Why Use Commercial Solar?
Commercial solar is targeted towards businesses that use most electricity between 9 am and 5 pm (operating hours).
These commercial-sized systems (10kW) and up carry unique design considerations and challenges we will go through within the blog.
The three distinct size breaks for commercial solar
(Baring in mind, the average residential solar system size is 5kW or around 20 solar panels).
Less than 30kW (around 100 panels)
A 30kW solar system will usually generate around 120kWh of electricity daily on average over a year; this will save approximately $2000 per month if 100% is self-consumed (which is possible in commercial situations).
30kW to 100kW
Solar systems of this size are usually installed in medium-sized offices, small retail businesses and local clubs.
Solar systems of this size require unique designs to protect the grid from all the electricity they generate. They also need special permission from your local electricity network (DNSP) to connect to the grid.
100kW – 250kW
These systems are typically installed in large offices, wineries, hotels and small to medium factories.
If your system exceeds 100kW, you can no longer claim the STC incentive. However, don’t stress you are still eligible for the subsidy known as ‘LGCs’. This is paid every year based on how much energy the system generates. The application process and paperwork can become quite complex as you have to install a special meter and report your generation every year to be eligible for your incentives. We will be more than happy to help you through this process.
250kW and over
These are extensive systems and go on large shopping centres or solar farms. We recommend using a solar specialist; you can view our latest commercial solar systems here.
Connecting large solar systems to the grid
When we install systems from 30kW and up, getting the network’s approval is essential. Every solar power system connected to the grid must be approved before installation.
For larger commercial systems, approvals usually come back with a set of conditions. For example, “This 55kW solar system has been approved, subject to the system having an export limiting device set to 10kW”.
Knowing this is very important, as it involves a substantial amount of cost and equipment to meet these conditions – and export limiting may affect the system’s projected savings.
Some solar retailers won’t disclose this information, as they may not have factored it into their costings, to begin with. We are happy to go through this with you so you understand it completely.
General solar costs and payback
As a ballpark figure, good quality commercial solar will cost around $1,000 to $1,300 per kW installed. Power optimisers and micro-inverters will add 15-20% to the total cost compared to a string (or centralised) inverter system.
An essential factor is that some commercial premises have signed long-term tariff contracts with their energy retailer. This affects future payback/savings from going solar. You need to find the terms that you agreed to and understand them. Ideally, this will help you know when your contract will expire and the projected increase in tariff charges.
This may seem like a difficult step, but at Westsun Energy, we are happy to help you through this process and always want to educate our customers as much as possible.
Monitoring and maintenance
We suggest you not buy a commercial solar system that does not monitor both solar energy generation and electricity consumption.
Without combined generation and consumption monitoring, you will not have the information you need to keep your post-solar bills as low as possible.
All reasonable monitoring solutions will allow you to check your gross consumption – meaning you will be able to view, for any particular hour, the before and after of solar’s contribution to your business. A brand that we recommend is Solar Analytics.
A maintenance schedule is essential to adopt. The requirements from the CEC state an installer must provide a maintenance schedule to the customer. Westsun Energy will have a comprehensive, tailored plan for you and your commercial system.
Additionally, panel cleaning should be undertaken on a case-by-case basis and not scheduled. We recommend Solar PV Repairs for this.
Commercial solar incentives – STC versus LGC’s
Solar systems that are 99kW in size and under are eligible for incentives known as the “STC Program”. To simplify, it means that you are paid based on the expected generation of a system over the next 13 years, to the tune of around $630 per kW of solar installed (this differs based on install location and market conditions).
This incentive is generally applied as a point of sale – for example, if you were quoted a 30kW system for $29,000, this would already have the -$19,000 STC incentive applied.
However, once your system is 100kW or more, you are no longer eligible to claim STCs, and must instead claim LGCs.
The significant difference is that while the STC incentive is paid in advance and essentially works as an upfront discount off the solar system, the LGC incentive must be accurately traced, reported and claimed every year.
To claim LGCs, register to become an accredited power station with the Clean Energy Regulator. We will assist you with this process and ensure that your metering meets the National Electricity Market standards, meaning you can properly track your generation.
