People’s motivations for seeking renewable power for their businesses can be broad: Reducing energy costs, doing their part to save the planet, and even bragging rights are among some of the most popular reasons to go green. Often, it’s a combination of all of those things.
Regardless of what drives an individual in taking the first step towards solar power for their business, it’s that first step that may be enough to stop them in their tracks.
The number of avenues available can be overwhelming. Some of that can be attributed to marketing. Vendors try to differentiate their services from the rest of the pack, which can lead to confusion about the business model behind the marketing.
That is really only part of a bigger issue: some of the concepts in play are understandably foreign to the average person.
Conceding up front that an exception exists to every rule and that not every state fully supports all of these programs, there are three basic models to consider for the majority of potential business consumers:
- Customer Owned On-Site Systems
- Third Party On-Site Systems
- Community Solar
Keep in mind that other options for off-site customer-owned models exist, as do many other variants that don’t fall neatly in these three buckets. But for now, let’s take a look at the three basic models as options for a business exploring solar.
Customer-owned on-site systems are probably the easiest option for people to understand. The key notion is that the customer finances and owns the system.
From a pure long-term investment standpoint, this model shines. Where many people pause, however, is with the up-front cost that is required, which can run a business tens of thousands of dollars for the average installation. Add in operations and maintenance costs, and the price of entry and ownership may scare many people away. That’s where our next model option comes in.
A simple Google search will likely return the most popular option: third-party on-site systems. These systems are common because they provide a win-win scenario to the consumer: the customer gets their on-site photovoltaic system, energy costs fall, and all without a major up-front cash payment. The system provider is also smiling, because they may have just secured a long-term revenue stream, depending on the arrangement.
These systems often involve a Power Purchase Agreement (through which the owner buys the power that is produced at an agreed rate over a long term) or a “lease to own” model, in which the owner and the system provider split the value of the energy savings over a period of time.
The number of variations in economic models likely to be encountered will roughly equal the number of system providers you review, so doing a true “apples to apples” comparison isn’t going to be a simple task. Short of engaging a professional to assist you in evaluating realistic payback scenarios and potential pitfalls, plan on doing a lot of reading and learning to make sure you are getting the option that fits your needs.
If your motivations for “going green” don’t require you to display your solar panels, your location includes a lot of shade, you are a renter, you don’t want to be locked in to a long-term investment, or any one of a number of other reasons that don’t make on-site solar a good fit, then there is yet another avenue to consider: community solar.
In simple terms, this typically means a ground-mounted photovoltaic system installed on the same utility network as you. The system owner seeks subscribers to buy a portion of the system output, often at a rate that is 10% lower than the subscriber currently pays the utility company. The customer is signing up to buy green power and reduce their electric bill, generally without a long-term commitment. This option has become quite popular for obvious reasons, as it’s a pretty painless way to save money.
These three basic models are really just the entrance to a deep rabbit hole. When you zoom out to the community level, you’ll learn about microgrids and community choice aggregation programs. Zoom out a little farther, and you’ll find large-scale renewable generation that may total hundreds of megawatts.
For the average business consumer, chances are that one of the options—a customer owned on-site system, a third-party on-site system, or a community solar program—are viable and readily available. Having a clear understanding of your businesses needs will help determine the best avenue for renewable power.
Steven Longway is director of Buildings Engineering at LaBella Associates.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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