Policies and Regulations for Solar Businesses November 13, 2023

Policies and Regulations for Solar Businesses

The solar industry is booming across the United States as more homeowners and businesses look for renewable energy options. However, operating a solar business comes with certain policies and regulations to be aware of. In this article, we’ll explore some of the key rules solar businesses need to know at both the federal and state levels.


Federal Regulations

At the national level, the Federal Energy Regulatory Commission (FERC) regulates the interstate transmission and wholesale sales of electricity. Some other federal agencies involved in solar policy include:


  • Environmental Protection Agency (EPA) – Sets standards for emissions and advocates for clean energy initiatives.
  • Internal Revenue Service (IRS) – Administers federal solar tax credits available to homeowners and businesses.
  • Department of Energy (DOE) – Conducts research on solar technologies and energy efficiency standards.


State Regulations

Individual states have more hands-on oversight of the solar industry through public utility commissions that regulate utilities and power providers. Key state-level regulations solar businesses must follow include:


  • Licensing – All solar contractors need to be properly licensed by the state’s licensing board for contractors. Requirements vary by state.
  • Permitting – Permits are required for grid-tied solar installations and may be managed by local cities/counties rather than statewide.
  • Inspections – Whether conducted by the utility or a local inspector, inspections ensure systems meet safety standards before interconnecting to the grid.
  • Net Metering – Rules differ by state but allow residential solar customers to receive credit for excess power produced and fed back to the grid.

By keeping licenses and permits up to date, solar companies can avoid penalties for noncompliance that may impede their operations. It’s also wise to familiarize yourself with the standards set by your local utilities.


Insurance Requirements

Having the proper insurance is essential protection for any solar business and its customers. Consult state regulations for minimum requirements, but policies you’ll generally need include:


  • Commercial General Liability – Provides coverage in case of property damage or injuries on a job site.
  • Workers’ Compensation – Covers employee medical expenses and lost wages due to on-the-job injuries per state laws.
  • Commercial Auto Policy – Recommended if using company vehicles for transports, tools, or site visits.
  • Commercial Umbrella Policy – Provides additional liability coverage above primary policies’ limits.


Maintaining continuous coverage ensures your business and customers remain protected from financial risks year-round as your operations evolve. Verify any changes with your insurance agent.


Contracting Regulations

When advertising, quoting, installing and maintaining solar energy systems, make sure to follow critical contracting guidelines:


  • Licensing Status – Only properly licensed individuals can conduct regulated solar contracting activities.
  • Written Contracts – All agreement details with customers must be clearly spelled out in a written contract before work begins.
  • Payment Schedule – Collection of payments for contracted work should follow a schedule outlined in the initial contract.
  • Permit Acquisition – Permits are necessary for any electrical or construction work and must be obtained by the licensed contractor.
  • Warranty Coverage – Equipment and workmanship warranties should meet or exceed state requirements for newly installed systems.


Maintaining high standards of ethics and transparency in all jobs helps build meaningful relationships with clients in the evolving regulatory environment.

Other Considerations

A few additional business operations policies solar entrepreneurs need to account for include:


  • Employment Regulations – At a minimum, federal guidelines govern minimum wage, overtime pay, workplace safety, and more.
  • Tax Compliance – Stay up-to-date with income, property, and other business taxes at the local, state and federal levels as required.
  • Property Ownership – Permits or easements may be necessary when working on locations not owned by the system customer like multi-tenant properties.
  • Technology Standards – Products utilized and system designs should comply with approved certification listings from authorities like UL and meet established industry codes.


Following federal, state and local regulations helps solar firms avoid legal issues down the road as standards periodically change. Keeping documentation of all licenses, permits, insurance and other required records is also wise for accountability.


By taking the time up front to understand all applicable policies, solar businesses can feel confident they are operating compliantly and building trust every step of the way with their teams and clientele. Regulations exist to promote safe, sustainable industry practices – so embrace them as guides for growth.

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