17,100 solar panel installers worked in the US in 2021. People gravitate toward solar panel technology because of its increasing affordability and the money saved on electric bills. Suppose you are interested in how to start a solar panel business. In that case, you will need to become experienced in the requirements, licenses, and the solar contractor insurance for boosting income. Keep reading to find out more.
A solar panel business handles the installation of solar technology systems for its clients. These installations will occur all over the US, primarily in residential areas. Typically you will be installing solar panels on a client's roof. The Department of Energy suggests solar panels perform best on south-facing roofs with a slope between 14 and 40 degrees.
A solar contractor installs, repairs, maintains, and modifies solar energy systems. Solar contractors are also responsible for installing solar thermal systems. These systems collect sunlight and produce high-temperature heat that generates electricity.
Since solar panels need unobstructed sunlight access, they are subject to natural pests. Birds often target solar panels as nesting areas and are attracted to shiny panels. Unlucky birds mistake the shine of a solar panel for a body of water. They will dive into them, hurting themselves and damaging the panel. And so, solar panel businesses are also in charged with maintenance and replacement.
The median pay of a solar panel installer is $47,670 annually. These solar panel installers work at a median rate of $22.92 per hour. To be considered for this income level, you must have a minimum of a high school education and on-the-job training under a professional solar panel installer.
Before you learn how to start a business installing solar panels, you must come to terms with the costs. Not all solar installation businesses are the same. You may only need a few thousand dollars if you plan to start a small solar installation business. However, larger businesses will need a few hundred thousand dollars or more investment. Examples of costs for small businesses include:
Installation equipment: $200-$1,000
Licenses and training: $600-$1000
Vehicle for transporting equipment: $2,000
Business registration: $0-$1,000
Insurance coverage: $360 to $4,000 a year
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Your journey of how to start a solar company requires several steps that include:
Figure out the costs of starting your business
Come up with a business name
Master the technical knowledge of solar panels
Plan the direction of your business
Get your solar panel business registered
Register your solar panel business with the IRS
Open a business bank account
Get the licenses you need to operate your business
Create your marketing plan
Invest in equipment
Find talented labor
Acquire adequate business insurance
Choosing an excellent name is a crucial step when discovering how to start a solar business. You will want to choose a unique name representing your brand message to customers. Check your state’s business records to see what other solar installation companies are called so you can brainstorm something distinctive. A few tips to keep in mind include:
Choose a name that is easy to spell so customers won’t have trouble finding you
Keep it simple. You want your business's name to express its purpose.
Ask your friends or other professionals for feedback on the name. Getting someone else’s opinion will help you discover how others perceive it.
Pick a name that works for any stage of your business. You won’t want to have to change it when you start expanding.
Try to make it catchy and easy to remember.
Keep things positive. Customers respond better to brands and marketing with a positive message. You want a name that speaks to the benefits of the customer.
You will need to know intimately about solar panels before you learn how to start a solar installation company. Without technical knowledge, you will not know about the recent advancements in solar panel technology and installation methods. State laws and requirements for solar panels are changing all the time as well. With a mastery of solar panel technical knowledge, you can make informed decisions about what products and equipment you must invest in.
A solid business direction is a solid step in how to start your own solar company. You must create strategic objectives planned more than a year in advance. Your business can use strategic planning to predict trends in the industry, so your operational goals are on track. Map out what the growth of your business will be in the coming years and set objectives that can be indicators of your success. Your action plan should consist of:
Employee hiring objectives: You will want to find ways to minimize employee turnover rates. Increase your access to qualified candidates by offering perks and other incentives. Set hiring goals to fill positions with high-quality candidates that can assist with solar panel operations, accounting, marketing, sales, and other crucial departments.
Product overview: Decide what solar panel products you will offer to customers. For example, mono panels are more energy efficient and last longer, but poly panels are more affordable.
Market analysis: An analysis of your target market will give insight into what your customers need. You can discover pricing points they are open to and which customers you want to appeal to. A market analysis can also reveal the strategies of your competitors and who is competing for your audience. You can learn your potential strengths and weaknesses as a competitor and develop strategies to take advantage of the information.
