Solar Energy is green and sustainable. We all know this but when considering solar energy for a commercial and/or industrial facility there is a lot more to consider than the environment. The environment may have led management to look into solar but the cost and benefit are the main drivers for implementation. When evaluating your facility for feasibility it is best to work with experts that understand the data needed and how to analyze that data.
There are several aspects to solar that need to be determined during a feasibility study.
1. Preliminary Design
First you will need to know what can fit on or near your facility. Starting with a maximum potential is a smart strategy. This is done by creating a rendering of your site and populating solar modules in a workable configuration. This preliminary design will be the starting point for the feasibility study.
2. Estimated kWh Production
Once the solar system size is determined the production estimate can be calculated. Solar produces different amounts of power at different locations and the equipment being used plays a crucial role as well. There are several pay and play solar production modeling programs in the market. They all work great to determine an accurate projection of your solar array performance. Once the production modeling is complete it must be compared to the electric bill usage history.
3. Incentive Analysis
The third step is finding all applicable incentives. Incentives are different from state to state and utility to utility. Incentives also change rapidly and may be depleted quickly. Any incentives established during project feasibility will need to have an accurate or estimated expiration date. The expiration date will allow you to know how your investment looks now vs sometime in the future. This will assure the project you choose today has the same financials if you move forward down the road.
4. Cost
Next you will need to determine the potential cost for the solar array as designed. This can be done by obtaining quotes from qualified solar contractors or working with an industry expert who can provide this to you (Keeping the solar sales teams at arm’s length is a good strategy in the early stages).
5. Financing Options
Next you will need to understand financing options. There are several options for financing solar and not all solar companies offer them all. Having a clear understanding of the different lease options, loan options and non-ownership options is key to implementing the best solution for your facility.
6. Financial Analysis
The information obtained from steps 1-5 can be compiled into a life of solar pro-forma and this can be used to determine which method makes the most sense. Since solar modules last 25+ years you should expect to see a 25 year cash flow showing tax effect, maintenance, replacement costs, financing cost and any other associated costs expected over the life of the solar array.
Solar does not make financial sense everywhere and some facility owners have different criteria for investments like solar. The only way to know is for an in depth analysis to be performed and feasibility determined. Independent solar consultants can work with you to save you time and make sure you get the facts before bringing sales people in the door.
Written By:
Jason Campbell – Owner
JMC Energy, Solar Consulting