Why Invest in Commercial Solar?
The majority of Australian businesses consume a big chunk of their power during the day, between 9 am and 5 pm, when it's sunlit all around. Businesses that install solar PV end up saving a massive amount of resources due to this. Moreover, if a company is capable of paying electricity bills, using commercial solar power would be a definite win-win for them. Not only would they save money on power consumption but also would choose an ecologically viable option in the form of solar power.
Commercial Solar Systems: Size Guide
The size of an average residential solar power installation is 6.6kW and has around 20 panels. But when it comes to commercial-sized solar systems, there are some categories of sizes that are available.
1. Under 30kW- Roughly 100 panels
These small commercial solar installations use similar hardware as used in residential systems. Consequently, they fall under the same grid connection rules as residential systems. Thus, installers who work with residential-sized installations can handle business-sized installs up to this level. There is hardly any need for 'specialist' commercial solar power knowledge. Such systems can generate about 120 kWh of electricity every day over the year. Businesses can save approximately $2000 per month on an average if it's 100% self-consumed.
Commercial solar arrays that range between 30-100 kW need unique systems to safeguard the grid for all the electricity they can generate. There is also a need for special permission from a local electrical network DNSP so that it can be connected to the grid. Working with commercial solar system specialists helps with proper installation and execution here. These solar systems are suitable for medium-sized office buildings, local community hubs and even small retail businesses.
3. Over 100kW
Businesses that choose to install solar PV panels over 100kW capacity can not claim STC rebate. However, such installations are eligible for LGC subsidy. This subsidy is paid every year and is calculated on the basis of how much energy the system generates. Businesses are required to complete additional paperwork, install a special meter and report the energy generation every year in order to claim the rebate. These systems are installed at hotels, large offices and small to medium scale factories.
4. Over 250 kW
These gigantic solar systems require the expertise of a specialist installer who has the engineering expertise to understand the unique requirements of such big commercial solar installations. Such systems are well equipped to hand solar energy generation for big spaces like malls and stadiums.
How to Choose a Commercial Solar Power System for Your Business?
Commercial solar installations that range upwards of 10kW often pose unique design and installation challenges. Only experienced solar power installation experts are aware of the considerations to keep in mind while assessing for commercial solar. Here is a detailed guide on how to choose a solar power system for the business:
Step 1: Connect Commercial Solar Power System to the Grid
In order to install a commercial solar power system with capacity 30kW and up in Australia, businesses need to seek the network's approval in writing. The approvals for most sizeable commercial size systems are subject to certain conditions. For example, the network may approve a 60kW system for commercial use, if the installation features an export limiting device set to 10kW. These approval conditions may incur substantial amounts of cost and equipment from a business. In this particular example, including the cost of an export limiting device can affect the projected savings of the company. An underhanded solar installer may not disclose or may not even factor in these costs when deriving an estimate for commercial solar installation. They fear that revision of the quote upwards after counting in the additional network compliance requirements may lead them to lose business. They prefer to conveniently ignore and continue installation hoping that a network's associates won't inspect the commercial installation. Commercial establishments must insist on a formal copy of the approval from the network and even verify it with an independent consultant to ensure there are no breaches. Since installing a commercial solar array comes at a significant price, its best to avoid any unfavourable surprises for later. Most councils require an approval to install systems more significant than 10 kW in size. Talk this requirement through with the solar company you choose to work with as well as the local council. All established commercial solar companies have an architect and private certifier on hand to expedite the approval process.
Step 2: File for Commercial Solar Rebate
The commercial solar systems that span below the capacity of 99 kW in size are eligible for a financial incentive in Australia under the "STC program" or Small-scale Technology Certificates. The rebate is paid based on the expected power generation of a system over the next 13 years, to the tune of about $550 per kW of solar installed. It is compulsorily applied as a point of sale discount to a commercial solar quote. Paid upfront in advance, STC acts as a discount on the cost of a system. However, for commercial solar systems that span 100 kW and over, businesses can only claim for LGC or Large-scale Generation Certificates. The LGC' rebate' must be accurately tracked, reported and claimed each year. It requires proper registration as an "accredited power station" with the Clean Energy Regulator. Experienced solar installers assist their clients in claiming the LGC by installing a meter that meets the National Electricity Market standards for tracking accuracy. Such systems get no up-front discounts affecting the rate of return from a solar installation, as well as cash flow issues for your business.
Step 3: Expectation Setting During Installer Consultation
Any Australian commercial solar installer will, in most likeliness conduct an energy profile analysis on the property under consideration. They will assess the billing structure i.e. the tariff plan, undeniable charges like ancillary charges, AEMO charges, service availability charges and weather-wise energy consumption of a business unit. This will give them an insight into your unique needs and requirements of your business from a power generation unit and also help project estimated payback time and saving.
