If you’re a business owner or government facility manager in New York State watching your utility bills, you’ve probably noticed they’re not getting any smaller. Commercial electricity rates have been climbing steadily, and for many organizations across Buffalo, Rochester, Syracuse, and throughout New York, that’s becoming a serious problem.
But here’s the interesting part: at the same time energy costs are going up, commercial solar adoption is absolutely booming. In 2025 alone, the commercial solar segment is on track for record-breaking installations, with over 2.3 gigawatts of new capacity coming online nationwide. That’s not a coincidence.
The relationship between rising energy rates and commercial solar growth isn’t just a correlation. It’s cause and effect. And if you’re a business owner, government entity, or nonprofit organization in New York trying to control costs and plan for the future, understanding why commercial solar continues to be a viable hedge against these increases could save you hundreds of thousands of dollars.
Solar’s Unprecedented Growth Across the Nation
Let’s start with some context. Solar energy has been the dominant source of new electricity generation in the United States for 26 consecutive months as of the date of this writing. That’s more than two full years of solar leading the pack, month after month. According to recent data from the Federal Energy Regulatory Commission, solar accounted for 72 percent of all new electrical generating capacity added in the first ten months of 2025.
Even more remarkably, utility-scale solar capacity has now surpassed wind power for the first time in history. Total utility-scale solar capacity expanded from about 92 gigawatts in September 2023 to over 160 gigawatts by October 2025. Meanwhile, natural gas (still the largest overall source of electricity) added just 6.55 gigawatts during that same period.
This isn’t just happening at the utility scale. Commercial solar installations for businesses and government facilities in New York State are experiencing similar momentum. Despite facing some policy headwinds, the commercial solar segment is projected to install a record amount of capacity in 2026, driven largely by one simple economic reality: solar makes more financial sense than ever before, especially with New York’s robust incentive programs.
The Relentless Rise of Commercial Energy Costs
While solar has been growing, commercial electricity rates have been moving in the opposite direction. Upward. Since February 2020, electricity prices have increased by an average of 40% nationwide. In some regions, the increases have been even more dramatic. Washington, D.C., for instance, saw electricity costs jump 93 percent from July 2020 to July 2025.
What’s particularly striking is how these increases are affecting different customer types. From 2022 to 2024, residential electricity rates climbed 10 percent, while commercial rates rose 3 percent. But for businesses and government entities in Buffalo, Rochester, Syracuse, and across New York State, the real story is what’s driving these costs higher and who’s benefiting from the current system.
A significant portion of the recent rate pressure comes from the explosive growth of data centers. These massive facilities, which power everything from cloud computing to artificial intelligence, are placing unprecedented demands on the electrical grid. In the PJM Interconnection (the nation’s largest grid operator), data centers accounted for $23.1 billion in power costs for a three-year period from June 2025 through May 2028. That represents 49 percent of the total cost across three consecutive auctions.
But here’s the uncomfortable truth: while data centers consume enormous amounts of electricity, they often pay lower rates than regular businesses. They negotiate special contracts and connect directly to transmission lines, securing favorable pricing unavailable to most commercial customers or government facilities in New York. Meanwhile, the infrastructure upgrades needed to support these massive energy users are being funded through rate increases that affect everyone else.
What’s driving these increases beyond data center demand? Several structural factors are converging to push utility rates higher. Wildfire recovery costs, transmission infrastructure buildout, grid modernization projects, and increased electricity demand from electrification are all finding their way into commercial electricity bills. These aren’t temporary blips. They’re long-term cost pressures that utilities are passing on to their customers.
For businesses and government entities with substantial energy needs, this creates a compounding financial burden. A facility with five-figure monthly electricity bills could face tens of thousands of dollars in additional annual costs from rate escalation alone.
Why Commercial Solar Is an Increasingly Powerful Hedge
Here’s where commercial solar becomes such a compelling hedge against rising energy costs. Recent analysis shows that increasing average annual retail rate growth from 2 percent to 6 percent can reduce the payback period for a commercial solar system from 6.3 years to just 4.2 years. That’s a 33 percent improvement driven entirely by rising electricity prices.
Think about that for a moment. Even without any additional incentives or technological improvements, the simple fact that grid electricity is getting more expensive makes commercial solar installations increasingly attractive. Every rate increase from your utility effectively accelerates your return on investment in solar energy systems. This is the definition of an effective hedge: a protection that grows more valuable as the risk it’s protecting against intensifies.
States with the highest commercial electricity rates (Hawaii, California, New York, Massachusetts, and Connecticut) naturally see the strongest solar economics. Not coincidentally, these states also rank among the top markets for commercial solar installations. The math simply works better when you’re offsetting expensive grid power with clean, renewable energy that you control.
Federal and State Solar Incentives Strengthen the Hedge
Beyond the compelling economics of rising utility rates, businesses and government entities in New York State have access to some of the nation’s most substantial solar incentives that make the hedge even more powerful. The federal Investment Tax Credit (ITC) provides a 30 percent tax credit on the total system cost for commercial solar installations. This tax credit is set to expire at the end of 2027. To retain that credit, it’s important to get your project started soon. For a typical commercial solar project in Buffalo, Rochester, or Syracuse, this can translate to tens or even hundreds of thousands of dollars in savings.
New York offers additional incentives on top of the federal program through the NY-Sun initiative administered by NYSERDA (New York State Energy Research and Development Authority). The Commercial and Industrial incentive provides approximately $0.12 per watt for systems up to 7.5 MW in the Upstate region, which includes Buffalo, Rochester, and Syracuse. This upfront rebate is applied directly to your project cost, reducing the initial investment required for commercial solar panel installation.
