Updated: Jul 9, 2021
by Andrew Ritch
Interest in solar projects is on the rise. I say this based on both empirical data (see my related article on the exponential growth in the size of solar facilities around the globe) and anecdotal evidence in the form of more solar project inquiries coming into Donovan Energy. Because of the latter, I want to share some of the practical realities of commercial solar projects.
Why is there a growing interest in solar?
Organizations that invest in corporate sustainability have, in part, committed to helping protect and improve the environment. Part of this commitment includes a greater adoption and reliance on cleaner, renewable sources of energy. Beyond being altruistic, capital investments in solar projects provide real financial value, too.
More and more companies seek opportunities to meet their present needs (to run successful business enterprises) and goals (to use cleaner sources of energy) without compromising one for the other. We know that those companies who can locate this balance perform better in the long run, generating better returns for shareholders and investors. Caring for our environment is one of three key pillars of sustainability; it drives many companies to pay attention to where they get their energy and how they use it.
Which leads me to my first point.
In most cases, solar should not be your first move.
Surprised? You probably weren’t expecting this statement. Let me explain.
Before investing in solar, organizations should tackle the "easy" things: LED lighting, building envelope, HVAC systems, etc. Without these initiatives in place, solar is a significant undertaking that will not achieve desired sustainability objectives. This is because energy efficiency gains made through solar can end up being squandered by inefficiencies elsewhere. If your company intends to adopt solar, then prioritize other complementary energy efficiency initiatives as part of the project. Once you’ve got these efficiency measures completed or included in the plan, it’s then time to think about solar (or other onsite generation sources).
Use tax incentives to offset costs.
The installed cost of solar projects has fallen steeply (see prior blog post), but they still aren’t cheap. Depending on your facility’s footprint (available roof space or land), the undertaking could be significant. For reference, you’ll need about five acres of area to generate one megawatt of power (which is equivalent to the amount of electricity used by ~ 200 average-sized homes).
Current tax incentives also provide a substantial benefit. Solar projects generate a federal tax credit equal to 22% of the system's installed cost. Additional state tax credits and utility incentives can provide additional benefits, where applicable. Cost offsets such as these – plus the hedge against future utility rate increases - may be more than enough to make the project economically viable.
Bottom line - costs can be manageable, so don’t necessarily let that be a deterrent.
Location, location, location.
A successful solar deployment depends upon the amount of space available, the condition (usability, quality, topography, unimpeded access to sunlight, etc.) of the area, and the type of technology used. Generally, a solar farm can be located almost anywhere, as long as the surface area is sufficient, and the panels can be positioned to maximize sunlight capture. Usually, you’re looking at either the roof of a building or open land.
The condition of the space is critical. If utilizing a rooftop space, the roof area must be in good condition and unobstructed. (It would be an expensive mistake to install a solar farm on a roof that might need repair or replacement soon afterward, as it would necessitate having to remove all the solar panels and install them again after repair or replacement).
A professional and experienced solar consultant can help you evaluate location(s) and determine the viability, opportunities, challenges, and barriers to a project's success.
You still need the grid (for now).
In most cases at present, adding solar doesn’t mean that your organization will disconnect from the grid. However, depending upon the size of the solar panel system and your normal energy usage, there may be times when you may generate more energy than you need. Unless you also have an onsite energy storage system (e.g., a battery, such as the Tesla Powerwall) to store this energy (see more on this below), you may be able to automatically sell excess energy back to the utility grid in return for a credit to your electric bill.
Notably, there will be times when you will not generate a sufficient amount of energy to meet your needs due to weather, time of year, or other circumstances. You’ll need to draw power from the utility grid during these times, which is why staying connected is still a necessity.
Think of it this way: Even though the sun always rises, it may not be shining or breaking through the clouds when you need it. Without the ability to store power for later usage (via a battery), there's too much unpredictability in knowing if you'll have access to sunlight when you need power generation. Staying connected to the grid is what allows you to work through that unpredictability.
Solar + storage offer a complete solution.
Batteries allow users to store and use excess energy when solar power generation is not available. Such batteries are already available today and continue to improve in efficiency and decrease in price.
Eventually, we will reach the point where the capacity and economics of batteries will allow customers to disconnect from the grid seamlessly. We haven't reached this point yet, but it will come.
Working with Donovan Energy can provide you with the expertise you need to move towards energy self-sufficiency. If you are interested in learning more about how solar – or any of the other technologies mentioned in this post - might work for your company, we'd love to talk!