Here at SolarQuotes we’ve put together a resource on commercial solar power called:
If you have a business but no solar panels, it’s made for you. Or if you work at a business without solar and want some cred for suggesting a money saving idea you may want to run your eyeballs over it for that reason. It’s full of solid advice and I highly recommend it. The only way I could recommend it more is if I wrote it myself. And I didn’t do that because I actually had no involvement with it at all.
I asked Finn why he didn’t want my input and he said something vague about, “professionalism” and “…not going off on a tangent with some horrible story about how a horse died” and “We tried to contact you but you were drunk that whole week1“.
Looking at the final product I have to say I don’t think my lack of participation had any detrimental effect. However, it is possible I may possess one or two little snippets of wisdom pertaining to commercial solar power that could prove useful but don’t really belong in an introductory guide. So I have written the following article, not as a replacement for the beginner’s guide, but an adjunct to it. I now present Ronald’s Hints, Tips, and Tricks for Commercial Solar. It contains all the vital knowledge I’ve learned about commercial solar in my long career as an ineffectual external life support system for a succession of horses.
Ronald’s Hints, Tips, and Tricks for Commercial Solar
This is a somewhat eclectic collection of things to consider when installing commercial solar power. I will cover:
- How small businesses are screwed over by grid electricity prices.
- How larger businesses are screwed over on exporting solar electricity to the grid.
- Demand charges & 5 minute settlement.
- STCs and LGCs that offset the cost of buying a solar power system.
- How to make sure your solar installation is covered by Australian Consumer Guarantees and not just lawyertastic contract law.
- Taking solar into account when planning new construction.
- Getting commercial solar quotes.
How Small Business Is Screwed Over
It used to be that all businesses paid less for electricity than households in Australia. It was simply accepted that average workers had to pay extra to subsidize capitalists to stop communists winning2. But this is no longer the case. Residences are no longer the exploited underclass of the electricity sector. They have been replaced by small businesses who now often pay more per kilowatt-hour of grid electricity than any other group in the country.
Business paying more for grid electricity than households is a very strange state of affairs for this country. I’d even go as far as saying it’s un-Australian, except that’s not really a word and more an indicator that the person using it is an idiot. There’s no justification as it’s cheaper to supply electricity to small businesses than households3. The only explanation I can come up with for this strange state of affairs is the people setting prices could get away with it.
The single silver lining is small business can use commercial solar to reduce their electricity use and often can export the surplus electricity they produce, although Queensland is fairly notorious for often not allowing any electricity export by businesses4. The benefits of commercial solar power are now so great for small business it can potentially have a simple payback period of under three years.
How Larger Businesses Are Screwed Over
Let’s say you have a larger business — a shopping center, a warehouse, or whatever — and you want to install a lot of solar panels on it. In this case you are likely to be screwed over in the amount of solar electricity you can export the grid. It may be extremely limited, it may be zero, or it may be contingent upon paying vast amounts of money to upgrade electrical connections5.
While larger businesses now pay a lot more for electricity than they used to, they still pay much less than households or small businesses. In combination with the inability to export much or perhaps any surplus solar electricity, it can mean only relatively small solar systems make economic sense.
How All Businesses Can Be Screwed Over
If a business is a large consumer of electricity and pays a lower rate for grid electricity as a result, then installing solar power can result in the business losing its “bulk discount”. Electricity retailers can use the installation of commercial solar as an excuse renegotiate contracts and insist on higher fixed charges.
Solar Power’s Effect On Demand Charges
It’s very common for business to pay demand charges as it’s a requirement for all large users of electricity. A demand charge is a fee based on the greatest of amount of grid power used during a specific period. There are a wide range of ways it is determined, but the charge is often high and a large portion of electricity bills. This makes it important to consider commercial solar’s effect on demand charges.
Unfortunately, solar often does little to reduce demand charges in winter as cold cloudy days typically result in greater electricity use and limited solar energy generation. But it can be effective at reducing demand charges in summer because while clouds can reduce solar electricity generation they are also likely to reduce the need for air conditioning. Of course, this only applies to businesses that operate during the day. Don’t come complaining to me if your solar panels aren’t reducing demand charges for your nightclub or Tasmanian devil petting zoo.
While home battery storage doesn’t currently pay for itself, demand charges mean that batteries for business may possibly be worthwhile.
5 Minute Settlement Is Coming
On the 1st of July 2021, electricity will be paid for in 5 minute intervals instead of being averaged out over half an hour as it currently is. This applies to businesses that currently pay demand charges and means batteries will become far more effective at reducing demand charges. Five minute settlement combined with rapidly decreasing costs makes me confident batteries will be cost effective for businesses within three years and four and a half months.
STCs And LGCs
STCs and LGCs are renewable energy certificates that offset the cost of solar power. STC stands for Small-scale Technology Certificate and they are received upfront when a system that is 100 kilowatts or less in capacity is installed. They are being gradually phased out and will no longer be created after 2030.
LGC stands for Large-scale Technology Certificate and they can be created by solar installations that are 100 kilowatts or larger6. Every megawatt-hour of renewable energy generated creates one LGC. These LGCs can be created until the end of 2030.
Which type of certificate is best will depend upon the cost of capital for your business and what you think will happen to LGC prices in the future, but given a choice I think most businesses would definitely regard STCs as the better deal. As they are received upfront they give certainty and save on capital costs. I know I’d definitely go for STCs.