Tips for Installing Commercial Solar Power System
1. Commercial Solar Costs and Paybacks
Good quality commercial solar power system that varies between 30kW and 100kW can cost around $1,000 – $1,300 per kW when installed in Australia. The additional cost of installing microinverters or power optimizers spans about 15-20% to the overall final price. Installing a string inverter system, on the other hand, is a cheaper alternative. A reputed 20-30kW commercial solar system can be purchased from about $700 per kW. They require less network protection, and thus, there are less engineering costs associated. The commercial premises that sign a long term tariff contract with their electricity retailer suffer when it comes to future paybacks/savings from going solar.
Businesses must remember the terms that are agreed to and develop a deeper understanding of them. When a contract expires the projected increase in tariff changes may come to play. Be persuasive and seek help from commercial solar companies and learn how solar installations can affect your tariff. Since the actual cost of raw power consumption from the grid tends to be low, the hidden costs like other additional fees and charges lead to the spikes. Switching to commercial solar allows a business to reduce and offset these high costs. All in all, it is common to earn the payback of commercial solar systems within five years. As long as businesses verify their contract duration with an energy retailer, confirm the charges on the bill that will get slashed when solar panels are installed, they are in good company.
2. Commercial Solar Designs and Layouts
The weight of a commercial-sized solar panel array installed on the roof can be the most significant consideration for most businesses. A certified engineer must physically inspect the site in question and share the structural engineering certificate before any proceedings. They must then share a detailed roof plan before installation. Commonly, the flat panel arrays are preferred over tilt-frame installations because of their cost-effectiveness and flexible approach. Even a ground mount system is an option if a roof is unsuitable for commercial-sized solar installation. However, it would require even more intricate planning and resources compared to roof-mount installations.
3. IRR and Discounted Cash Flow Analysis in the Quote.
IRR (internal rate of return) is a more preferred metric than ROI for commercial-size solar power generation systems. It allows the businesses to assess the returns from the capital invested in solar systems more realistically. All central commercial solar installers present a pretty thorough cash flow model in their quote. Businesses must have an accountant go over such sections.
How to Finance a Commercial Solar Power System for Your Business?
Cash remains a popular way to purchase a commercial-sized solar power installation among businesses. Since the cash price for a commercial solar system remains the lowest sans any additional fees and charges involved with financing and leasing it, it gives the optimum payback over a shorter duration. However, it's important to note that larger commercial solar systems incur significant expenditure, which could weigh heavily on the business capital in the short run.
2) Power Purchasing Agreement (PPA)
Solar leasing arrangements or more popularly known as power purchasing agreements are another popular choice among businesses. It involves a third party retailer who installs a commercial system on the property. The system is legally owned by the retailer, and they also bear the maintenance cost. Such an agreement allows businesses to purchase a set amount of electricity over a long term agreement from third party vendors Such arrangements reduce the overall business electricity costs because the price for electricity under a PPA is usually lower than what grid power costs. Also, there is no upfront cost involved in installing the system. However, in such arrangements a business is obligated to buy all the electricity generated by the system, irrespective of the fact whether it is self-consumed by the business or sent to the grid. Businesses opting for the PPA route must have it optimally sized for maximum self-consumption. Start with a low price for year one and scrutinize the fine print on how the fees range over the time of the PPA. Ideally, the prices should increase over its term at a low rate or not at all.
Green loans are perfect instruments for negotiating pricing with a commercial solar installer. If the residual savings from a new commercial solar system are more than what is paid by the business on interest for the loan, it's ideal for the business. It saves the company from a cash flow crunch too.
4) Building Upgrade Finance (SA, VIC and NSW only)
Certain Australian states offer a "building upgrade finance" to help building owners access loans to improve the energy efficiency of existing commercial buildings. They address barriers to building upgrades, such as capital flow and cost outlaying for commercial upgrades while tenants receive the benefits, such as lower electricity bills.About National Solar Company
National Solar Company is Australia's most trusted commercial solar company with more than 50MV solar PV installed at over 3000 business units countrywide. With a large team of solar professionals working across the Australian continent and handling international operations, National Solar Company is the best choice for renewable energy solutions for the corporates. Our range of products includes:
- . Battery Storage
- . LED lighting
- . Power Factor Correction, and
- . Solar PV
We are experienced service providers with a proven track record of designing and installing solar PV installations all over the nation. We work with corporates like SME and even large C&I customers, serving solutions that range from 10kW to MW in terms of capacity. Our team of dedicated professionals are responsible executives who try to ensure that there are fallacies with the sale, installation or maintenance process. However, if in case of any discrepancies surface, they jump into remedial action on priority to ensure excellent customer service standards.