We routinely get this question as we assess buildings for potential energy efficiency improvements. Unfortunately, there isn’t an easy answer. There are many variables that need to be considered when contemplating whether a solar project makes sense for your buildings. In this article we discuss some of the more important questions to ask before adding solar generation on your facilities.
1. Electric Utility Rate Structure and Each Building’s Utility Load Profile
This is perhaps the most important variable to consider when determining the financial viability of a solar installation. In a recent project, we evaluated 12 buildings in a school district. Several of them had the same utility rate structure, but the maximum demand and number of run hours of each building varied greatly; which affects the cost of electric consumption and therefore how much the solar production value would be for that individual electric meter/building. We saw a huge variance in the effective solar production value for each building. In some buildings a 100 kW solar array would produce around $12,000 annually, and in other buildings that same size array would only produce $6,000 annually. Both arrays would have produced the same amount of electricity for the building, but we projected a huge difference in actual dollars saved.
75 kW Array – Shawnee Fire Station 72
2. Cost and Quality of Solar Panels
Good quality solar panels should generate electricity for over 25 years. Make sure what you’re purchasing is from a reputable source with warranties on production for 20+ years.
3. The Roof Under the Solar Panels
Often the best time to install solar is right after a roof project. Most commercial roofs should last over 20 years. Typically, we don’t see an increase in insurance premiums when our public sector clients install solar on their buildings. But speak with your insurance provider to make sure.
If your roofs are old or approaching the end of life that’s OK. We have seen clients include in a bid to remove/reinstall the roof once after the first 10 years, to account for eventual need for roofing replacements. This should just be discussed with your solar designer/installing contractor.
4. How Do I Pay for Solar?
Our public sector clients typically finance projects through their financial advisor. We have seen many ways this this type of project gets funded. Most recently, one of our clients used a lease-purchase with a 20-year term to fund the construction. Financed in this way, their return on investment was around 9-10 years.
Commercial sector clients would also be able to take advantage of renewable tax credits, which could reduce the capital cost of an array by 35%.
75 kW Array – Orrick R-XI School District
About the author – Ryan Terry is a business development manager with Navitas. His background as a professional engineer and 19 years of experience in the energy industry help him bring a practical approach to developing strategies for public sector clients who want guidance in how to initiate an energy conservation program in their facilities. He can be reached at rterry@navitas.us.com.