The economics of an investment in solar power – part 3

by Energy Action | Feb 09, 2017
In the third and last article in this series, we look to demystify the economic specifics of an investment in solar power. This time, we look at coverage of a solar package and what it means to invest in a Power Purchase Agreement (PPA).

Solar energy has seen a global increase in consumption as more countries recognise the obvious benefits. It’s a topic that we seem to be having more conversations about and predict it will increase in the years to come. 

Although solar power continues to account for a small share of overall energy supply, commercial and industrial sectors are slowly embracing or thinking about investing in renewable energy.

 
If you’re looking into solar packaging you must consider the payback, sizing, and coverage of the solutions before you sign on the dotted line.

In part one of our ‘economics of an investment in solar power’ 3 part series, we identified the importance of recognising the payback range for solar packaging. It also highlighted how this payback period may sway to invest in a Power Purchase Agreement (PPA). Have a read here.

Part two looked at solar installation sizing and what that means for your decision in investing in a PPA. Have a read of it here.

In our third and final blog, we look at coverage of the solar package and what it means for your decision to invest in a PPA.

 Coverage

Regardless of the amount of roof space that you have, there is a relationship between your average daytime power usage and your total power usage. It dictates that only 20-30 per cent of your sites energy needs will be covered by solar power alone.

This means that even with batteries potentially doubling the power you can use on site (and assuming a huge roof area) you will not be off grid using solar and batteries alone. 

What does coverage mean for your decision to invest in a PPA? 

The key message is that you will still be dependent upon your electricity retailer. Perhaps even more dependent upon your electricity retailer for the supply of power to your site.

Your current electricity contract may have volume variation penalties, which imply increased costs when you under consume or over consume against the grid. Your considerations of a PPA for solar must take account of this factor, so that you do not incur unexpected costs.

Setting expectations when you go to market is one step in the process of ensuring that your contract will not be punitive. Checking your contract before you sign it is another step. Then, finally, constant vigilance is required to ensure that things to go awry in the retailer billing system through the course of your contract. 

Every business is different so it’s generally not a ‘one size fits all’ approach. We advise that you speak with your energy retailer (or us) to assess your individual needs and what arrangement is best suited for your working environment.  

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