Which Parts of a Business Electric Bill Does Rooftop Solar Actually Lower?
Summary
Solar mainly cuts energy charges, the part billed per kWh. Demand charges, set by the month's highest kW, barely move if that peak happens after sunset. DOE's Federal Energy Management Program (FEMP) splits commercial bills into energy, demand, and fixed charges. For scale, Lawrence Berkeley National Laboratory (LBNL) reports that non-residential solar systems installed in 2025 had a median size of 41 kW and an average of 238 kW.
Three pieces of the bill
| Charge | How FEMP describes it | Effect of solar |
|---|---|---|
| Energy | based on kWh consumed; can vary by time of use and season | falls by the kWh produced on site |
| Demand | based on maximum kW during a period, typically each month | falls only if solar is producing when the peak occurs |
| Fixed | set by the rate schedule, not consumption | unchanged |
Demand charges come in several forms. Time-of-use demand charges count only the maximum during specified hours. Non-coincident charges use the highest demand of the month regardless of time. A ratchet takes the larger of this month's peak and a set percentage of the previous 11 months' peak, which FEMP notes can let one spike set the demand charge for the rest of the year.
Picture a facility whose July peak is 200 kW at 6 p.m. If the array is producing little by then, daytime energy purchases drop while the demand charge stays near 200 kW. Advanced meters record use hourly or every 15 minutes, which FEMP calls interval data; laying that record over the solar production curve shows whether the peak falls inside or outside the sunny hours.
Size and price patterns
LBNL's 2026 data update, covering about 5.3 million systems through 2025, splits non-residential projects at 100 kW. Non-residential installed prices were essentially flat year over year, and median prices differed by $1.7 per watt across the size range shown. Adding storage raised the median price by $2.0/W for small and $1.3/W for large non-residential systems.
On the operating side, FEMP cites actuarial data indicating that comprehensive O&M could lift the average performance ratio (actual over modeled production) from 92% to more than 95%.
Sources
- U.S. DOE FEMP — Evaluating Your Utility Rate Options (updated 2026-05-08)
- U.S. DOE FEMP — Optimizing Solar Photovoltaic Performance for Longevity (updated 2026-05-11)
- Lawrence Berkeley National Laboratory — U.S. Distributed Solar and Storage: 2026 Data Update (2026-08)
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