When most people talk about solar, the conversation usually splits into two directions: residential or utility-scale. Residential grabs the headlines because it’s relatable — everyone knows someone with panels on their roof. Utility-scale gets attention because it’s massive, but here’s the reality: most of what people call “utility” is actually Commercial & Industrial (C&I). True utility-scale projects are the hundreds-of-megawatt sites feeding power directly into the grid. C&I, by contrast, serves the needs of specific businesses or institutions.
That leaves small commercial solar — the overlooked middle. Offices, schools, churches, warehouses, and the 50 kW to 600 kW systems that power them.
Most EPCs will take on small commercial solar projects if they come their way, but given the choice, they’d rather chase high-volume residential or the headline-grabbing C&I and utility-scale bids. Small commercial becomes the awkward in-between, treated like “residential with more panels” instead of being recognized as its own viable market.
And here’s the truth: small commercial isn’t filler work. It’s a growth engine hiding in plain sight.
With the changes coming to the federal solar tax credit, commercial solar will be one of the few places where tax credits are still available.
Table of Contents
Size Definitions
The solar industry often uses broad terms that aren’t always well defined. For clarity, here’s how the segments typically break down by system size and project type:
- Residential (up to ~20 kW)
Residential solar systems are usually under 20 kW, sized for single homes or small multifamily units. They’re behind-the-meter and designed to cover household energy use. There’s a small grey area between residential and small commercial for very large homes, complexes, businesses, and farms. - Small Commercial (50 kW – 600 kW)
Small commercial solar systems range from ~50 kW to 600 kW, serving schools, offices, warehouses, and churches. They’re more complex than residential but often too small for utility-scale financing. - Commercial & Industrial (C&I) (600 kW – ~1 MW)
Large commercial projects, ranging from ~600 kW to 1 MW, are typically found on corporate campuses, factories, and big-box retailers. They combine onsite consumption with more advanced financing and engineering. - Utility-Scale (1 MW and above)
Utility-scale starts at 1 MW by EIA standards, though most projects are much larger (4-10 MW). Utility-scale projects are defined by their role as these systems sell power directly into the grid through PPAs or wholesale markets.
Why Small Commercial Is Likely Underserved
Looking at the size breakdown makes it clear where small commercial solar fits: it’s bigger than residential rooftops but smaller than large-scale C&I. It’s that “in-between” status, making it easy to overlook.
Residential has well-established sales models, financing options, and streamlined installations. C&I and utility-scale attract major developers and major capital. Small commercial solar, on the other hand, sits in a gray area. It’s usually too big to run through a residential installation playbook, but not large enough to command the resources and attention given to a large commercial project.
This positioning creates a challenge to keep many EPCs from prioritizing the space.
- Financing gaps. Small commercial solar doesn’t have the turnkey loan products of residential, and the deal size is often too small to attract the structured financing available for large C&I or utility-scale projects.
- Awkward fit for project teams. The jobs are often too complex for a residential crew but not always large enough to justify sending in a full commercial team — creating inefficiency and margin pressure.
- Complexity underestimated. Older buildings, quirky electrical systems, and demand charges make these projects far from simple. Underestimating that complexity almost always leads to change orders, delays, and callbacks.
- Sales message mismatch. Small business owners think like CFOs, COOs, and facility managers rolled into one. Too often, they’re approached with residential-style messaging that misses their real priorities: cash flow, tax exposure, and operational stability.
- Service blind spots. Unlike utility-scale projects, where O&M is assumed from day one, small commercial projects often launch without clear service or warranty coverage. When something breaks years down the line, that gap becomes expensive for both the customer and the EPC.
How to Approach the Niche Differently
Small commercial is underserved because the playbooks that work in residential or C&I don’t translate cleanly. The companies that do well in this space aren’t necessarily reinventing the wheel, but they are adapting their approach to fit the middle.
Financing Comes First
One of the biggest barriers for small commercial solar projects is the lack of fit-for-purpose financing. Deal sizes in the 50–600 kW range are often too small to draw the attention of institutional investors but too large for most conventional small-business lending products.
This leaves property owners caught in the middle, who are interested in solar but unable to make the numbers work. EPCs that build relationships with lenders who understand SMB credit profiles, or that bring tools like C-PACE, leases, and tailored PPAs to the table, are the ones unlocking projects that would otherwise never move forward.
Right-Sizing the Project Team
Small commercial solar projects bring a unique set of challenges that make them difficult to force into either a residential or large commercial model. Roof structures can be older or irregular, electrical systems are often outdated, and demand charges vary by utility and region. Add in local permitting quirks, fire code requirements, and the need to coordinate with multiple stakeholders like school boards, business owners, and facility managers, and you have a complex project.
Yet, at the same time, the project size and complexity don’t always justify deploying a full-scale commercial crew with all the overhead that comes with it. That’s why many EPCs find themselves stuck: the work is too complex for a residential team but not quite big enough for a traditional commercial process. The companies that succeed in the small commercial space are the ones that carve out dedicated workflows for 50–600 kW installs, or even build specialized small-commercial teams that can deliver consistency, avoid negative margin impacts, and keep projects moving without unnecessary rework.
Messaging Must Align With The Customer
Small business owners sit in a unique position. They don’t have the goals of a residential homeowner, and they don’t operate like corporate CFOs who are backed by finance teams and long-term capital strategies. Instead, they’re often wearing every hat at once: owner, operator, facilities manager, and bookkeeper. Their decisions are grounded in the day-to-day realities of running a business and keeping operations stable.
This is where most EPCs stumble. Pitching “go green” or “save on your power bill” may work in residential areas, but it misses the mark with small commercial solar. These owners want to know how solar will affect their operating budget, how quickly it pays back, and whether it insulates them from unpredictable rate hikes. They care about predictability, not just savings.
Messaging that resonates frames solar as risk management and a business investment. Show them how it locks in energy costs for the next 15–25 years, how incentives can reduce tax liability, and how warranties and service agreements keep their systems reliable without unexpected expenses. When positioned this way, solar stops looking like a “nice-to-have” sustainability move and becomes a strategic decision to protect their bottom line.
Baked in Service
Service is where small commercial often falls through the cracks. In utility-scale, O&M is included from day one without question. Residential rarely offers long-term service at all. Small commercial projects fall into the middle category, meaning they are frequently sold without clear O&M plans or warranty protections.
That gap does not show up right away. Five years later, when an inverter fails or a roof leak raises questions about workmanship, the absence of service agreements becomes expensive. The EPC ends up fielding calls, absorbing costs, or worse, losing credibility with a business owner who assumed coverage was included.
Positioning warranties and O&M as part of the value proposition instead of an afterthought changes the outcome. It protects the customer, safeguards the EPC, and creates recurring revenue that smooths out the peaks and valleys of project-based work. Just as important, it signals professionalism and long-term commitment, qualities that small business owners look for when choosing a solar provider.
Massive Opportunities in Commercial Solar
Small commercial may be the industry’s overlooked middle, but it will not stay that way forever. The companies that treat it as its own lane, with financing solutions, right-sized teams, tailored messaging, and service built in, will be the ones that succeed.
It is not filler work. It is not residential with more panels. And it is not too small to matter. It is a distinct and viable market that rewards the EPCs who take it seriously.
For those willing to adapt, small commercial is more than an afterthought. It is a growth engine hiding in plain sight.
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