Solar for your Business - How it Works to Save You Money

Thursday, March 19, 2020

The Basics: kWh

So as a business owner you have heard about commercial solar systems and how they can save you money but you are still not sure of the whole process. What does it all mean? How does solar save money for a business?

Let’s start with the basics. Your electricity bill has various charges. Some are fixed like the service charge and others are based on your electricity consumption. The unit on which your business is charged is the kilowatt hour ( kWh)  which is a unit of energy.

For example , 100 watt light on for 10 hours uses 1 kWh. Basically on your bill under usage it may say that per kWh the retailer charges you, say $0.25 and the cost of running your 100 watt light for 10 hours is, therefore,  $0.25.

Tariffs: Peak & Off-Peak

On many bills there is a peak tariff and off peak tariff ( and in some cases a shoulder) so this means that the same energy used at different times of the day has a different cost.

Now as we are talking about a commercial solar system with no energy storage ( see blog on energy storage for more info) the ability of the commercial solar system to address site loads, in other words how much electricity is being used, is limited to daylight hours.

How It All Works

So how does this work? When the solar is producing it directly addresses the site loads. If the loads exceed the ability of the solar at that point in time to supply enough energy, the grid helps out. If the solar is producing more than the site is consuming the excess goes back out to the grid and this excess has a certain value attached to it, usually a lot less than the cost to draw energy from the grid.

A Financial Proposal

As a commercial solar system is offered as a financial proposal the solar system designer looks to put together a system that attempts satisfies all the relevant criteria. You, as a business owner, are looking at solar, in most cases from a purely financial proposition. Should you hire additional staff, invest in  more machinery or reduce your ever increasing electricity bills?

Solar System Output

Now, I will get into a tiny bit of nitty gritty! A 100 kW system means the total amount of solar panels on your roof amounts to 100,000 watts or 100 kW, made up of individual panels, commonly around the 350 - 400 watt mark. This 100 kW figure does not mean that the system will continuously produce 100 kW. The reality is that the system, if North facing in the Southern Hemisphere, will produce a peak of 100 kW for short periods of time. What’s important is how much energy, in kWh, will be produced and when. Remember we are trying to address the loads on site to reduce electrical draw from the grid and thereby saving money.

In this example the system is orientated towards true North so peak production is at 12.00 pm, effectively a Bell curve.

What Good Designers Should Do

What the prudent commercial solar system designer must do is:

  • Find out the sites average daily load
  • Access the sites interval data, short increments of time showing site loads
  • Take into account the physical nature of the site, i.e. size of roof etc
  • Design a system that maximizes the the ability to address the site loads directly 
  • Minimize or take into account excess solar production going out to the grid

Then offer this proposal in a visually appealing package with the added bonus of a PPG ( Power Production Guarantee).

Payback Period

Currently many commercial systems are offered with 4 - 5 year pay back periods and the ideal situation is from day one the system offered is cash positive.

So, you have now been presented with the proposal. You have exercised due diligence and have done you sums and the answer is yes. What is the process now?

The Process

After paying a deposit project is locked in and the application to the distributor process begins. This is necessary due to the fact that the system size exceeds 30 kW. Basically you the future system owner, via the company that offered the proposal, must ask for permission from the distributors to allow the system to connect to their infrastructure. In other words they own the poles and wires. This is different from the retailer who you pay directly for the energy consumed on your site.

This application process is fairly lengthy and complex and can sometimes take up to 12 weeks to finalise ( sometimes less depending on the site and system specifics and the particular distributor involved. Some Are easier to deal with than others. Remember this process is taken care of by the company whose proposal you have accepted. They do the work, not you!

Grid Application Accepted

After the application has been accepted then the installation side of the project starts to be organised. Materials are organised, site drawings are constructed and a project timeline is created. The project management side is vital on all jobs but is especially important when it comes to the larger commercial project. The stakeholder wants a timely completion with minimal disruption to any business activities and the commercial solar company wants to complete works on time and on budget.


The decision for your business to go the solar road must be built on a careful assessment of the financial viability of such an endeavour. Select a company with a good reputation and the ability to listen. You have to be aware of the timeline involved from initial grid application process all the way through to the conclusion of the process. Remember a commercial solar system will negate energy from the grid and will save you money and allow, by default, investment in other areas of your business. Exercise due diligence, be prudent in you cost benefit analysis of the options before you and make the best decision for you and your business.


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