchase the output of your renewable energy project. You may either submit a proposal to SMUD’s next Request for Offers (RFO) for Renewable Energy, or you can make an Unsolicited Offer.
Requests for offers for renewable energy
Periodically SMUD issues Requests for Offers for Renewable Energy. To get on SMUD’s electronic notification list for future renewable solicitations, please register at SMUD’s Electronic Bid Solicitation System in the appropriate renewable energy categories.
SMUD will accept unsolicited offers for qualifying renewable energy projects. If you would like to submit to SMUD an unsolicited offer for eligible renewable energy projects, follow these steps:
1. Make sure your project is an eligible renewable energy resource. You can check the eligibility of various renewable technologies by reading the SMUD Renewable Energy Resources Eligibility Guidebook.
2. Fill out the Renewable Project Data Information document. It gives us information to evaluate your project proposal.
3. Fill out the Capacity and Energy Profile Data Sheet. It will give us information on how to value the power output of your project. If you have a wind or a solar project, please also provide the expected output for each hour of one calendar year (the “8,760 hour energy profile”).
4. Sign a Confidentiality and Non-Disclosure Agreement to keep your project information confidential. Fill out the Acrobat form, print out, sign and date. Scan the printed and signed agreement.
5. Submit your documentation electronically to SMUD at the following email address: email@example.com.
Maintenance and repairs
Do I need to do any maintenance?
Little maintenance is required with a solar electric system other than washing the panels a few times a year to help keep the system operating at its best.
Does having solar on my roof mean I am "off the grid" and not connected to electricity from SMUD?
No. Having a solar electric system does not mean you are "off the grid." While it is possible to design a system to produce all your power and enable you to go "off the grid," SMUD does not recommend that you install a system that large.
What happens at night when the sun is down? Do I still get electricity? Does electricity get stored somewhere in my business?
At night, or on very stormy days, a conventional solar electric system goes dormant. During these dormant times, you will get power from the electricity grid. When the sun comes back out, the system resumes producing energy. If you don't use all the electricity that you are producing at that moment, you can sell the excess electricity generated back to SMUD.
If I need to schedule a power shut off, who do I contact?
Site and product selection
How can I tell if my business will be a good fit for solar?
The typical business will need to have a southern-facing roof with little or no shade. East and west facing roofs also are viable, but their yearly output is decreased by 25% or more over the course of a year. A perfect slope for your roof would be 25% to 30%. While a solar electric system will produce power at a wide variety of slopes and orientations, it is important to try to maximize your output in relation to the size of the system.
How can I calculate the size solar electricity system I would need?
The size of your system should be based upon your electricity usage patterns, not the size of your roof.
Besides the basic warranty, price & service questions, what are the other questions I should ask?
Always try to get an idea what is going to be produced by the system. While it is impossible to predict the weather and its impact on the output of your system, there are formulas to determine expected output.
Will my roof leak?
It's not often that your roof leaks. Newer mounting systems are have improved resistance to leaks. Ask your contractor how your system will be mounted and how it will be sealed.
Will a rooftop solar electric system lower my bill?
Yes, solar electricity lowers your bill, but you must still factor in the upfront cost of the system.
Who benefits most from solar power?
The most cost-effective installations are in businesses that have large electric bills. However, we have found that many businesses are installing solar for environmental benefits.
Is there a cost to connect to SMUD?
Yes, there is a one-time fee to connect new solar systems to SMUD’s grid to recover the cost of providing interconnection service. The interconnection fee will be applied to all new systems starting March 1, 2022. The interconnection fee applies when adding a new solar system, a solar system with battery storage or a battery storage system only.
Are there any tax credits available?
Tax incentives may vary over time. Consult with your tax consultant before making a purchase decision. They'll let you know the latest federal tax incentives and their possible benefit to you.
How much do systems cost?
System prices vary by size and technology. The more expensive systems are ones that integrate with concrete tile roofs. The least expensive ones are traditional framed modules mounted on the roof. Prices in the SMUD service generally range between $8 and $11 per watt before tax credits and rebates.
Payback time is determined by many factors, most importantly the amount of your current electricity bill. Customers with lower bill amounts typically have a 20-plus year payback period. Customers who have larger bills may see a return on their investment in as little as 7 to 10 years.
Does SMUD sell solar electric systems?
No. SMUD does not sell solar electric systems. SMUD offers clean energy programs for your business.
Does SMUD offer solar incentives or rebates?
SMUD does not offer rebates for solar installations. Production meter stipends for interconnection projects were discontinued effective June 1, 2023.
How do I apply?
If you are buying a system from a contractor on the SMUD list, the contractor will take care of the paperwork. If you are installing the system yourself, you can submit the application through the PowerClerk website.
I have existing solar. Can I install more and do I get the same rebates?
Yes. You can install more solar on an existing system. If you install a second PV meter socket, SMUD’s solar program does provide a commercial solar stipend
Finding a contractor
How do I find a contractor?
Use web resources like Angi and the Better Business Bureau to find and talk to as many contractors as possible. The contractor you select will place an interconnection application with SMUD through the PowerClerk website. This will start the SMUD inspection procedure.
How can SMUD help me in the solar purchasing process?
SMUD provides information to help you but offers no direct recommendations or assistance. Many prospective solar customers take SMUD's residential workshops. See our upcoming classes.
Do contractors need to be certified or licensed to install solar?
A contractor should have a C-10 electrician's license or a C-46 solar installer license. SMUD also recommends you use a NABCEP certified installer.