Additionally, qualifying solar energy equipment is eligible for accelerated depreciation through the Modified Accelerated Cost Recovery System (MACRS), allowing businesses to recover a significant portion of system costs over a five-year period. New York also exempts commercial solar systems from state sales tax, providing additional savings on your solar installation in Buffalo, Rochester, Syracuse, and throughout the state.
These incentives are structured on a megawatt block system, which means they decrease over time as more solar is installed in each region, making now an opportune moment to invest in this hedge against rising energy costs.
Taking Control: Breaking Free from the Utility Rate Cycle
The current situation with data centers and rising rates highlights a fundamental shift happening in the energy landscape. Large industrial users are finding ways to secure favorable rates and negotiate special deals. Meanwhile, regular commercial customers and government facilities in New York are seeing their bills climb to subsidize grid infrastructure that primarily benefits these massive energy consumers.
Commercial solar offers a way out of this dynamic. When you generate your own power through a rooftop or ground-mounted solar system, you’re no longer at the mercy of utility rate cases, infrastructure cost recovery, and allocation decisions that consistently trend in one direction: up. You’re insulated from rate volatility and protected from having to subsidize the grid upgrades that benefit other users.
This is what makes commercial solar such an effective hedge. Unlike financial hedges that simply transfer risk, solar eliminates much of the exposure entirely by reducing your dependence on the commodity (grid electricity) whose price you’re worried about.
Beyond Cost Savings: Additional Benefits of the Solar Hedge
While protecting against rising energy costs is the primary benefit, commercial solar installations offer additional value that strengthens the overall hedge. Energy independence is a significant advantage. When you generate your own power, you’re no longer dependent on a grid that’s being strained by competing demands and rising infrastructure costs.
Grid resilience is another factor. Paired with battery storage systems, commercial solar installations can provide backup power during outages and help businesses and government facilities avoid costly downtime. As electricity demand surges nationwide (driven by data centers, manufacturing growth, and electrification), grid constraints and reliability concerns are likely to increase. Having your own generation capacity becomes a competitive advantage.
There’s also the sustainability angle. Major corporations like Amazon, Google, and Walmart have made renewable energy central to their operations, and this mindset is filtering down to businesses of all sizes. Government entities in New York are increasingly required to meet renewable energy targets. Customers, investors, and stakeholders increasingly expect organizations to demonstrate environmental responsibility. Commercial solar panel installation is one of the most visible and measurable ways to do that.
The Technology Strengthens the Value Proposition
It’s worth noting that while rising energy rates are a major driver of commercial solar adoption, the technology itself continues to improve. Solar panel costs have fallen approximately 70 percent since 2010. Energy storage systems have become dramatically more affordable and capable. Installation processes for commercial solar systems have become more streamlined.
The combination of falling solar costs and rising electricity rates creates a powerful economic dynamic for businesses and government facilities. Your solar energy system becomes more valuable year after year as the grid power it replaces gets more expensive. This isn’t just a one-time savings. It’s a hedge that appreciates over time, protecting your organization from future rate increases while the underlying asset (your solar system) becomes more cost-effective to deploy.
The Time to Hedge Is Now
If you’re a business owner or government facility manager in Buffalo, Rochester, Syracuse, or anywhere in New York State looking at steadily increasing utility bills, commercial solar deserves serious consideration as a hedge against this ongoing trend. The economics have never been more compelling, and they’re likely to keep improving as energy prices continue to climb.
The businesses and government entities installing commercial solar systems now are locking in long-term protection against future rate increases. They’re also gaining energy independence, improving their sustainability profiles, and potentially enhancing their property values. Meanwhile, organizations that wait are paying more for grid power every single month, and in some cases, subsidizing the electricity infrastructure for data centers and other large industrial users.
The relationship between commercial solar growth and rising energy rates isn’t mysterious. When the cost of the problem keeps going up, the value of the solution keeps increasing. That’s exactly what we’re seeing play out across the commercial solar market in New York State right now.
25+ Years of Commercial Solar Experience in New York State
At National Solar Technologies, we’ve been serving commercial businesses and government entities across New York State for more than 25 years. Based in the Buffalo area, we specialize in commercial solar installations throughout the state, with a focus on serving Buffalo, Rochester, and Syracuse.
Our experience spans hundreds of successful solar installations for businesses, nonprofits, municipalities, and government facilities across New York. We understand the unique requirements of New York’s climate, the specific NYSERDA incentive programs available in the Upstate region, and the regulatory environment that businesses and government entities navigate when investing in solar energy systems.
We help organizations throughout New York State navigate the complete process, from initial site assessment and energy analysis to system design, financing options, NY-Sun incentive applications, and professional installation. Our team understands the economic realities facing businesses and government facilities in Buffalo, Rochester, Syracuse, and across the state, and we design solar solutions that deliver measurable returns while serving as an effective hedge against continuing rate increases.
Whether you’re a small business in Buffalo, a large commercial facility in Rochester or Syracuse, or a government entity anywhere in New York State looking to hedge against rising energy costs while meeting sustainability goals, we provide customized solar energy solutions designed for your specific needs and financial objectives. If you’re ready to explore how commercial solar can protect your organization from continuing energy rate increases, we’d love to talk.
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Contact National Solar Technologies today to schedule your free commercial solar assessment and discover how solar can serve as an effective hedge against rising energy rates in New York State.