Commercial solar layouts and design
The system’s weight is one of the most significant factors when installing a commercial-sized solar array on a roof.
It is essential that the structural engineering certificate is produced and an engineer has physically inspected the site.
Westsun Energy will provide an in-depth plan before installation commences.
Flat panel installations are usually more common than tilt-frame installations. They are cost-effective (tilt frames have additional fees) and can easily be altered to suit last-minute changes.
Ground mount systems are also an option if your roof is unsuitable for solar. These require much more planning and can be more expensive than a roof-mounted system.
Financing your commercial solar system
Cash/CapEx
A common way to purchase a system but technically not finance.
The cash price for a solar system will always be the lowest (leading to the shortest possible payback time), as fees involved with finance or leasing increase the overall cost of a system.
A potential downside is that larger commercial solar systems represent a significant expenditure, which could be used elsewhere in the business.
Power Purchasing Agreement (PPA)
PPA’s are a type of solar leasing arrangement.
The main idea is that a third-party retailer installs a system on your property (meaning it legally owns and is obligated to maintain it) and enters an agreement with your business to sell you a set amount of electricity over a long-term contract.
The main benefits are that your electricity costs are lower overall because the price for electricity under a PPA will be lower than what you currently pay the retailer. There is no upfront cost for installing the system.
The downside is that you will be obligated to buy all the electricity the system generates, regardless of whether this energy is self-consumed by your business or sent to the grid for a feed-in tariff.
As self-consumed solar energy is far more valuable than solar exported to the grid for a feed-in tariff, if you are considering a PPA, it is essential to have the system optimally sized for maximum self-consumption.
PPA set out the price of solar energy for the duration of the PPA. While a low cost for year one is a good start, reading the fine print on how the prices will be adjusted over time is essential.
The best PPA is one that, over its term, increases its prices at a lower rate, rather than the one with the lowest starting price and then inflates by 5% p.a.
Loan
A green/business loan will allow you to negotiate pricing with a solar installer like a cash buyer. If the savings from a new commercial solar system are more than what you pay on interest for the loan – you can see why this would be a great option to avoid taking a significant cash flow hit by using capex/cash to buy a solar system.
What to expect from Westsun Energy from your initial visit/consultation
Westsun Energy will conduct an energy profile analysis on your property.
The main things we will look for are:
- The billing structure and what kind of tariff you are on
- The charges cannot be avoided. Ancillary charges, AEMO charges, service availability charges, etc.
- The energy consumption during daylight hours – especially in winter. This will allow them to determine what’s more critical – roof space or what you need as the customer. For example, you may need a 100kW system but only be able to fit 50kW on your roof – an energy profile analysis will be able to definitively tell you if it’s still worth it to go ahead.
- Arranging site inspection/visit
- Analysis of power bills and interval data
- Understanding your needs and goals
Inverters in a commercial-sized solar system
Generally, there are three options for choosing a solar inverter setup for a commercial-scale job.
- Chained string inverters
- Micro-inverters or optimisers
- Large central inverters
Cost is vital in a commercial solar system, and micro-inverters and optimisers generally carry a 20% premium in price over conventional string inverters but offer a variety of safety and performance benefits.
When installing your commercial solar system, it can be hard to justify an additional $50k expense for micro-inverters compared to a string inverter system that will effectively produce almost the same power.
String or central inverters represent a more cost-effective option. However, most commercial installers lean towards chaining residential-sized inverters instead of one large central inverter.
This preference is for a variety of reasons:
- Not all roofs suit a huge single array, and multiple smaller inverters give design flexibility with different strings
- Access. It is much easier to move and install briefcase-sized inverters than a central inverter that is the size of a small room – especially when heavy machinery is required to lift it into place.
- Redundancy – one failure does not jeopardise the entire system
Ultimately, we will provide recommendations based on your unique situation and help you decide whether you want a no-frills or an electrical engineering system on your roof.
At Westsun Energy, we take pride in providing our customers with as much information as possible before starting their solar journey. Contact us today to find out more from Perth’s solar specialists.