A plan for funding your business and financing expenses: Decide whether to use bank loans, find investors elsewhere, or apply for government grants. Consider issuing stocks to fund your business ventures. You can reach out to potential investors and explain the benefits of your business. Investors who think your company is a good bet might infuse capital or buy company equity.
Registering your business with a state is the first tangible step in your journey to answer how to start a solar panel company. You need to decide which type of business to register as. The different types of business structures you should consider are outlined below.
| Business Structure | Description | Advantages | Disadvantages |
|---|---|---|---|
| Sole Proprietorship | You own an unincorporated business yourself | You keep all the profits low-startup costs, easy to change your business structure later | Limited resources, limited business scale, you assume the risks of your debts |
| Limited Liability Company (LLC) | You and other members are company owners with corporation protection and reduced personal liability | Separate legal identity, limited liability, tax options, easy-to-form, member-controlled | Difficult to raise investment, No longer exists if members die |
| Corporation | You start a company where you share ownership with other individuals, stockholders, and shareholders | Independent life separate from shareholders, easy to raise investment through stock sales. | Pay income tax on profits that are taxed twice |
Your business will need a way to pay taxes. To answer how to start a solar panel installation business, you must consider registering with the IRS. You can apply for an Employer Identification Number (EIN). An EIN simply identifies your business to the IRS for tax purposes and makes reporting business taxes easier. This number helps the IRS find you and reduces the chances of identity theft.
You will need a business bank account to protect your personal assets as a part of how to start a solar installation business. You can open a business bank account to help you apply for business loans. These loans can help you pay initial costs to start your business, like paying for inventory, hiring employees, and getting insurance coverage. The steps to opening a business bank account include:
Getting an EIN: You will need this to get a business account with the majority of banks
Find a bank: Choose a bank with low minimum requirements and fees to open an account since you are just starting out
Get necessary documents: A bank will require a copy of the documents from when you registered your business
Decide the account type: Banks will offer different business account types. A checking account lets you get invoices for clients and spend funds on business expenses. A savings account lets you accumulate interest on your funds. Merchant service accounts are required if you want to allow your customers to pay with a credit card.
Open the account and deposit cash: To open your account, you need to transfer a minimum amount of cash into it.
Currently, 12 states have licensing requirements for solar contractors. Still, many states have general requirements you must satisfy to install solar systems for customers. Relevant state requirements for your solar panel business are outlined below. Some states also have local-level requirements depending on the area you operate in.
| State | General Requirements | Specific PV Requirements | Specific Solar Thermal Requirements |
|---|---|---|---|
| Alabama | Electrical contractor, journeyman electrician | None | None |
| Alaska | Electrical contractor, electrician | None | None |
| Arizona | Appropriate contractor’s license | Electrician license | Plumber license |
| Arkansas | Commercial or residential contractor’s license | Electrician license | Plumber license, solar mechanic license, solar thermal installation license |
| California | Solar contractors license | Solar contractor license | Solar contractor license |
| Colorado | Electrician and plumbers license | Electrical contractor licenser | Electrical contractor license |
| Connecticut | None | Home improvement contractor’s license. PV-1, PV-2, E-1, or E-2 license | Solar thermal contractor license |
| Delaware | Electricians license | Electricians license | None |
| Florida | None | Certified solar contractor, electrical contractor | Certified solar contractor |
| Georgia | None | None | None |
| Hawaii | Solar energy system contractor license | Solar power system contractor license, electrical contractor license | Solar power system contractor license, solar hot water system contractor license, solar heating and cooling systems license |
| Idaho | None | Electrical contractor license | Plumbing state certificate of competency |
| Ilinois | ICC certification | Electrical contractor license | None |
| Indiana | None | None | None |
| Iowa | Must be registered with the Division of Labor | Electrical contractors license | None |
| Kansas | None | None | None |
| Kentucky | None | Electrician license | Plumber license |
| Louisiana | Solar energy equipment contractor license classification | Solar energy equipment contractor license classification, electrical contractor license | Solar energy equipment contractor license classification, mechanical work classification |
