What Does an Ideal Scenario for Commercial Solar Power Look Like?
27th Feb 18
Cameron Quin

For most businesses, commercial solar is the most promising method to generate their own electricity. Photovoltaic technology can adapt to almost any rooftop with enough structural strength, and productivity is guaranteed in sunny countries like Australia. However, some businesses have exceptionally good conditions for the technology.

This article will provide an overview of some factors that enhance the benefits of commercial solar when present in a building. In other words, these are the factors that make solar power great and not simply good.

Companies With a High Daytime Energy Consumption

Solar power is clean and affordable, but there is still a key technological hurdle to overcome: production is variable because the sun can’t be controlled. Engineers can estimate it with a high degree of precision, but there will always be some variation due to weather. When photovoltaic panels generate electricity, there are three things you can do with it:

  • Consuming it immediatel
  • Storing it in lithium batteries, or using any other energy storage method
  • Exporting it to the power network, getting a feed-in tariff from your energy retailer

Consuming it yields the highest financial benefit, since you save the full retail price of each kilowatt-hour generated. Energy storage requires additional investment, and the feed-in tariff for exported energy is not that great in Australia: between 2 and 4 times smaller than the retail price in most cases! If a company has a a high daytime energy consumption, the full output of a commercial solar array can be consumed immediately to maximise the financial benefit.

The best candidates for commercial solar power tend to be companies with a high daytime consumption, including industrial manufacturing plants, air-conditioned malls, distribution centers and educational facilities.

Energy Consumption Slightly Above the Minimum for Capacity Charges

Australian companies above 160,000 kWh of yearly consumption not only pay for the energy used, but also for the highest demand measured in a rolling 12-month period. If your company consumes slightly above 160,000 kWh per year and has ample area for a photovoltaic array, you can achieve even greater savings with commercial solar power by erasing the capacity charge.

Assume a company consuming 200,000 kWh per year has enough area to mount a commercial solar array that generates 75,000 kWh annually. In this case, consumption would fall below the 160,000-kWh threshold, eliminating the capacity charge from the power bill. It may be necessary to wait for a 12-month period before the charge is phased out, but consider that most solar panels are rated for around 25 years!

Keep in mind that commercial solar power can eliminate the capacity charge even if you purchase it’s electricity through a Power Purchase Agreement (PPA). In this case there is no upfront expense, you see net savings from the first month of operation, and achieve even greater savings once the capacity charge is phased out.

Conclusion

Commercial solar power can be a great business decision when your daytime consumption is enough to use the full output of a photovoltaic system, and if solar power can bring yearly consumption below the threshold for capacity charges. This is the scenario where a business can get maximum savings from solar power.

  • Download our free guide to
    power purchase agreements 7 things you must know when dealing with PPA

new paper

Cameron Quin

27th Feb 18
Cameron Quin

Cameron Quin has been heavily involved in business development from an early age. After founding and selling two online companies, Cameron found a strong passion for renewables and the opportunities it brings for the commercial and industrial sector. Sharing the possibilities of solar and the knowledge from the Solar Bay team is his favourite pastime.