Renewable Solar Energy and Site Selection Decisions
tility costs are typically a key factor in site selection decisions and sustainability continues to be a source of discussion at the top of many corporate and governmental agendas and solar energy continues to be a leader in renewable energy solutions. Top companies such as Target, Walmart, Prologis, Apple, and IKEA are just a few of the large corporations employing solar as a means of renewable energy production.
WHAT IS SOLAR ENERGY
Solar energy is simply energy emitted by the sun. Collecting it and turning it into electricity to power homes and business is the objective. For the most part, solar panels convert the sun’s light into a usable and renewable energy source through semi-conductors. The process of converting the light into electricity is called the photovoltaic effect (PV).
Solar panels absorb and trap the solar energy. This electricity travels from the panels to an inverter that converts the Direct Current (DC) power into Alternating Current (AC). The downfall is that on a cloudy day or at night, panels are not collecting much, if any, electricity. But when it’s sunny, the panels may collect more electricity than can be used and this energy goes back to the grid.
Net-metering is when more solar electricity is produced that can be used. The excess gets sent back to the public-utility power grid. Later, at night or during cloudy weather, the excess electricity on the grid can be pulled for use. Essentially, the grid is storing the excess energy until it is needed.
A company generating its own energy from solar typically has peaks and valleys of energy consumption (typically less in the summer and more in the winter). This is the opposite, typically, of energy generation (more in the summer and less in the winter). Net-metering allows the company to sell the excess energy to the utility companies for a credit at a retail rate.
WHY USE SOLAR ENERGY FOR A CORPORATE FACILITY
Why generate your own energy?
- Reduce operating costs
- Lock-in energy costs
- Decrease carbon footprint
It’s cheaper. Especially for smaller facilities. The cost of energy becomes a flat line cost in the operating expenses for example for 25-20 years that solar panels are expected to last and generate energy. Generating your own energy can control a line item operating expenses for decades.
THE CHALLENGES OF USING SOLAR ENERGY
Two primary challenges exist. The cost of installation of sufficient panels for the company’s energy consumption can be significant and new legislation is being considered in some states as utility companies work to control the solar markets.
A thorough due diligence of current and anticipated electricity would be required to accurately price an appropriately sized solar panel system for any company. The price is developed from the configuration of the panels and the estimated monthly output of electricity (KWh) needed. Additionally grid tie-in would need evaluated. Understanding the electricity rates at the location of the facility is key in this evaluation. However, there is a federal tax credit and depreciation incentives available for investments in renewable energy that could match the goals and objectives of a company.
Several states are looking at legislation that would change the pricing of the net metering credit for electricity being stored on the grid. This could be a determining factor in the site selection process for a company interested in renewable energy.
For example, SB309 in Indiana looks to credit the system owners’ excess energy at the wholesale price per Kwh and then later allow the system owners to buy back that energy at retail rates. This legislation could potentially reduce one incentive for companies evaluating sites where they are interested in renewable energy.
Understanding the local utility rates and historical inflation, along with corporate culture and value systems is key in determining if renewable solar energy is a topic that should be in discussion as part of any location decision. It is important to continue to gather information when considering any renewable energy source as a part of a location decision. Rates and regulations vary vastly in different regions of the country and legislation may be on-going.