How to Start a Solar Panel Business

Denise Elizabeth P
Senior Financial Editor & Contributor

You may have already heard that renewable energy is the future and that is most likely why you have landed on this page – How to Start a Solar Panel Business.

After doing some research, you have most likely realized what a great opportunity getting into the renewable energy business is, especially a solar power business.

Solar energy is available to most homeowners and many businesses, small and large, are adding solar technology to their locations.

Consumers are drawn to solar panels for a variety of reasons including:

  • There is an unlimited amount of solar energy
  • Solar energy is clean compared to fossil fuels which damage the environment
  • In the majority of markets, solar energy is cheaper compared to fossil fuels

There is an increasing demand from consumers looking to conserve energy and lighten their financial burden while doing so, it is a win-win for everyone.

If you have been bouncing around the idea of Starting a Solar Panel business, here are some tips to help you bring your business idea to fruition.

Solar panel business

Write a Business Plan

Most successful businesses that make it through the initial market entry phase are more likely to succeed if they create a solid business plan.

A business plan helps set a track for your business that identifies what it needs to succeed.

A good business plan should answer some if not all of the following questions:

  • What is the vision and mission of the company?
  • What products and services will we provide?
  • What is the cost to provide this product and/or service?
  • Where do I purchase inventory from (i.e. solar panels to be installed in customer homes and businesses)
  • What are the startup costs?
  • What physical location and equipment is needed?
  • What ongoing costs will there be?
  • Who is my target market?
  • How will my solar panel business make money?
  • What will I charge my customers?
  • Do I need financing?
  • What is the sales and marketing plan?
  • Who is the competition?
  • How will success be measured?
  • What are the short and long-term goals?

Business plans are vital for running and growing your solar panel business.

Opening a solar panel business usually requires a significant initial investment.

You will need to acquire an inventory of panels to be installed in customer homes and businesses and they are not cheap.

From the research we have done, the initial average investment to enter the solar market strong is around $500,000.

This includes solar panel equipment to perform your first round of installations for about a year, marketing costs, and any costs associated with hiring staff.

Purchasing panels from distributors in larger bundles will bring the cost down per unit.

Some ongoing expenses include ordering panels from distributors, payroll, rent/lease of your location, paying energy companies on behalf of leased customer accounts, maintaining licenses, business insurance, etc.

A solar panel business can make money in a few different ways:

  • From the successful installation of solar units which can be a retail rate paid up front for connecting their panels to their home and the power grid – for a residential installation, the price usually ranges from $15,000 – $50,000.
  • Leasing programs which often include the cost of the panel installation and any power customers are using from the grid – leases can run between $25/month – $200/month
  • Sub-contracting for larger solar panel contractors and companies

Providing the option to install solar units or lease is a great business model as it provides two types of revenue streams for your business and more options for your customer.

Sub-contracting for larger solar panel contractors and companies can help you gain experience installing larger projects and help you create another revenue stream.

Because getting into a solar panel business requires a large initial investment, you may need to reach out to lenders or investors for some capital.

As you can see, a business plan will help you identify key aspects of your business and what you need to do to have a strong start.

Having a solid business plan will also help you increase your chances of raising capital, as lenders and investors can see what your vision for the business is as well as how you plan on making money.

Choose a Business Name

When choosing a business name, you always want make sure the following items are true:

  • The name is easy to remember
  • The name is available
  • The name is brandable

It is always a good idea to select a name that is easy for customers to remember so that they can refer you without having to look up the spelling of your name because it is too complicated.

You will then want to check if the business name you want is available and not already in use by another business.

You can check name availability at your local Secretary of State website.

There are lots of business naming resources that you can use like Neamcheap here:

Find a domain starting at $0.88

powered by Namecheap

This helps you identify available domain names before you register which can be helpful in determining general name availability.

You are not required to reserve a name before starting your business, but if you are afraid someone else might use the name, then you may want to consider doing a name reservation, especially if you don’t plan on forming your business right away.

A name reservation costs around $25, depending on your state, and they give you name exclusivity for 30 – 90 days so that you have time to form your business without worrying about the name you’ve already chosen being taken by someone else.

