Energy management: Making the switch to on-site solar generation - by Jim Dumas

Jim Dumas, Solect
Energy

Working towards a more efficient energy management plan requires advances in energy reduction and energy optimization. There are a number of ways to control energy costs—assessing your building for energy losses, instituting better control systems, and replacing old operating equipment with high-efficiency models. But if your business is looking to take that next step, deploying an on-site renewable energy system, such as solar, is a substantially effective solution.

Not only does on-site energy generation help save on energy-related costs, but it also provides a more stable means of electricity production. Gaining energy independence allows businesses to dodge fluctuating electricity markets, which often experiences spikes in costs during times of peak demand (cold New England winters). Moreover, self-generating electricity reduces reliance on carbon-based fossil fuels, decreasing greenhouse gas emissions and, ultimately, benefitting the environment.

Types of on-site energy systems

Wind: Wind turbines create electricity by propelling blades around a rotor that connect to the main shaft, which in turn spin a generator producing electricity. Like solar panels, turbines generate power on or off the grid and produces clean energy, creating a positive environmental impact.

Combined Heat and Power (CHP): CHP systems use thermal energy to generate both heating/cooling and electricity. These systems can operate at an 80% efficiency level, while the conventional method of producing heat and power separately typically has a combined efficiency of only 45%.

Solar: Solar photovoltaic systems are exceptionally impactful forms of on-site energy that directly convert sunlight into serviceable electricity. If your system produces more electricity than needed, the extra electricity typically gets delivered back to the utility grid, allocating a credit for the electricity your system contributes to the grid (net-metering). Alternatively, you may also install an energy storage solution—a battery that stores energy from solar panels during the day, allowing access to solar generated electricity at night or other times of the day when your array isn’t producing at maximum capacity.

Solar Incentives Making the commitment to on-site solar generation enables businesses to reap the benefits of state and federal solar incentives, enabling cost savings while meeting long-term sustainability goals.

Different states offer different incentives, so it’s important to work with a solar energy company that is knowledgeable in the different programs available to commercial businesses and organizations. For instance, Rhode Island’s current renewable energy incentive programs – the Renewable Energy Fund (REF) and Renewable Energy Growth (REG) are vastly different from Massachusetts’ Solar Renewable Energy Certificate (SREC) incentive program. Additionally, state programs often change with different political agendas, so ensuring you know what’s available to your business- and when- is an important part of understanding solar/renewable energy’s economic feasibility.

The solar Investment Tax Credit (ITC) is another important incentive encouraging the growth of solar energy in the United States. The ITC awards a 30% tax credit towards the purchase of solar renewable energy systems on residential and commercial properties, and it will remain active at current levels until the end of 2019.

Financing options Depending on an organization’s needs and goals, there are a variety of financing options that enable most organizations (commercial businesses, municipalities, non-profits) to take advantage of solar energy.

Purchasing and owning your own on-site solar system offers the best long-term savings. When purchasing an on-site solar system, companies will pay the lowest electricity rates over time, and can take advantage of state and federal solar incentives.

Under a solar lease model, the business/property owner installs an array on their rooftop/land and acquires the solar array via a capital or operating lease. These financing methods are common for businesses that prefer to deploy their capital in other areas of their business. Additionally, when leasing a solar panel system, there is no on-going maintenance since the system is owned by a third party.

Power Purchase Agreements (PPAs) are contracts where solar energy companies develop, build, own and maintain a system on the customer’s site, selling the generated electricity back to the organization at a reduced, fixed rate for an extended period of time (typically 15-20 years). Under this model, the customer incurs no (or very low) upfront costs.

Once a business has assessed its energy use through energy reduction and optimization, on-site energy generation is the next sensible step. Installing an on-site renewable energy solution is a big investment, so it’s important to find a company with significant knowledge and expertise in the development, financing, installation and management of the technology you are considering. Upon establishing the best way to deploy an on-site renewable energy system, such as solar, you can maximize your energy efficiency even further —to be discussed soon—by investing energy storage technology.

Jim Dumas is co-founder and chief operating officer of Solect Energy in Hopkinton, Mass.