EECA recently published guidance for businesses weighing up commercial PV generation. As always, the devil lies in the detail, and understanding the methodology used to assess the viability of solar energy is important for businesses weighing up possible on-site PV generation.
The report, Commercial-scale solar in New Zealand: Information for businesses considering investing in solar energy highlights several crucial considerations. These include:
- suitability of the available roof space (ideally large and unshaded)
- their daytime electricity usage (higher daytime demand produces better returns)
- upfront costs (these range from around $1500-2000 per kW)
- maintenance needs and
- lifespan.
The real insights are in the methodology. EECA’s analysis wasn’t based on rough estimates: it involved a detailed, half-hourly examination of real electricity consumption data from 11 New Zealand businesses over an entire year. This granular approach is critical because, as the findings revealed, the timing of electricity demand, generation figures and network pricing are key to predicting financial viability.
The primary metric used was the internal rate of return (IRR), which showed a significant range. The high was 8.6% at a manufacturing site in Auckland but the low was very low: just 0.4% at a big-box retail site in Dunedin. What drove these variations? Timing of generation.
Big savings occur when on-site solar generation is happening when network charges are high, which effectively rewards demand reduction during peak times. The report authors noted that IRRs >5% generally required good network cost savings, while the IRRs >8% combined high network cost savings with significant energy cost savings.
The typically big, flat-ish roofs common in standard commercial buildings provide plenty of space for solar arrays. But what about the possibilities for residential buildings to generate more PV? It prompted me to think about strategies like east/west facing panels or incorporating fins onto the roof to maximise sunlight exposure at different times of the day. The underlying principle of aligning generation with demand and understanding the financial implications remains the same, even if the application and scale differ.
EECA’s insights emphasize the importance of a rigorous, data-driven approach. The report warns that detailed half-hourly analysis that models predicted generation, actual demand and network pricing is essential to accurately forecasting financial returns. Whether for a large commercial building with a flat roof or the potential for innovative solar designs on residential homes, EECA’s methodology is very helpful. I hope it will help drive more efficient PV generation in New Zealand.