How Can High-Rise Buildings Benefit from Solar Power?
Solar photovoltaic systems are among the best building upgrades available in Australia, considering the high electricity tariffs charged by local power retailers. However, solar arrays need space and not all building types have suitable conditions for them.
Deploying solar power for high-rise constructions is challenging, since these buildings have a small rooftop area in comparison with their indoor space. Also consider that tall buildings normally have many types of mechanical equipment on their rooftop, since there is no space for them elsewhere.
In spite of the physical limitations present, solar power can be an attractive option for high-rise buildings. Direct use of solar power works even with limited space, and a corporate PPA can be used to source additional solar generation from a remote site.
Direct Use of Solar Power in High-Rise Buildings
When considering solar power for a high-rise building, managers often find that the return on investment is attractive in spite of the space limitations. Tall buildings tend to have very high air conditioning expenses during summer, since they have an ample wall area that is constantly reached by sunlight. Measures that reduce electricity consumption while being cost-effective are attractive for building owners.
Although high-rise buildings have a small rooftop area compared with total indoor area, a solar photovoltaic system can still achieve an excellent financial performance. The electricity generation will be small compared with the total building consumption, but also keep in mind that the installation is affordable due to its small size. In other words, the project works in terms of cost and benefit.
Assume you have a 10-storey building with 1,000 square metres per floor, with a yearly electricity consumption of 1,800,000 kWh. Of the total rooftop space, the area available for solar panels is 400 square metres, which allows the installation of a 60-kW commercial solar system.
- With a favorable location in Australia, a photovoltaic array of this capacity can easily produce more than 90,000 kWh per year.
- Considering that the building uses 1.8 million kWh per year, the solar array only produces enough electricity to meet 5% of total consumption.
Reducing the electricity bill only by 5% with solar power may not seem like a great deal at first, but consider the upfront investment and the savings achieved.
- A 60-kW solar power system is eligible for a rebate in the form of Small-Scale Technology Certificates (STC). The normal price of a 60-kW solar installation is over $100,000, but the STC rebate reduces it to around $70,000.
- Australian businesses often pay over 20 cents/kWh. With 90,000 kWh of yearly generation, the solar power system saves over $18,000 per year.
In this simplified example, the payback period of the solar power system is less than 4 years and the return on investment is above 25%. The energy output of the photovoltaic array is small compared with total building consumption, but the financial performance is favorable.
Corporate Solar Power Purchase Agreements
Another solar power option that is common among large commercial and industrial users is simply signing a Power Purchase Agreement (PPA) to get electricity from a remote site. Since this approach uses the existing power network to deliver electricity, a transmission fee must be paid to the electric company that operates the grid. However, a solar PPA ensures a favorable and predictable electricity price in the long run, making companies less vulnerable to the kWh price volatility that characterises Australia.
Mars, a global provider of various consumer products, have followed this approach for their operations in Australia. They have six factories and two branch offices in the country, and all the electricity consumed is purchased from a 200-MW solar farm in Victoria. The solar PPA has a term of 20 years, which ensures a stable electricity price for Mars regardless of how the energy market behaves during the next two decades.
Many other companies have signed large-scale solar PPAs as part of their strategy against the rising electricity prices in Australia.
- Telstra, a telecommunications and media company, signed a PPA for 70 MW of solar power in May 2017.
- Bluescope, a steel manufacturer, signed an even larger deal for 88 MW in July 2018.
Companies have realised that solar power is the smartest business decision, since it stabilises their electricity expenses. Instead of relying on old power stations that depend on fossil fuels with volatile prices, large commercial and industrial users can switch to an energy source that is clean and guaranteed to be available – sunlight.
Which Solar Power Option Is Better for Companies?
When deciding between owning a solar power system or purchasing electricity through a PPA, there are advantages and disadvantages in each case. However, choosing one option does not eliminate the other, and managers can decide to deploy a smaller installation on-site, while purchasing additional electricity from a remote solar farm.
In the case of high-rise buildings, one of the main limitations for owning a photovoltaic array is the limited rooftop space. However, the payback period and return on investment are attractive. On the other hand, there is no space limit when electricity is purchased from a remote solar farm through a PPA, although there is a transmission fee for use of the power network.
Regardless of the approach followed, it is important to make sure you are using a high-quality photovoltaic system that is covered by solid warranties. Even when you sign a solar PPA and the provider is responsible for system maintenance, it is in your best interest to avoid malfunctions that interrupt the electricity supply: your building will be forced to use expensive electricity from local power retailers while the reparation is being carried out, even if the solar PPA provider bears the full cost.
Australia has excellent conditions for solar power: low technology costs, abundant sunshine, and a massive savings potential due to high electricity tariffs. The business case for solar power is favorable for both system owners and PPA clients, as long as you ensure you are getting high quality and reliable warranties.