How to Start a Solar Panel Business

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.

What is a Solar Panel Business

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. 

How Much Do Solar Panel Installers Make?

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.

How Much Does It Cost to Start a Solar Company

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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A row of solar panels generating power.

What Are the Steps to Starting a Solar Panel Business?

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

Come Up With a Business Name

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.

Master the Technical Knowledge of Solar Panels

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.

Plan the Direction of Your Business

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.

Get Your Solar Panel Business Registered

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

Register Your Solar Panel Business with the IRS

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.

Open a Business Bank Account

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:

  1. Getting an EIN: You will need this to get a business account with the majority of banks

  2. Find a bank: Choose a bank with low minimum requirements and fees to open an account since you are just starting out

  3. Get necessary documents: A bank will require a copy of the documents from when you registered your business

  4. 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.

  5. Open the account and deposit cash: To open your account, you need to transfer a minimum amount of cash into it.

Get the Licenses You Need to Operate Your Business

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

Create Your Marketing Plan

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.

Invest in Equipment

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

Find Talented Labor

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.

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Insurance Requirements for Boosting Income

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.

General Liability Insurance

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

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

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.

Commercial Auto Insurance

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’ Comp Insurance

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.

Business Owner’s Policy Insurance

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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