| Maine | Electrician license | Electrician license | None |
| Maryland | MHIC contractor license | Master Electrician license | Master plumbing license |
| Massachusetts | Electrician license | Electrician license, Building permit | Construction supervisor license, Building permit |
| Michigan | Electrician license | Electrician license | Mechanical contractor license |
| Minnesota | Mechanical contractor license, $25,000 mechanical bond | Electrical contractor or an electrician license | Plumbing contractor or plumbing license |
| Mississippi | Solar and wind construction license classification for work that exceeds $50,000. | Electrical work classification | Plumbing license |
| Missouri | Contractors must register with the Missouri Secretary of State, NABCEP certification for solar projects, electrical engineer license | None | None |
| Montana | Licensed electrician for work that exceeds 90 volts | State homeowner’s electrical permit | Master plumber license |
| Nebraska | Electrician license | Electrician license | None |
| Nevada | Solar energy system license or C-37 solar contracting license | C-2 license, photovoltaic installer license | Solar contracting license, Solar air-conditioning subclassification |
| New Hampshire | None | Master Electrician license | None |
| New Jersey | State registration for plumbers, electricians, and home improvement contractors | Electrician license | Master plumber license, electrician license |
| New Mexico | Qualifying party (master electrician or master plumber) | Electrical license, mechanical license | Electrical license, mechanical license |
| New York | None | None | None |
| North Carolina | None | Electrical contractor license | Electrical contractor license |
| North Dakota | Contractor license for any work that costs $2,000 or more | Master, journeyman, or a class B electrician license | Journeyman or master plumber |
| Ohio | Contractor license for commercial buildings | Electrical contractor license | Contractor HVAC license when used to heat a building, contractor electrical license |
| Oklahoma | None | Electrician license | None |
| Oregon | Trade licenses for solar energy equipment, electrical contractor license | Electrical journeyman’s license | Plumbing journeyman’s license or solar heating and cooling system installer license |
| Pennsylvania | None | None | None |
| Rhode Island | None | Certificate A electrical contractor license, electrician license, Certificate B journeyperson's license | None |
| South Carolina | None | Mechanical contractor license for commercial installations, certificate of authorization of residential work for residential installations, electrician license | Mechanical contractor license with a plumbing classification for commercial installations, Certification of Authorization of plumbing work for residential installations, plumbing license |
| South Dakota | None | Electrical contractor license | Plumbing contractor license |
| Tennesse | None | State contractor’s license for projects that cost $25,000 or more, electrical contractor license | Mechanical or plumbing contractor license classification |
| Texas | None | State electrical contractor license | Master plumber license |
| Utah | None | Solar photovoltaic contractor license | None |
| Vermont | None | Electrical permit | Solar system installation specialty license |
| Virginia | Alternative energy systems contractor license specialty | None | None |
| Washington | None | Electrical contractor license, certified electrician | None |
| West Virginia | None | Electrical license to make final determinations of the electrical grid structure | Plumbing license |
| Wisconsin | None | Building plans must be submitted for review by the Division of Safety & Buildings. | HVAC contractor license for HVAC installations, Master plumber license |
| Wyoming | None | Electrical license, electrical contractor license | None |
When asking yourself how to start a solar panel installation company, marketing may not be the first thing that comes to mind. However, marketing can decide what makes or breaks your business. You must decide which marketing methods to use to get your name out there. Some examples include:
Print ads: These ads will run in magazines, newspapers, mailers, billboards, and posters.
Commercial ads: You can buy time slots on television, radio, or online video sites like Youtube.
Joining your local chamber of commerce: The chamber of commerce will allow you to meet and network with other local business owners
Install solar panels in high-traffic areas: Solar panels in high-traffic areas act like a billboard on their own. If you have a prominent logo displayed or a phone number, potential customers can get in touch with you.
Create a website so customers can find you: Most customers search for a company's website before contacting them. A website connects you with potential clients and makes you more legitimate.
Invest in SEO to boost your rank on search engines: To help people find your website, you will want to invest in search engine optimization strategies that help your business rank higher on relevant searches your customers make.
Promote your brand on social media: Create a social media account on Facebook, Instagram, or TikTok to connect with your potential audience. You make posts advertising your business and interact with your customers directly.
