As we have discussed in some of our previous articles, the benefits of commercial solar power go beyond reducing electricity bills. Solar power also helps companies become environmental stewards, lowering their greenhouse gas emissions. In addition, being perceived as a corporate citizen is highly beneficial for an organisation: media outlets are more likely to show them in a positive light, and clients who share their values are more likely to conduct business with them.
At the end of the day, commercial solar power is not only about saving the planet. For many companies, it is simply the business decisions that makes the most sense! A few decades ago when photovoltaic systems where clumsy and expensive, clean operation was the only argument in their favor, but now they deliver both financial and marketing benefits.
We know two basic things about the Australian power network: it still gets most of its electricity from coal and natural gas, and kilowatt-hour prices have become extremely high after major grid upgrades. For the residential energy consumer, the main reason to deploy solar power is avoiding hefty power bills, and some homeowners may simply be willing to reduce their emissions, saving cash in the process. Homeowners have a significant impact on the solar industry as a group, but not individually.
Large commercial and industrial energy consumers face a different outlook. Unlike individual homeowners they get media attention, and increasingly depending on the size of the organisation. People know that companies with commercial solar arrays are reducing their carbon footprint, but they can also conclude that companies without solar power systems get most of their electricity from the coal-dominated power grid.
There is another important aspect to consider: large companies are likely to cause power grid congestion, and grid upgrades are precisely the main reason why Australian electricity tariffs are so high. If grid upgrades are required to deliver the power required by large commercial and industrial consumers, everyone bears part of the cost.
Australian companies are in a unique position to take the lead in the solar power industry. They can continue with “business as usual” using electricity generated with fossil fuels and congesting the power grid with their high demand. On the other hand, they can transition to commercial solar power and other clean energy technologies, reducing their carbon footprint and helping slow down the increase in electricity tariffs.
Blockchain technology has received plenty of attention with the rise of cryptocurrencies, but its potential in other applications is often overlooked. Energy retailers currently perform a middleman role, purchasing carbon-intensive electricity from coal and natural gas power plants, reselling it to homes and businesses. Although companies are using “dirty power”, technically they are not purchasing electricity from coal- and gas-fired power plants.
One of the proposed concepts for the network of the future is deploying free trade between generators and consumers, where homes and businesses with generation systems can perform both roles. Blockchain technology is a viable tool to implement this concept, and it comes with an added feature: tracking every single transaction. As a result, it will be possible to tell how the energy consumption of a company is split between carbon-intensive generation and clean generation.
When governments introduce clean energy targets they are often viewed as a burden, but in many cases it is actually the best business decision. Commercial solar power and other clean generation systems are consistently beating the electricity cost of fossil fuels in new projects. There is common misconception that coal power is cheaper, but this only applies for old power plants that will soon reach the end of their service life – new coal generation cannot compete with renewable energy in terms of kilowatt-hour cost.
Large commercial and industrial energy consumers can deploy photovoltaic arrays for zero upfront cost, thanks to the concept of solar as a service. Instead of purchasing a solar PV system, they sign a contract with a technology provider. While the provider is responsible for project financing, operation and maintenance, the client agrees to purchase the energy output during a specified period of time.
For an Australian company paying around 25 cents per kilowatt-hour, a reasonable solar PPA price is around 16 cents/kWh, equivalent to a 36% reduction in electricity costs at zero upfront cost. Even lower PPA prices are possible as project size increases, thanks to economies of scale.
If you have been following solar industry news, perhaps you are aware that many large organisations are investing in megawatt-scale renewable generation systems. This not only reduces their carbon footprint, but also promises lower operating costs that the traditional power network. The following are some examples:
Renewable generation systems are among the best building upgrades available for commercial and industrial energy consumers, since they reduce operating costs while boosting corporate image. In addition, the carbon footprint is reduced significantly: while solar and wind power have no emissions during operation, gas-fired generation produces over 0.4 kg of CO2 per kWh, while coal exceeds 1 kg of CO2 per kWh in many cases.
Australian companies are faced with various trends: increasing electricity prices, a reduction in the cost of renewable generation technologies, combined with a tendency towards increased transparency in the energy market. Commercial solar power and other clean energy technologies are the obvious choice.