Commercial Solar Step 1: 10 Things to Consider Before Getting Started with Solar
This is the first post of a series written by engineers and technical professionals from REC Solar | Duke Energy Renewables, one of the top providers of renewable energy solutions in the US. See the full stories as they roll out here.
Commercial solar installations are everywhere. On rooftops of buildings, factories and retail stores. In parking lots at schools and bus depots. Ground-mounted in farm fields, community solar open spaces and at water treatment plants.
Understanding the variables that make each commercial solar site or project unique before beginning construction is undeniably important to the success of any solar PV project. With more than 20 years of experience developing nearly 800 commercial, industrial and municipal projects, we’ve learned what needs to be considered — from energy demand, site conditions, financial options and more — before jumping into onsite solar PV generation.
Here are 10 common variables and customer requirements to keep in mind.
1. What are your energy consumption habits today (and are they changing)?
In order to determine how big your solar PV system needs to be, it’s essential to understand your energy usage. A detailed analysis of your energy bill for 12 to 18 months provides the data needed to help understand current and help project usage, including:
- Usage: track and understand impacts, such as seasonal cooling, that change your energy bill. Also look at what may be changing for your facilities – for example, if you plan to add EV charging stations in the future, your usage will likely increase.
- Demand: spikes in usage may include spikes in energy charges, based on your facility/facilities location, electric utility rate, climate, and more.
- Programs: are you taking advantage of demand response or other utility incentives that may lower your energy rates?
- Time of Use (TOU): Many utilities are shifting to time of use rates, charging more when there is more demand for grid-sourced energy. Onsite solar generation plus battery energy storage is a great consideration under TOU.
2. Consider energy resiliency and the cost of grid downtime
Energy resiliency is the ability to withstand, respond to, and recover from interruptions to utility power. How much resiliency your business needs will depend on your operations, the critical services you provide, or processes that need to be powered regardless of what’s impacting the utility grid.
A solar-only solution will not keep the lights on in the event of a utility grid power outage. If resiliency is essential, then storage, “islanding” software, specialized inverters, and/or other technologies are needed to enable your onsite generation to operate independently from the grid.
3. Is the site right for commercial solar? Will a utility-scale project work?
Rooftop, ground-mount, and carport are the basic solar installation options. Which option is best for your business will depend on a host of factors:
Terrain matters for ground-mount systems. It’s essential to understand your soil conditions if this is the option that you think will work best. This can be handled relatively quickly using a competent third party for a geotechnical analysis
Rooftop installations on expansive buildings can be ideal for industrials, pharmaceuticals or distributions centers, when the rooftop serves no other purpose beyond its basic function of keeping the elements out. For rooftop installations, it’s essential to look at the type and age of the roof to determine which type of racking systems makes the most sense and to assess related costs.
Carports and canopy systems involving a rigid structure over a parking lot or other land can be effectively used for a solar array. Getting a handle on clearance dimensions is an important variable to calculating the cost of the system.
4. What about the weather?
Solar installations must be designed to withstand local weather conditions, including hail, wind, rain, ice, and snow. It’s not uncommon for PV panels to be damaged by weather events. For rooftop and canopy systems, lightning protection may need to be factored in as well. Fortunately, systems can be designed to reduce the impact of weather-related damage. Appropriate insurance coverage and plans for operations and maintenance should also be start-of-project considerations.
5. Comply with building codes and local utility regulations
It’s crucial to work with a developer who understands all code requirements, including local, utility-specific, (see interconnection) and national codes.
For example, while the National Electrical Code (NEC®) already has a 2020 edition, most of the country is still following 2017 NEC requirements. The NEC version can vary by location, impacting local hardware, equipment and operations choices. A great example is the NEC’s Rapid Shutdown requirements that enable emergency personnel to de-energize a system quickly and easily in the event of a fire. Assure your developer has adequate experience and staffing to keep up with a variety of codes and changes as they occur.
6. Transmission type and distance
Determine the infrastructure required to move energy from where it’s generated to where it will be used and calculate the related costs. If you need to move the generated energy from a PV array more than a quarter of a mile, there can be substantial costs associated with that. For example, if an array is built to power an agricultural operation with multiple irrigation pumps — where operations are typically spread out over a large expanse of land – then moving power from the array to where it is used may involve substantial infrastructure, building power lines, and working with the Authority Having Jurisdiction (AHJ) to understand local requirements.
7. Factor in local labor rates
From construction to electricians to equipment operators, labor rates vary greatly based on location. Work with a project developer who has extensive knowledge with commercial and utility-scale solar. Such leaders will insulate you from variable risk such as fluctuating labor availability, compensation, and insurance.
8. What are the tax implications?
This one may seem self-explanatory, yet it often trips up long-term project return on investment (ROI) if not factored in adequately before projects start. Investing in commercial solar and solar plus storage is a definite property improvement with significant long-term value. Sales taxes at point of purchase should also be factored in as well as any additional property assessments, such as parcel taxes.
It is important to note that some jurisdictions may exempt select business types from sales tax on solar. For example, in New York, some counties fully exempt all sales tax, whereas in California, agriculture and some manufacturers are exempt from a portion of the state sales tax.
9. Explore financing, local exemptions and applicable incentives
|UPFRONT COST||None||None||Full cost|
|TAX CREDITS*||Given to financer||Given to financer||Given to customer|
|MAINTENANCE||Covered by financer||Offered||Offered|
|INSURANCE||Covered by financer||Offered||Customer owned|
|RELIABILITY FACTOR||Offered||Offered||Not offered|
|PERFORMANCE RISK||Financed||Financed||Customer owned|
|TERM||Typically 10-15 years||7-10 years*||Customer owned|
If you’re investing in onsite solar, there are many factors to consider. From the U.S. Federal Investment Tax Credit (ITC) to state and local incentives, incentives vary and change. If dealing with third party finance, assure that your finance partner has the wherewithal to understand the options and simplify the process of finance.
10. Don’t forget operations and maintenance
Do it yourself or pay professionals. That’s the decision when it comes to operations and maintenance (O&M) to keep your solar energy generation at peak performance. Before deciding, keep in mind that reputable solar EPCs will guarantee solar panels for 25 years. Yet the panels themselves will often continue to work for 35, 40 or more years. Effective O&M strategies will make significant impact on your bottom line and return on investment.
Additional Commercial Solar Resources
Webcast: Solar + Storage
Whitepaper: Solar for Business
Whitepaper: Understanding Your Energy Bill
Blog: Energy Demand Charges Explained: What They Are and Why You Should Care
About the Author
Richard Murphy is a top professional, specializing in commercial project engineering, modeling and financial analysis. He helps REC Solar – a Duke Energy Renewables company – and its customers establish initial designs for commercial solar projects to accurately estimate costs and potential ROI. Richard works with commercial and industrial enterprises to analyze if their potential solar projects makes sense for their operations, facilities and locations.