A Beginner’s Guide to Commercial Solar Systems
If you’re thinking about investing in a commercial solar power system for your business in Australia, this guide is for you.
Wherever possible, all businesses should strive to reduce their energy use and spend on electricity. A commercial solar system is an excellent way to accomplish this in a cost-effective manner without having to alter the business’s operations.
We’ve outlined several key points below to give businesses enough information on how they should go about exploring their options for a commercial solar power system.
1. Does the company own or lease the property?
If your company owns the property where it does business, you won’t have to worry about this move. Solar panels may be installed on your site pending any required government approvals. Your solar Engineering, Procurement, and Construction (EPC) provider should be aware of these and take care of them.
If your company rents space from a landlord, the first step in your solar research should be to check with your landlord to see if they will allow the installation to take place. This should be formalised in a letter of consent (“LOC”) as well as an amendment to the main lease, or letter of amendment (“LOA”), stating what will happen if the lease expires or is terminated. This will apply to the condition of making good on the property, which would already be included in the main lease.
After you’ve reached an understanding in principle on the LOC and LOA, you can move on to the next stage. If you’ve accepted the business case for the solar system, these letters may be formalised.
2. Usable Space Available
Solar systems may be used for a variety of purposes. The roof is the most popular area for a solar system to be installed in a commercial building. If you’re going to use a roof space, of course, you’ll want to look for any possible shade issues or obstructions on the roof that will restrict the amount of space available for panels. While a solar provider will normally find the most effective way to install panels around obstructions, it is important to be aware of the potential effects.
Access and safety are two other factors to consider when installing rooftop systems. If not adequately handled, working at heights can be extremely dangerous. Furthermore, solar systems must be maintained over time, so it is critical to provide provisions for safe access walkways, exclusion zones along live edges, including skylights, and also the need for permanent guardrail and skylight mesh while considering the space available.
Solar systems may also be installed on vacant land or other usable ground space. The panels are mounted on a frame with cables trenched back to the site’s main switchboard, and the systems are installed on frames that are pile driven into the ground.
This is a good option if the site has limited or no available roof space and lots of available land. A ground-mounted system has the advantage of being able to be positioned and oriented in the optimal direction, resulting in higher energy yields. It also removes the need for operating at heights, lowering installation risks as well as continuing operation and maintenance costs.
Other solar applications involve solar car shades, in which a panel is mounted on top of a purpose-built car shade frame, with the panels acting as both electricity generators and shading. Alternatively, constructing integrated solar uses glass panels as windows or atrium ceilings. When considering available space, all of these choices should be considered.
Here at Venergy, whether it be a rooftop system or a ground-mounted system, our CEC-accredited designers will deliver an efficient, reliable, and market-leading recommendation which surpasses the usual commercial solar company standards. Call us on 1800 836 374 to join the Venergy revolution today!
3. Operating Hours and Business Load Profile
Consider how your company uses electricity and how long it is open to see if solar is a viable option for you. A company that only works at night would not profit from a solar system because commercial solar systems only work when the sun is shining. The majority of companies, on the other hand, operate from 9am to 5pm. This is ideal for solar power. A company that operates seven days a week between the hours of 9am and 5pm would have the highest return on investment. This will imply that the system would be able to reduce a significant portion of the business’s company’s daytime consumption without producing any exported power.
Other companies that run 5-6 days a week will see excellent returns, but the solar system will be exporting power during those times. Retailers are not providing much in the way of feed-in tariffs (“FiTs”) for exported power under the current circumstances in the energy market, so export provides little, if any, benefit. Solar’s true value comes from its ability to reduce consumption that would otherwise be purchased, so reducing export should be a priority.
If you know how your company uses energy and when it uses it, you will determine whether solar should be a factor for you. Companies that work outside of these hours will start to be feasible for solar and battery solutions as battery storage becomes more cost-effective.
A good EPC provider would ask your electricity retailer for interval data for your site and map out exactly how you use electricity for a period of 12 months.
4. Buying Solar
A company has plenty of options when it comes to financing a solar system. There are some of them: Capital Purchase (“CAPEX”); Finance or Lease; and Power Purchase Agreement (“PPA”).
Important: These options are all available, and which one you choose will depend on how your company compares its investments and risk profile.
A CAPEX purchase is one in which the company pays for the system with its own cash flow. The CAPEX purchase would provide the best returns to the company, usually within 4-6 years. CAPEX purchases would actually require continuing operation and maintenance, as well as costs for repairing parts that malfunction after their warranty periods have expired.
A CAPEX purchase makes sense for a company that:
- Has sufficient funds to pay for the system;
- Prefers to purchase and own business assets;
- Has a low cost of capital, so financing or a PPA arrangement will be ineffective;
- Is mindful of the continuing costs of operations; and
- Want to get the best return on investment as quickly as possible.
Financing or Leasing
Finance or lease options are beneficial to companies who do not want to invest capital in a solar asset and would rather keep that money in their core business. A finance or lease option makes sense for a company that:
- Doesn’t want to invest the company’s capital;
- Wants the system to be cash flow positive, which means that the savings would be greater than the financing costs;
- Due to an existing banking partnership, they have a low cost of capital;
- Is aware of the continuing costs of operations; and
- Understands the risks associated with financial plans in the event of downtime or failure.
A Power Purchase Agreement (PPA) is a company’s final procurement option. In a PPA, the EPC installs the system at no cost at the site, and the customer simply pays for the electricity generated by the system at a much lower rate than their retail electricity prices. A PPA would make sense for a company that:
- Doesn’t want to invest the company’s capital;
- Doesn’t want to take the chance of downtime or failure;
- Doesn’t want to take on responsibility of future maintenance costs; and
- Wants to concentrate on its core business while the system is owned and operated by an experienced EPC.
Need more solar tips? Check out our Commercial Solar Capabilities page to get started on making an informed decision about purchasing a rooftop solar system. Our transparent commercial solar system planning and design service offer certainty regarding your forecast return on investment and savings. Not to mention, we are a trusted local business with 12 years of industry experience, and we only supply the very best products backed by long warranties from the world’s leading manufacturers.