You can also choose to trademark your business name so that someone else doesn’t use it – learn more about that here.

Form your Business

Before officially opening your doors and installing your first solar panel project,  you will need to legally form your business.

Start your LLC & Business Today! Choose on of the Following:

To do this you need to register your business with your local secretary of state by selecting a business structure.

There are several business structures to choose from including sole proprietorship, limited liability company (LLC), Corporation, etc.

You will want to consult an attorney if you are not sure which business structure to choose.

You can also use a formation service to help you setup your business.

Some of them are free + State Fee!

Many business owners choose an LLC (limited liability company) because it provides limited liability protection to you as the owner(s) and it benefits from pass-through taxation.

It provides a flexible business structure and is fairly simple to set up.

Why business owners choose an LLC:

  • Business owners are not liable for the company’s debts and can choose their own management structure.
  • They qualify for pass-through taxation – meaning that profits are only taxed once.

For example, if your LLC declares bankruptcy or is sued, your personal assets such as your vehicle, personal bank accounts, and house are safe.

Each business structure has its own advantages and features but for the majority of small businesses, an LLC is going to be the best choice.

If your business begings to grow and you wish to bring on sharehlders and other investors, you can always change to a C Corporation down the road, but an LLC is your best option when starting out.

LLC’s are simple, flexible and protect your personal assets.

You can learn more about LLCs here.

  1. Select a business entity type: we recommend an LLC.
  2. Obtain an EIN (Employer Identification Number) from the IRS – once your application is completed online, you will receive an EIN instantly.
  3. Register your business locally in the State in which you will be conducting business. This is done with the Secretary of State in the state where you will be doing business.
  4. Obtain any business licenses or permits required in your State to operate a solar panel business. These can also be found at your local Secretary of State website. Most states require some sort of licenses or permits so you will want to do a quick google search on this one.

Certain state permits and licenses may be needed to operate a solar panel business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

residential solar power

Business Insurance

Business insurance is a must in any industry, but even more-so when you have contractors and employees going onsite to customer property to provide a product and service.

Business insurance will protect your companies financial well-being should something go wrong like an on-the-job injury or any legal issues that could arise with your customers.

General liability insurance is a great place to start as it provides coverage for most scenarios that could come up.

Workers Compensation Insurance is another one to get if you plan on hiring employees – many states actually require Workers Compensation Insurance.

If you aren’t sure what additional insurance coverage you need, you can always contact your insurance agent for help.

Create a Website

Creating a website is key to helping with your branding and your marketing efforts.

Many customers will want to see work that you’ve done and learn more about your company, and pointing them to  your website is a great place to do this!

Create a website that is easy to navigate and that is not cluttered.

Post high resolution images of solar panel projects you have done so customers can see your work.

Make your contact information obvious and clear and add a section with testimonials and customer reviews.

A solid website makes your business look more credible, so spend time on developing this key asset.

Advertising and Marketing

Now that you have the foundation of your business setup, you need to start getting the word out!

Solar panels are a highly visible product. Consider installing panels on a home or business in a high-traffic area for free or at a promotional rate.

If you want to gain more commercial clients, consider donating a panel to a local park or school and place your branding on the project.

Have a solid sales script that you and your sales team use so that they look knowledgeable and professional.

Your sales script should include information about government incentives and tax-cuts that are available for those who install solar panels.

The more you know, the more your potential customers will trust you for the job.

Another way to build your network is to attend seminars and conventions such as the Solar Power International convention in Las Vegas where you can network and connect with other industry leaders as well as potential clients.

Other advertising and marketing efforts should include direct mail campaigns, door to door appointment sales, call center, and social media marketing.


The solar panel industry is seeing a year over year growth of 15%, which makes it an industry that is worth getting into.

If you have knowledge in renewable energy sources and have the drive to get out there and make it happen, it can be a really successful business venture.

As you can see, setting your business up for success means building a strong foundation which includes a solid business plan, investing in solar panel equipment so that you can deliver to customers with no wait time, and focusing on advertising and marketing efforts.

Once your first customer comes on board, you will need to be ready to hit the ground running, so preparing in advance is going to set you up for success.