THE BUSINESS CASE FOR SOLAR
The Australian Commercial & Industrial sector accounts for 66% of our national energy requirements, thereby representing a significant opportunity for direct consumer energy savings & renewable energy uptake.
With average annual retail energy price increases of between 19-36% for Small to Medium Enterprises solar PV represents a compelling opportunity to hedge against further pricing increases.
These increases in retail energy cost coupled with declines in solar PV cost and generous government incentives equate to highly compelling cases for business investment in solar PV assets.
Average SME electricity expenditure
THE SIMPLE FACT IS THAT SMALL BUSINESS ENERGY CONSUMERS CAN EXPECT SYSTEM PAYBACK PERIODS OF BETWEEN 2.5 – 3 YEARS AT PRESENT.
THE GOOD NEWS
The sharp rise in retail energy costs over the past few years has coincided with a sharp decline in the cost of solar system components, resulting in solar reaching ‘grid parity’ in 2012. This continuing trend has resulted in the energy generated from a solar solar system being considerably cheaper than retail energy tarifs. Maximising the return on a solar investment requires careful analysis of a sites usage profile and tariff structure. Genevo have analysed hundreds of small to large commercial sites, successfully hitting the ‘sweet spot’ for our clients through optimal sizing, considered array layouts & component selection.
Our experienced engineers take a wholistic approach to a site during the analysis phase advising on:
- Existing usage inefficiencies
- Multiple meter prioritisation
- Power factor correction
- Network charge mitigation
A large proportion of our commercial customers achieve bankable payback periods of between 2 – 3 years. Optimising system payback curves can only be achieved through careful usage analysis and system sizing selection. Of further benefit is that a carefully structured finance arrangement will often yield a nett reduction in monthly outgoings after solar system savings are offset from system repayments. Solar for SME’s really is a no brainer!
BUSINESS TIME IS SOLAR TIME
Where the bulk of residential energy usage typically occurs at dawn and dusk, resulting in lower rates of self consumption, the majority of businesses use energy when the sun is doing it’s thing………….. shinning! Emitting waves of photons down to each and everyone of us to be converted into energy saving electrons for those who have invested in a solar PV system. Our experienced engineers will carefully analysis your sites usage profile, optimising the design of the system design for highest levels of self consumption and minimising export to the grid. Depending on your DNSP, zero grid export of solar generation may be stipulated after your network connection application is submitted and underlines the importance of thorough analysis prior to commissioning a commercial solar system.
BUSINESS RETAIL ENERGY TARIFFS
Bundled vs un-bunbundled
Large energy consumers are classified by Distribution Network Service Providers (DNSP’s) as retail customers that consume above a certain annual thresholds. This ranges from 1MWh/PA – 1.6MWh/PA depending on the DNSP. Retail energy contracts above these thresholds are refereed to as ‘unbundled contracts’. These large energy consumers are given discounts on the unit cost of energy (kWh), however, they incur network charges (kW or kVa), which can be equally as high. That is, the energy cost (kWh) and network charges (kW) are ’unbundled’ and shown separately within the bill. In the case of ‘bundled’ contracts, the unit energy cost will be higher as it will have the network charge bundled into it. Payback periods for a solar system where businesses are on bundled contracts will generally be much shorter as the unit of energy being offset by the solar system is higher.
The ire of business customers
In order for the Distribution & Transmission Network Providers (DNSP/TNSP’s) to maintain sufficient capacity to supply peak demand at any given time, network charges, which are measured in either kW or kVa are passed through energy retailers to cover the cost of transmission/distribution (poles and wires) infrastructure.
Most of the time this transmission capacity sits by idly waiting to spring into action whenever customers demand it, customers are charged for the peak that is consumed during the billing month, which is then transposed across the full 30 day bill cycle. These charges can form a substantial component of a large energy customers monthly bill cycle, at times accounting to over 50% of the breakdown. Genevo has worked with some of Australia’s largest customers, being the first to trial a large software enabled battery system to reduce demand charges in partnership with TAFENSW in a commercial setting.
Whilst solar PV can have some impact on demand charges, unfortunately due to its intermittence, solar cannot be relied upon to guarantee network charges savings. Smart software enabled battery storage systems are proving themselves as a reliable method to reduce network charges. Genevo have extensive experience in analysing and designing solar PV and software enabled battery systems to tackle network charges.