Commercial Solar self-consumption and why it makes business sense

 

More and more Australian businesses are looking at solar power as a way of reducing their ever increasing electricity costs. Over one million Australian homes have now installed solar power systems, with the majority doing so over the past 5 years; this has been largely linked to a rapid reduction in the price of photovoltaic solar panels. People are now discovering it’s cheaper to install solar and generate their own electricity than what it is to buy from the grid.

Solar Incentives

Solar installations have been subject to many policy changes over this period, both by state and federal governments; the word “solarcoaster” gets bandied about a bit in reference to the ebb and flow of policy adjustments. Both the federal government Renewable Energy Certificate (RECs) incentives, which reduce the upfront cost of installing a solar system and the state government Feed in Tariffs (FIT), which set a price you get paid for exported solar energy have been reduced over the last few years.

Commercial solar PV

Currently the federal government still has the Renewable Energy Target (RET) which facilitates solar incentives in the form of Small-scale Technology Certificates (known as STCs or RECS) to installations up to 100kW (400 panels) and Large-scale Generation Certificates (LGCs) for systems above 100kW. This normally results in a point of sale discount of $1,000-$3,000 on the average residential install and $3,000-$60,000 on a small to medium commercial installation. But the RET appears to be under threat with the Abbott government appointing a climate change sceptic to review the RET and pressure from large fossil fuel generators like Origin, AGL and Energy Australia to wind it back.

The current Victorian FIT sits at 8 cents p/kWh, down from a high of 60+ cents at its peak in 2010-11. Other states currently have lower FIT’s and the essential services commission have Victoria’s FIT earmarked to go down to 6.2-7.4 cents in 2015. With a low FIT in place there is not much incentive for customers to export electricity into the grid. If the return on investment or payback period are important considerations for you when installing a solar system, our recommendation is to size your system to minimise export to the grid and forget about trying to export. If you can self-consume the solar energy directly from your rooftop, you can offset the cost of paying 20-30c+/kWh if you had to buy that energy from your electricity retailer. Here’s where the niche for businesses comes into play.

Solar for business

Most businesses use electricity during the day. This just so happens to coincide with the hours the sun is out delivering electricity to millions of solar systems around Australia. There are a lot of empty roof spaces out there on commercial and industrial premises that are missing out on a real opportunity to take advantage of solar.

Here’s an example of a potential scenario. Take a small business like an office, retail store, supermarket, petrol station or gym. These businesses will tend to have a high consumption during daylight hours, they can be paying up to 30c/kWh or more for their peak electricity and they often have roof space available for solar panels. If their daytime consumption was high enough and a solar system was designed to minimise export to say 10%, there is the potential that by investing $45,000 in a 30kW solar system for their roof they could be saving around $10,000 a year on their electricity bills. Considering a good quality solar system can last up to 25 years or more with little maintenance costs, commercial solar systems like this can provide a hefty ongoing savings to businesses looking to take the solar leap. Ask Green Energy Options about doing a detailed financial summary for your business.

Financial Summary

Soalr Financial Summary Example

The upfront cost associated with going solar can sometimes be a reason to defer the decision, but there are now many solar financing options available to business and homeowners. Green Energy Options can offer different types of financing or leasing products through our business partner network. Contact us for more info.

With innovative new solar monitoring options now being offered, businesses can show their customers what their solar system has been doing. This opens up opportunities for companies with solar installed to use their green credentials to market themselves to customers and go above and beyond what their competitors are doing. If you throw the environmental benefits of reduced CO2 and greenhouse gases into the equation, there are many incentives for business to look at solar power and take a leadership role in their communities.

So, even though the Feed in Tariff is low, just forget about exporting electricity and optimise your system for self-consumption. And even though the current government appears hostile towards the Renewable Energy Target, it is still in place and probably will be for at least another six months (in my opinion and depending on Clive Palmer’s position). There are still good reasons to consider solar for businesses, now is a great time to take advantage of the sun, own your own power station and move your business into the future of energy.

For commercial solar enquiries, please contact Green Energy Options on 1300 931 929 or aaron@greenenergyoptions.com.au