How To Get Some STCs For A System Over 100 Kilowatts
If you want to install a system larger than 100 kilowatts and receive STCs, there is a way to get at least some. It’s called cheating. Well, it’s not exactly cheating, it’s more using the rules in a way they don’t specifically say you can’t. The trick is, you install 100 kilowatts and receive STCs for them and then you expand that system out to whatever size you want and the portion above 100 kilowatts will generate LGCs. So if the total size is 200 kilowatts you’ll only get STCs for half of it, but that’s better than none.
Another option is to install over 100 kilowatts of panels in total but in practice it operates as a number of separate systems that are separately metered. For example, a shopping center could install 150 kilowatts of solar panels that in practice is 3 different 50 kilowatt systems connected to 3 separate businesses, each with its own electricity account.
Consumer Guarantees Apply To Systems Under $40,000
Australians are protected by consumer guarantees that apply to everything that costs under $40,000, including solar systems. These consumer guarantees provide a considerable amount of protection to the buyer in the event something goes wrong and a dispute arises. For purchases of $40,000 or more contract law applies, which I would describe as a lot less forgiving. So if you are considering installing a $70,000 solar system you may want to instead consider getting two separate $35,000 systems. Splitting the system up like this definitely can increase the total cost, but I think a modest increase would be well worth the additional protection.
New Buildings And Commercial Solar
If you are designing a new building there are a few things you need to ensure to be sure it’s suitable for commercial solar power:
- Can the roof handle the weight of the solar panel system you have planned?
- Can the roofing material be penetrated without a problem if the panel mounting system requires it?
- Will the roof allow for a low cost solar installation?
Getting the roof right at the start can allow for considerable savings when it comes to installing solar.
Minimize Roof Obstructions When It Pays To Do So
Ideally you want vents, chimneys, antennas, and air conditioner units on the southern edge of the roof where they won’t cast shadows on solar panels or you want to eliminate them from the roof altogether. This may be easy to do, or it may be extremely expensive. Because the cost of solar systems has fallen a long way, in many cases it will be cheaper to design the system around roof obstructions rather than pay through the nose to shift them.
Microinverters and optimizers can reduce the effect of shade on solar power systems, as can using solar panels with panel string optimization. These can be used for all the panels in a system, they can be used for just those that will suffer from shading.
Finish The Building First
One mistake I’ve seen more than once is an organization eager to have solar panels on their new building has an architect draw up the plans and then they sign a contract for solar installation before construction even begins. This can be a problem because by the time the building is finished the cost of solar could have fallen significantly. While the installer may have taken expected falls in hardware prices into account in their quote, they can’t be certain what will happen to costs and will need to protect themselves against risk and not offer too low a price. In addition construction delays are common and can be long.
This is less of a problem than it used to be because the cost of solar is already so low, absolute falls in price over six months or a year are not likely to be very large. But it can still make sense to pay an installer for consulting services so you can be certain your building will be ready for commercial solar when completed but only negotiate a price when it’s done.
Flat Roofs
Many commercial buildings have flat roofs and I wrote about installing panels on them here. If you aren’t in a cyclone area and the roof can handle their weight, then ballasted tilt frames can be used. These don’t use screws or other attachments that penetrate the roof and simply use weights to stop storms blowing them away. These have the advantage that if you are not sure which way your panels should face, they can be repositioned at less expense than other systems and this can allow you to experiment to find the most effective positioning or change them if conditions change, such as electricity consumption patterns or solar feed-in tariffs.
Get Commercial Solar Quotes
Because there are many factors to be considered when installing commercial solar systems, costs can vary significantly. Some roofs will require extensive and expensive work before they can support solar panels while others are ideal for a low cost installation. To get an understanding of what your options are I definitely recommend getting quotes from multiple reliable installers – and we can help with that.
Footnotes
- This was technically true and a much more impressive accomplishment than it sounds as I don’t drink alcohol. ↩
- And what would the communists win? A new car! ↩
- This is particularly true now rooftop solar power has shifted peak grid demand to after business hours. ↩
- Queensland does have the worst local grids in Australia, but when you have people spending their own money to install solar panels and you’re not willing to accept the clean electricity they can provide because you don’t want to make transmission upgrades that are a tiny fraction of the cost of the harm caused by fossil fuel generation, then it’s not a smart move for the future of the planet. ↩
- You might think the local Distribution Network Service Provider would put up the money for connection upgrades and allow businesses to pay it back through their feed-in tariffs, but it doesn’t seem to work that way. ↩
- Systems that were 10 kilowatts or larger used to have the option of creating LGCs instead of receiving STCs upfront but that has been changed. However, if you apply before the end of March this year you may still get in under the old rules. ↩
About Ronald Brakels
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“How small businesses are screwed over by grid electricity prices.” ?
Too easy. They drop their pants and bend over.
No mystery there.
What I AM concerned about is the flaccid acceptance by people in agreeing to the Terms and Conditions (and fine-print generally, imposed by a company who wants to sell THEM something.
You want MY money, Kiddo? Then YOU acquiesce to MY terms and conditions.
WTF has become of people?????????? Gutless, Brainless and less of everything else.
Another possible way for a single business to install more than 100kW’s of solar and still get STC’s rather than LGC’s is to set up a separate Pty Ltd company to own each 100kW of solar. So a business could install 500kW of solar under the names of five different companies, each owning 100kW and therefor qualifying for STC’s.
Sure there are costs involved in setting up and running five different Pty Ltd companies but the benefits can outweigh the expenses.
I would thought that this has to do with the NMI numbers (the meter/power connection) not the company its self but I have been wrong quite often. Anyone got a handy link???