Create an e-mail marketing campaign: Create an advertisement that you send to multiple potential customers through email. This message will encourage customers to contact your business or inform them about your promotions and services.
Another critical aspect when discovering how to start your own solar panel business is investing in the proper equipment. Typical equipment that solar installers need includes are outlined below.
| Equipment | Description | Cost |
|---|---|---|
| Digital multimeter | Measure electrical values like volts, amps, and resistance | $20-$200 |
| Battery-operated drill | Helps you drill roof holes to mount solar panels | $100-$300 |
| Conduit benders | You use this tool to help place electric wires and roll conduits | $25-$50 |
| Caulk gun | Helps you secure solar panel mounts | $10-$80 |
| Safety equipment | Protects you from falling and other injuries like electrocution. Includes gloves, hardhats, rubber shoes, safety glasses, and possibly a safety harness | $300-$500 |
| Wire stripper | Removes wire insulation | $20-$200 |
| Tape measure | Makes precise measurements to determine where to place solar panels | $10 to $100 |
| Solar panel hangers | Secures solar panels to a roof and helps with mounting and leveling. | $300 or more |
Getting a talented team together is critical when learning how to start up a solar panel business. You will unlikely be able to run a solar panel business alone. You will want to surround yourself with talented people skilled in the industry with the proper qualifications to install solar panels.
Potential employees need to have at least a high school diploma. They should have at least one year of on-the-job training when hiring an experienced candidate. If a worker has experience as an electrician or other related construction job, their job training time can be less. They should be comfortable with working at higher elevations. Some types of employees you want to consider hiring for your solar panel business include:
Solar panel contractors: Solar panel contractors are responsible for designing, installing solar panels, and performing maintenance of existing systems.
Electricians: Electricians help with wiring and constructing racks for solar panels to be installed on. They test solar system circuits and equipment to ensure they comply with safety standards.
Salespeople: A salesperson will interface directly with customers and sell them on the benefits of your solar panel business. They will negotiate prices and spread awareness of your brand.
Bookkeepers: Keeps track of business expenses and payments. Can prepare taxes for the business and prepare reports for making business decisions. Bookkeeper reports go to you and other business owners to help with daily decision-making.
Administrative assistants: Responsible for performing daily clerical tasks like answering phones, putting together a schedule, and keeping track of business contacts.
Marketing researchers: These employees gather data on market trends, your target customers, and your direct competitors. Through market research, you can learn the preferences of your consumers and what products they are open to purchasing.
Insurance might be one of the most crucial components to figure out when learning how to start your own solar business. Insurance policies can save your business from catastrophic lawsuit costs that have the potential to bankrupt you. They can also help you repair and replace damaged equipment, protect your employees, and cover you for professional mistakes. Below are some recommended insurance policies for your solar panel business.
A general liability insurance policy protects your business from some third-party lawsuits. Typically general liability will protect from bodily injury, personal injury, and property damage claims. This can be helpful if a client slips on your business premises or your solar panel install job causes damage to a client’s property.
Thimble is our recommended provider of short-term general liability insurance. They offer a quick experience where you can get coverage instantly. The company provides several A-rated insurance partners to choose from. This company is experienced, representing over $150 billion in coverage since launching in 2016. Thimble has an A+ rating with the Better Business Bureau.
Professional liability insurance protects you from the financial costs of mistakes made in your business decisions. This policy typically covers negligence, copyright infringement, and errors in service.
We recommend Hiscox for your professional liability insurance policy. This company offers specialty insurance policies with comprehensive coverage. They have a platinum trusted service award from Feefo. Hiscox also provides discounts when bundling multiple policies for your business. They have an A rating from AM Best.
Commercial property insurance protects your business building and property from physical damage. This policy covers events that include:
Fire
Theft
Vandalism
Wind
Lightning
Burst pipes
Explosions
Certain events, like earthquakes and floods, will not be covered by default. You will need to add coverage for those events to your policy.
CoverWallet offers an excellent online marketplace to shop for commercial property insurance. They have over ten big-name carriers to pick from and help you save time shopping. You can comparison-shop, manage policies, and compare coverage all from one place. CoverWallet serves thousands of customers annually and has an A+ from the Better Business Bureau.
