How to Maximize Payback on Solar Power System Investments
Green-focused companies embrace solar power for a number of reasons. Renewable energy might reflect their organizational values or make them more attractive to customers and prospects. As businesses, though, they also have to consider the financial implications of going solar. When it comes to maximizing returns, businesses have to consider the payback possibilities when selecting a solar power system.
The specific technology choice might seem moot in regions where local utilities or state governments offer incentives to solar-powered businesses, or where companies have the option to sell power they generate with a photovoltaic (PV) system back to the utility. Incentives can certainly shorten system payback periods – as long as they remain in place. But local, state and federal incentives for solar power are not guaranteed, and businesses can’t rely on them as the main method of ensuring a return on a PV system investment. That can be a problem for any organization that opts for a simple grid-tied solar PV system without energy storage capability. Such systems are limited if the utility won’t buy back the electricity; for example, if the business doesn’t use the power it generates, the surplus power goes to waste..
One answer is grid-interactive technology, which incorporates battery backup, and smart inverter/chargers to give users the means to control their energy usage, since the technology alleviates the need to rely solely on the utility, especially when costs are high or the supply is less stable. Such a system essentially gives the owner his own microgrid behind the meter, which can perform a number of financially beneficial actions, such as:
- Use the extra renewably generated electricity to keep the energy storage bank of batteries fully charged;
- Divert more renewably generated electricity to run the business or even go off the grid if circumstances permit; and
- Consume stored, renewably generated electricity rather than grid power during peak energy times when grid power is most expensive.
This is not some future-tech development coming soon to a grid near you, but rather something being used by bottom-line-conscientious businesses today to improve their operating economics and environments. One example is the Malankara Tea Plantation’s offices, which provide administrative operations for a tea plantation in Kerala, India. This historic building complex converted to solar-sourced power instead of diesel backup generators to save money on fuel and electricity, and to maintain reliable power during periods of instability from the local grid. During the unprecedented blackout that recently affected much of India, the office complex remained operational while others struggled to find fuel for portable diesel generators.
Solar is also making a contribution in an area known for unreliable sun radiance. Lite Solar, a commercial and industrial solar system developer, worked on a project to install solar for the Laurel Ridge Winery, located in the Pacific Northwest. The winery uses solar to not only offset the costs that stem from winemaking, which is very energy-intensive, but also to combat power stability problems during the changing seasons. Smart inverters are certainly efficient, but as importantly, they deliver greater annual yield and can produce as much as 30 percent more power per year than a business might capture from an identical array connected to a simpler system.
Green businesses can honor their environmental principles without compromising their financial ones. Doing so requires some strategic planning before any PV system investment. A third prime example, Spatial Designs, is an architecture firm in the Midwest that installed solar to provide backup power to its offices following regular local utility outages. With solar, the firm is able to shave electricity bills while also maintaining uptime to continue work with its clients during a blackout. This prevents the firm from losing time or money during outages on projects that need working lights, phones and Internet.
While simple grid-tied systems might be initially attractive for budgetary reasons, they don’t pay off in the long view. Grid-tied systems can’t offset utility consumption in the evening or back up power during an emergency or outage. Grid-interactive systems, however, save businesses money when the grid is up, and save businesses’ reputations and productivity levels when the grid goes down. When companies can manage energy flow in multiple directions, they can take charge of any energy scenario and accelerate returns on investment, regardless of geography or whether local, state or federal governments deliver incentives. Expect to see a variety of grid-hybrid applications in the future as more businesses see the value in power from renewable energy.
Mark Cerasuolo manages marketing at OutBack Power, a designer and manufacturer of balance-of-system components for renewable and other energy applications. Previously, he held senior marketing roles at Leviton Manufacturing, Harman International and Bose Corporation, and was active in the Consumer Electronics Association (CEA).
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