Creative Ways to Make Solar Pay Back for Commercial Buildings

Editor's Note: This post is the second in a two-part series about commercial onsite solar. In case you missed it, you can read the first post here.

For too many American businesses, installing an onsite solar system is untenable thanks to solar-killing utility tariffs.

Local permitting can also kill a project. For many permitting departments, a solar project gains extra attention despite being proven technologically with thousands of permitted precedences.

The first of this two-part article series profiled these key issues.

But a solar project can still be developed successfully in the face of solar-killing utility rate designs and extra city permitting attention.

Using smart technology to overcome utility demand charges

Customer-owned solar economics used to be pretty straightforward. Many utilities offered net metering that allowed a customer-owned solar system to spin the meter backward. Net-metered solar projects could zero out their electricity bills by satisfying 100 percent of a building’s energy consumption.

However, net metering allows a building with solar to use the grid but pay nothing for this service.

To correct this flaw, utilities won approvals to apply non-coincident demand charges. A demand charge should recover grid investment costs created by a building’s use of the grid. But utilities have used non-coincident demand charges to create higher bills that are beyond the actual burden a building places on utility grid investments.

That was the challenge I faced in developing a solar project at a small medical building.

This medical building was a great solar opportunity: An installed solar system could satisfy 100 percent of the building’s energy needs. But the utility’s use of non-coincident demand charges, applied across all 12 months of billing, meant that solar could only reduce the building's energy bill by about 60 percent. That level of savings was insufficient to economically justify a solar system.

Installing batteries was the first solution we examined. The idea was to charge the batteries from the solar system and then discharge the stored electricity to reduce kilowatt demand. Doing so would allow the building to qualify for a lower rate and achieve an electricity bill reduction of more than 90 percent. But, while battery costs have dropped dramatically, for this application they did not economically pencil out.

But the deployment of a smart load-control system combined with a solar system proved feasible.

Today’s smart load-control systems can monitor thermostats, and other end-use applications, in real time. They are “smart” in their ability to control end uses, in this case it was the building’s air conditioners, to insure that the building does not exceed a threshold kilowatt target level while still maintaining a comfortable building temperature.

A combination solar system, plus smart load controls, allowed the building to move to a lower cost rate design. The added cost for the smart load control system was minuscule compared to savings.

Permitting lessons learned

Permitting was a second challenge for this project. The building owner wanted the solar system installed on a raised structure located on the property’s back parking lot. Parking lot solar structures are growing in use, especially when a building's roof is too congested for a solar installation.

Using a parking lot solar structure generated considerable attention from the city’s permitting staff. They initially said it merited public hearings. This type of review would have taken months of community engagement plus costly additional work by engineering professionals.

The project’s solar contractor was key to overcoming the staff’s initial reaction. They professionally supplied staff with precedents on how other cities permitted similar structures. With these insights, the permitting staff concluded that the project could be permitted without public hearing.

However, the solar structure did raise two additional permitting issues. The first was sizing it for emergency vehicles. This required gaining inputs from the city’s fire department and medical emergency agency. Their input enabled sizing the structure to allow unencumbered fire and medical emergency vehicle access around the property.

The permitting department also decided the solar structure should be designed to host a parking space large enough to accommodate a handicap van. This added cost and construction time, and required regrading of the parking space to satisfy parking surface gradient rules. Staff also required new handicap stripping across the parking lot to the building’s entrance plus modifications to the building’s entrance pad.

Combined, all three of these permitting issues added over six months of delay to the original construction time schedule.

Having a solar general contractor that could successfully work with the permitting department's staff was a key lesson learned. An additional value was having a solar general contractor with a strong customer service focus. In this case, the solar general contractor stood by their original contracted price despite the permitting delays and costs.

Technology is on the cusp of empowering customer-owned solar

Today, for most buildings, the promise of customer-owned solar is just a promise. Utilities are using non-coincident demand charges to block solar economics.

But this era of monopoly power is about to end.

Batteries, combined with solar, will define the future for electricity. A declining cost curve to price competitiveness will enable this combination system to overcome utility demand charges. This will shift economic power to consumers who can tell their utility to either price competitively or lose a customer.

Until that day arrives, smart technologies that can be combined with solar to win lower electric bills and achieve reduced emissions.

The dawn of the smart, solar building has arrived. The future will be smart zero net energy buildings.

Image courtesy of the author