You will need a commercial auto policy to protect your business vehicles. This coverage is required for business uses of vehicles you own. It protects your vehicles from damage and your business from auto-related liabilities.
Tivly is our choice for commercial auto insurance. They are an insurance service that matches you with policies from over 200 partners. Policies matched through Tivly are easy to update when your business needs change. You can get many policy add-ons like gap insurance, rental reimbursement coverage, and more. Tivly has an A rating from the Better Business Bureau.
Workers' compensation insurance is required coverage in most states for businesses that hire employees. This policy protects your employees when sick or injured from work-related activities. It will pay medical costs for employees to deal with injuries and pay disability benefits to replace their lost income.
For workers' compensation insurance, we recommend The Hartford. They give your employees access to an excellent network of medical providers. The Hartford is a trusted, long-standing insurer with over 200 years of underwriting experience. They offer modern conveniences like a mobile app and services for renewable energy businesses to cut costs. The Hartford has an A- rating with AM Best.
A business owner’s policy is one of the most comprehensive forms of insurance. It combines the coverage of several policies like general liability and commercial property insurance. You will find coverage for things like business interruption, compensating you for business income lost due to damage to your business property.
NEXT is an excellent provider of a business owner’s policy. You can get instant online quotes and save money by bundling multiple policies. The company serves over 420,000 customers and has a 4.7/5 from their customer reviews. NEXT has an A- (excellent) rating from AM Best, and they reached $650 million in premium revenue in 2021.
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This place is an absolute joke of a company and should be ashamed of the way they conduct business. I was hurt on the job at the end of July and it took them just shy of 7 weeks to issue out a paycheck to me. Yes the amount was back dated but still. Not many have the luxury of not receiving a paycheck for almost 2 months. To top it all off, the original adjuster marked me down for the wrong state which caused a problem from the get go, I've had 3 different adjusters now since each one can't seem to figure out the simplicity of my claim. All my paperwork which includes, my job, house, and drs visits all are from the same state and city but yet some how I have been filed under a completely different state 1500 miles away. They do not answer your phone calls or emails no matter how many you leave. I've had to escalate my frustrations to the supervisors of each of these individuals in order to even get some kind of response. I've had more communication and information given to me about my claim from the customer service representatives then the actual adjusters.......... please tell me how that works?! A serious overhaul needs to happen here in order to serve your clients the way they deserve to be taken care of. 10/10 do not recommend this company to a single soul on earth
I have never had the displeasure of working with a more incompetent and disrespectful person in my life. I’m an injured worker and the adjuster that was assigned to my case was named Carrie Furgeson. In the past 6 weeks that I’ve been injured and out of work I have only been able to get ahold of her twice, not for lack of trying. I have left countless voicemails, countless emails, and she ignores them all. When I am finally able to get ahold of her I’m greeted with terrible customer service. She is rude, she talks over me and I’m hardly able to get a word in edgewise. She spelled my name wrong on my documents even after I spelled it for her properly countless times, this caused a whole new issue with my bank. I have bill collectors from the hospital calling me demanding payment and Carrie Furgeson won’t do a single thing to help, or to get them paid. All of my documentation is in Colorado, my job is in Colorado, my address is in Colorado, all my Dr offices and appointments have been in Colorado and Carrie still managed to hold my claim because she wasn’t sure what state she needed to file it under. It’s been 6 weeks since my Injury and my company still hasn’t received the wage paperwork to fill out so they can get me my correct wages. When she’s not ignoring me she’s answering my questions with “I don’t know” well I don’t know how she got this job, because apparently she doesn’t know anything about it. She is a disgusting morose individual inside and out and I genuinely wish her the worst in all of her future endeavors. I highly recommend you don’t use this company. Please if you are a business owner and your looking into this company please don’t use them. I’m sure they have the cheapest payment and that’s why companies use them in the first place, but you will be doing your employees a grave disservice by forcing them to venture into this absolute dumpster fire of a company. I would rate 0/5 if possible but 1 was the lowest I was allowed.
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Not all those who wander are lost.
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