Solar Energy Industries Association (SEIA) national chairman Brian England explains the business of solar, including load profiles, ROI and the finer points of billing.
For many years now the impetus in the solar industry has been driven by government support, either as Commonwealth rebates on solar installations or state government-initiated high feed-in-tariffs, which are the amount you are paid for the power you export to the grid.
Both of these mechanisms have artificially promoted residential rooftop solar as an easy sell with no overriding requirement to accurately assess the energy use profile in the premises.
Over the last few years, there have been reductions in federal assistance as the cost of solar has come down, and at the same time there have been ongoing efforts by state governments across the nation to limit the uptake of solar, as it is affecting their revenue stream from coal-fired power generation.
Power demand across the nation has been falling for four years, partly due to the penetration of solar PV into the national grid and the increasing awareness of energy efficiency in power use and equipment type.
As a result of these changes, especially the low feed-in-tariffs (typically 6 to 8¢/kWh), the output from a solar system needs to be used as it is produced, otherwise it is sent to the grid for very little payment.
The only premises where solar is effective under this restrictive regime is where there is high daytime use of power at least five to seven days a week. This is a great fit for commercial energy use.
This has meant the solar industry has had to look to sectors where solar is cost effective and for businesses where the investment can be amortised over a period of time in line with standard capital investment decisions.
In addition, there is an excellent match between high refrigeration and air conditioning loads as these will tend to peak while the sun is shining.
Freehold premises are an easier investment decision as you have complete control over the process. If you are in leased premises, there are arrangements that can be made between tenant and landlord where the landlord can install the system as a property investment and sell power to the tenant at a price that saves the tenant money but also provides an investment return.
Each commercial premises has a different load profile and it is not good enough to have a look at a power bill that averages use over a billing period.
The energy use during peak sunlight hours needs to be identified to ensure that the system design is suited to the premises and needs to account for both average and peak energy consumption throughout a working day.
This will require data logging of the site over a typical week to ensure a design that is appropriate and provides the capital cost returns that are expected. If you have larger commercial premises, ensure that whoever is quoting your system is prepared to provide data logging prior to quoting.
Data logging may be provided as part of the job or as a charged service. Last but not least is billing. The ROI will depend on the cost of the power you purchase as this is the cost you are replacing with your solar power. Talk to your energy provider to ensure they will not penalise you if you install solar and negotiate a suitable rate.
At all costs avoid billing that includes a peak power usage (PPU) rate combined with a cheap power buy rate. This will largely negate any benefit from solar and often negates any benefit from energy efficiency measures you may undertake in your business as well.
Research well as there are ’cowboys’ in the solar industry like any other industry who talk big but don’t deliver. Buyer beware!
About the author
Brian England is the national chairman of the Solar Energy Industries Association (SEIA). He is also the managing director of Self Sufficiency Supplies and has been supplying and installing solar for over 35 years.
SEIA is a national association of solar installers and solar businesses formed to keep up to date with the latest trends and equipment and for mutual assistance. As SEIA members, organisations have signed up to a code of conduct that ensures integrity in the way they do business. Members can be sourced at www.seia.org.au