09 Jun COMMERCIAL SOLAR – THE GUARANTEED INVESTMENT MISSED BY BUSINESS
Contrary to popular opinion, Australia’s commercial sector is widely in favour of strong action on climate change. Prior to the enactment of carbon pricing in 2011, supporters included BHP, AGL, and the Business Council of Australia. Worldwide, it’s accepted that climate change is going to significantly impact the future of each and every one of us, and global action is needed. Take the reaction of US business leaders to Trump’s withdrawal of the Paris Agreement as evidence.
Why then, are Australian companies laggards when it comes to utilising solar energy? While residential uptake is at its highest level in five years, the commercial sector is needlessly reluctant to install commercial solar photovoltaic (PV) systems. Is solar power a better investment for Mum & Dad than it is for business owners? Let’s investigate.
The commercial solar business case:
There are two aspects to a commercial power bill: consumption and demand. Look at consumption as your car’s odometer, slowly ticking over, month by month, year by year. Demand is your speed. Let’s say at 8 am you had your foot to the floor: turning on computers, lights and air conditioning. Once things were up and running, you eased back, popped on the cruise control and got stuck into your emails (once self-driving cars arrive, this analogy literally becomes reality. Hurry up Tesla).
While we understand the concept of consumption, many may not realise that they are also charged a demand tariff. The more you use at a certain time, i.e. the demand you place on the network, the greater this tariff may be.
Here’s where solar makes really good sense for businesses. Yes, a solar system reduces your power bill by replacing your grid consumption with [free] solar consumption. But it may also reduce your demand tariff through the same method. If you begin to place less demand on the grid, you may be eligible to reduce your tariff, making your solar investment even more profitable.
Let’s talk returns.
In 2016, a report was prepared for the Australian Clean Energy Regulator. It found that for a 30kW solar system, the return on investment was six years in New South Wales, and possibly even quicker in Queensland. This indicates an ROI of 17-20% from day one through to year 25, the estimated end to the life of a solar system. Economies of scale point to even greater returns on larger systems. The study didn’t consider in detail the potential reduction in peak-time consumption or demand tariffs, so the economic viability may be even more attractive. It did, however, consider small-scale technology certificates (STCs); rebates that reduce the initial cost of the solar system. STCs are reduced yearly, making now the most beneficial time to go solar.
Now that the business case has been put forward, consider the co-benefits. Encouragingly, the majority of Australians are in favour of strong action on climate change. Going commercial solar means going green, which means marketing and a positive brand image. Remember that this is incidental to installing a system. You’re going to save money anyway, this will only improve your business image and help drive even more revenue. It’s a true win-win. As more businesses install solar, and as strong action becomes mainstream, you will be in the position to say “I was there when it happened”, giving your business even more legitimacy.
Mark my words. One day, and one day soon, Australia will again have an emissions trading scheme. When that day comes, companies far and wide will be clamouring to reduce their emissions in every way possible. Commercial solar will be the first avenue they turn.
Not you. You’ll be in the enviable position of already having saved thousands, with emissions credits up your sleeve to sell to those with less foresight.
And isn’t the goal of every company to be ahead of the trend?