Solar Panels & The Future of Energy in Australia
In Season 2, Episode 3 of our SteelTalk Webinar Series, we talk with Andy McCarthy, CEO and Director at RACV Solar about what’s happening in the commercial solar and energy storage space.
RACV Solar was founded in 2010, initially branded as Gippsland Solar back when only 2% of homes in the Latrobe Valley had solar systems. Fast forward to today and the industry has progressed in leaps and bounds, as evidenced by Andy’s 170-strong installation and support team.
How Does Solar Work?
In a nutshell, solar panels work by converting photon energy from the sun into DC electricity, thanks to the movement of electrons on the layers of the solar panels. This DC current flows to an inverter to become AC electricity that can handle some or all of a building’s power needs.
So, if you’re generating a 1kW of solar energy during the day and you’re using this energy immediately in your business, that energy is never making it to the grid: it’s being consumed as ‘free energy’ as soon as it is made.
This means it’s not being fed back to the grid, which is an important distinction to make.
Using Solar Power Immediately vs Feeding Back to the Grid
If you are feeding solar-generated power back to the grid, you’re often only going to receive a couple of cents for it per kilowatt, and you’re also at the mercy of government legislation and changes to the spot price of electricity.
However, if you’re keeping the power that you generate in-house and using it before it actually gets to the grid, you are likely getting the best possible value from it.
This concept is driving the boom in the commercial solar projects across Australia, with some customers generating and using 100kW of solar energy, for example, seeing a return on investment of less than four years.
The Evolution of Solar Systems
Across Australia we’re now seeing 1 in 4 households with solar panels, making us one of the fastest adopters of solar energy in the world.
In the residential market, the average home uses around half the power they generate immediately, and the other half is fed to the grid. But gone are the days when you could receive more than 60 cents per kilowatt for feeding power to the grid: these days the tariff sits at around 5 cents.
However, Andy reports that we’ve also seen a serious about-face in the initial cost of solar installations. An average 5kW home installation in the early days was priced around $18,000, whereas now the same sized system will cost you less than $5,000 to install.
Overall, we’re seeing a higher uptake due to the lower initial outlay, but feed-in tariffs are dropping due to a potential overload of solar headed to the grid. In Victoria, for example, the level of renewable energy in the system can sometimes top 80%, meaning there is sometimes too much renewable energy in grids that were not designed to handle the load.
Low feed-in tariffs are prompting a higher uptake of battery installations too, as more people realise that feeding excess solar power to the grid doesn’t make financial sense.
The bottom line is that both homeowners and businesses need to use their solar power wisely and keep it on site where possible to ensure they get the maximum environmental benefit and cost savings from their system.
The Future of Solar and How to Maximise ROI
Andy notes that the solar market has evolved to a point where there might be 20 or so 100kW big commercial systems being installed every week, after the first 100kW system was installed in Victoria just 10 years ago.
A system of this size is a good yardstick as it offers the best return on investment for building owners. A 100kW solar system installed at 6 degrees on an east/west commercial shed roof might cost around $100,000 and save the owner around $25,000 per year, meaning they can recoup their outlay in just four years.
More complex projects that include battery storage are becoming more popular too as the nuances of commercial electricity bills change, and government policy (particularly in Victoria) becomes increasingly supportive of the uptake of renewables.
The transport industry is at the forefront of solar energy too, as the industry moves towards electric vehicles, electric charging and power stations and bigger public transport networks powered by renewable energy.
Commercial Solar Battery Systems: Are They Worth It?
Whilst solar batteries were previously only used to store power to use at night, there are now several different ways to generate revenue from a solar battery. These include timed feed-in to the grid to help support peak demand, enabling businesses to recoup serious dollars over a short period of time.
Andy predicts that there will continue to be an upward trend in solar & battery systems as the understanding of how to best use battery-stored solar power becomes more prevalent. This is true for both smaller residential installations and solar farms, which are heading towards mandated battery storage on new projects.
However, solar batteries don’t always make sense for every project: Andy notes that currently, only around 3 out of every 10 commercial installations are projects worthy of including a battery due to the cost/benefit ratio.
The method for determining whether a solar battery is a worthwhile investment is twofold. Firstly, looking at energy use in short 15-minute increments helps the solar provider assess how and when a business is using power, and secondly, overlaying data of the solar radiation for that area helps to determine what impact a battery will have on the overall power usage.
As an example, a cold storage facility with 24/7 refrigeration might be using 100kW evenly across the day and night which would make them the perfect candidate for a solar system without a battery, as every kilowatt hour they produce will get used before going to the grid.
On the other hand, a manufacturing facility using a large machine a few times a day might also be using 100kW per day in total, but it is being used in peaks or bursts. In this situation, a battery makes much more sense as it offers better ROI than feeding the unused power back to the grid, and helps to reduce the demand charge.
A demand charge is imposed by the electricity company to ensure your peak demand is constantly available – even if you only use it once a week. That means if your large machine draws 400kW for a single production process that happens for 5 minutes once a week, your power company will ensure that capacity is available every day.
This demand charge can be significant – up to 30% of your electricity bill – so a battery can absolutely help in this situation.
In any case, a detailed feasibility study from your solar provider will ensure you understand the pros and cons of a battery for your individual project.
Examples of Solar Systems in Commercial Structures
Commercial structures naturally lend themselves to large solar installations due to their expansive roof space and the fact that they are often positioned in open areas exposed to full sun.
In our webinar, Andy covers two impressive commercial solar installations: a complex 1.4-megawatt system installed on the roof of Latrobe Regional Hospital and a 2.6-megawatt system with 10mWh of storage at Australia’s largest private shopping centre in Narellan.
For the Latrobe project, a whopping 5000 solar panels were installed over 58 different roof areas over the space of nine months. The hospital site presented unique challenges: of course, a hospital operates 24/7 and cannot be without power, so RACV Solar had to overcome this with their specialist team.
For the Narellan project, all of their solar power is being used during daylight hours, however a battery system was included in this project as an additional revenue stream. In this part of the grid, the demand for power fluctuates and the infrastructure isn’t always available to support peak demand, so the inclusion of the battery has enabled the shopping centre to act as a mini power station and feed power to the grid, generating significant revenue.
Get help with designing a solar installation for your commercial building
If you’re considering installing solar panels on your commercial structure, it’s worth advising your design team at the outset so that your roof can be designed and engineered with solar in mind.
Steelcorp partners with reputable specialists like RACV Solar to offer an end to end service.
From solar feasibility studies to design, weather modelling, installation, commissioning, ongoing maintenance and performance monitoring, the Steelcorp team can work with you and your solar provider to ensure you’re getting the best system for your project.