Commercial solar in Australia goes from strength to strength
By Daman Cole, Managing Director, Yingli Green Energy Australia
Friday, 13 March, 2015
There is absolutely no doubt that solar will be one of the mainstream technologies of the future, both worldwide and in Australia. Together with wind, it is already making up the vast majority of new energy generation installed around the world.
For example, one of the largest energy companies in the world, E.ON in Germany, has entirely divested away from traditional energy sources and is now focused solely on a portfolio of renewables.
Back on home ground, the commercial sector is the fastest growing sector of the solar market in Australia, with thousands of businesses realising its benefits in reducing business risk, locking in energy prices, slashing electricity bills and making a strong and positive statement about their environmental impact.
Solar provides businesses with a seat at the table with their own energy contracts and allows a little more control over energy and its rising costs. We have seen returns on investment of between 20-25%, year-on-year, depending on the type of business and subject to current electricity rates. What’s more, solar is relevant for any organisation - in fact, our customers include a wide variety of businesses, from IKEA to Australia Post, Monash University to Burder Industries (manufacturing) and Glenlynn (aged care) to Balgownie Estate (wine).
However, there are several factors that businesses need to review before proceeding.
The quality of the products and the track record of both the manufacturer and the installer are all important questions to consider, in order to guarantee sustainable financial returns. Businesses need to apply the same level of due diligence as they would to any other major capital expense to ensure they have a quality product and dedicated local support for optimum performance over time. The solar market has become very price sensitive, but the cheapest products are unlikely to deliver the best long-term returns or have any local support mechanisms on the ground.
One useful tool for buyers is the Australian Solar Council’s Positive Quality program. This benchmark (based on random spot checks of participating manufacturers) has been designed to provide customers with peace of mind regarding the components they are buying and a guarantee of quality.
One of the relatively unknown aspects with commercial solar is grid connection. The viability and process varies from site to site, so thorough upfront analysis by the solar installer and good communication with the local utility is essential. This only further highlights the need to choose a reputable installer with good commercial experience.
At Yingli, we are focused on empowering solar installers on the front line with our YINGLI 4 YOU Partner Program. We want to ensure that our installers have the most up-to-date training and product knowledge and understand the full electrical needs of solar, how the panels are made, how they generate electricity, how they offset usage and how it must be maintained for the long-term optimum efficiency of solar. The aim, of course, is for solar buyers to have confidence in businesses that can show partnership with global manufacturers.
Unfortunately, the growth of solar in the commercial market is not being reflected in large-scale, utility-scale solar. Political uncertainty around the Renewable Energy Target has stifled investment and confidence in large-scale projects and this has had a flow-on effect to the appetites of most banks and lending institutions. As a result, larger engineered projects are not evolving and the solar industry is currently very focused on the markets which can be serviced by upfront capital (commercial and residential).
We believe that for solar to grow to its full potential, the solar industry, government and energy companies need to find ways to integrate solar into the grid in ways that are more digestible for energy companies and make practical sense for investors. To date, government support for solar has been weighted towards consumers. We now need to find a blend and balance between the two. For me, it is about trying to find better unity between the solar industry and the existing grid. In some instances the grid may be transmitting from traditional coal-fired power stations from thousands of kilometres away, whereas if you can mitigate some of that by installing smaller solar farms along that transmission line, surely that would also benefit the networks and generators by providing a more cost-effective solution.
Around the world, there are large solar projects of anything from 30-600 MW, whereas it may be more relevant to consider a series of 2 and 5 MW projects in essential spots to support the grid. This approach would allow for a transition from residential and commercial rooftops to the application of smaller large-scale projects, all supporting communities and without heavily impacting the existing networks.
Ultimately, despite some innate uncertainty in the market, my core message is that the potential for commercial solar in this country is huge.
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