The monthly electricity production of a solar power system rises in proportion to installed capacity, leading to increased savings in your electricity bills. However, there is an upper limit for system capacity: once you start having surplus generation, the financial performance of a solar array starts to decrease, since exported electricity only earns you a reduced feed-in tariff. On the other hand, you get full savings from all the solar generation consumed on-site.
Note you can have surplus solar generation even if total kWh production is below your total consumption. This is because photovoltaic systems supply most of their output around noon, while building consumption is more evenly spread throughout the day. Keep in mind that households have their highest power demand after sunset, and there are businesses that operate at night or with a 24/7 schedule.
Australia has two different incentive programs for solar power. In both cases, you get one certificate for every MWh (1,000 kWh) of electricity produced by your system.
These certificates are purchased by organisations subject to mandatory renewable energy targets, such as energy retailers. By law, they must obtain a minimum portion of their electricity from renewable sources, and purchasing STCs and LGCs from third parties counts towards their quota.
Considering the high electricity tariffs in Australia, solar power systems are already an excellent investment based on power bill savings alone. However, the additional income from selling STCs and LGCs makes the business case even better. Both types of certificates are priced based on market supply and demand, but there is an important difference between them:
The main benefit of claiming all your STCs upfront is subtracting all the corresponding capital from the upfront investment in solar power. Although the exact STC count changes based on project location, you can expect an incentive ranging from $600 to $700 per kilowatt of capacity. This represents a sizable benefit, considering that solar power systems in Australia typically cost less than $1,700/kW.
The Australian Clean Energy Regulator (CER) website has a section where you can input your solar PV system capacity and location (based on ZIP code), to get an estimate of how many STCs will be credited in your favor. Note there are technical requirements for your system to be eligible, so make sure they are not missed!
A 100-kW solar power system is too large for households, unless the project is for a huge mansion, but many mid-sized business can benefit from a system of that capacity. To get an idea of how such a system looks like and how it performs financially, consider the following typical values:
Companies with an electricity demand high enough to justify a 100-kW solar power installation consume above 160,000 kWh per year, which means they are subject to hefty capacity charges. In addition to paying for electricity consumed (kWh), they pay for their largest measured demand (kVA) over a 12-month rolling period. If a company manages to bring its net annual consumption below 160,000 kWh with a 100-kW solar power system, the capacity charge disappears after the first 12 months.
If you are considering a 100-kW solar power system for a company, you can get an excellent financial return. Just make sure you get an assessment of your electricity load first, to verify if it is large enough to justify 100 kW of solar generation capacity; perhaps you can get a better return on investment with a smaller installation.
Like with any solar power system, it is important to verify that your building has the right conditions for solar power. The roof must have a good structural condition, and ideally it should have a large area that is free from shadows.
Depending on the types of loads present in your building, energy storage may also be viable. For example, if you have a short-duration demand peak that is driving up your capacity charges, it can be trimmed with a battery array of the right capacity.
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.