How Solar Power Achieves Synergy with Energy Efficiency and Consumption Management

12th Jul 18

Written by James Doyle

Commercial solar systems provide an excellent way to reduce power bills in buildings, and their basic principle is very simple – owning a photovoltaic system is cheaper than purchasing electricity equivalent to its production from electricity retailers. If you calculate the purchase price of 100,000 kWh per year, and then compare it with the annual ownership cost of a solar system that produces 100,000 kWh per year, you will notice that solar power is the cheaper option by 50% or more.

However, even after deploying a solar system, you will still spend more than necessary on electricity if you are consuming it inefficiently. The benefit of producing your own electricity is partially offset if your installations are wasteful – power losses due to inefficiency become a smaller expense if your electricity source is cheaper, but they are still an unnecessary expense!

As an example, assume two identical buildings will be equipped with commercial solar systems of the same capacity, and both properties get roughly the same sunshine. However, one property has modern air conditioning systems and LED lighting, while the other uses inefficient window-type air conditioners and older fluorescent lighting.

  • Electricity costs will be much lower for the property with energy-efficient installations, which is getting cheaper power and also using each kilowatt-hour more efficiently.
  • The property with inefficient electrical installations also gets cheaper electricity, but a significant portion is wasted.

Generating your own electricity is one of many viable approaches to reduce your power bills, and it can be combined with other strategies to achieve even greater benefits. In addition to deploying energy efficiency measures, and you can take advantage of how your power bill is structured to pay less for each kilowatt-hour. This article will describe how both approaches can be combined with solar power to make your power bills as low as possible.

Combining Energy Efficiency Measures with a Solar PPA

If you have already decided to deploy a solar power system for your building, you should also get your installation checked to identify inefficient equipment. The following are some examples of cost-effective equipment upgrades that can complement a commercial solar array:

  • Replacing incandescent, fluorescent and HID lighting with modern LED products.
  • Upgrading air conditioning systems: Smaller properties can replace window air conditioners with ductless split systems, while larger buildings can deploy smart chillers.
  • Motor-driven equipment can become much more efficient if you upgrade the motors to higher-efficiency models, complemented with speed controls.

Energy efficiency requires a customised approach for each property, just like commercial solar systems. The examples above are cost-effective in a wide range of projects, but the best combination of energy efficiency measures can only be determined with an energy audit.

Remember you can get a commercial solar system at zero upfront cost through a Power Purchase Agreement (PPA). This frees up capital to deploy energy saving measures, and then you can use the output of your solar installation more efficiently.

Managing How Electricity is Used

Depending on how your power bill calculated, it may be possible to reduce the amount paid simply by changing the hours when you use certain electrical equipment.

  • Some electricity tariffs apply time-of-day rates, which change depending on the hour. In this case, you can reduce power bills simply by using less electrical loads when the highest rates apply.
  • Business tariffs normally apply a capacity charge, which is calculated based on the highest consumption peak measured over a specified period of time, typically 12 months. These charges can be lowered by avoiding the use of many high-power devices simultaneously.

Managing your consumption becomes much simpler if you add batteries to a commercial solar system. The batteries can be programmed to be used as the main electricity source when kilowatt-hour prices are high, or when your building’s power consumption is at its peak.

Basically, demand management allows you to “turn the tables” when dealing with electricity providers. You can take advantage of billing practices that would normally work against you:

  • Do they charge more for electricity during certain times of the day? You can move your power consumption to hours when they charge less.
  • Do they apply capacity charges based on your consumption peaks? You can trim off those peaks with batteries and by rescheduling how your equipment is used.
  • Do they offer a low feed-in tariff for surplus electricity from your solar array? Store the energy in batteries and use it later, ideally to avoid high kWh prices or capacity charges.

We are aware that the methods described above may feel like cheating your electricity provider, but they are perfectly legal. You are not tampering with the power meter in any way, but simply taking advantage of how electricity tariffs are structured in Australia – this is not very different from looking for discounts when shopping.

Concluding Remarks

A building equipped with a commercial solar system achieves a significant reduction of electricity bills, but the benefits are enhanced if you add energy efficiency and demand management measures into the mix:

  • A solar photovoltaic system provides you with cheaper electricity. This applies for both photovoltaic array owners and clients who get solar power through a PPA.
  • Energy efficiency measures allow you maximise the value of each kilowatt-hour. For example, if you switch from incandescent to LED bulbs, you can power six times as much lamps with the same amount of kilowatt-hours.
  • Demand management measures let you reduce how much you pay for electricity from the power network. Note that the most effective strategies change depending on how your bill is calculated.

A building with all the measures described above is almost invulnerable to the electricity price increases frequently applied in Australia. The power grid is relegated to a backup electricity source, while a commercial solar system provides kilowatt-hours at a fraction of the retail rate.

If you conduct financial analysis for a solar power system, you will find that the business case is very favorable in most cases. However, an even higher return on investment can be achieved with a project that combines all the possible strategies together: solar generation, energy efficiency and smart management of your consumption.

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    power purchase agreements 7 things you must know when dealing with PPA

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    power purchase agreements 7 things you must know when dealing with PPA