In recent years, the development of highly efficient solar energy storage has advanced the economic case for solar energy even further. Solar-plus-storage is a model in which solar panels are paired with batteries so that, instead of exporting excess power or selling it back to the utility companies, consumers can store the excess energy they produce for use at a later time. For residential solar adopters, storing solar power can result in the ability to cut the cord from utility companies entirely.
For commercial facilities that incorporate solar power, the goal is often different. The scale of solar installation that may be needed to entirely offset their utility needs can be prohibitively expensive, at least at the outset. However, smaller scale solar arrays can still result in enormous utility savings through the implementation of “peak shaving.” Here’s why:
Understanding Your Electric Bill
Commercial power consumers should take a closer look at how they are paying for energy. The strong business case for commercial solar implementation stems from the way utility charges are structured. In addition to charging for kilowatt-hours of energy consumed, utility companies leverage other fees, often called “demand charges” or “facilities charges,” which are also assessed based on kilowatt-hour usage.
For large commercial facilities in particular, the demand charge (which is sometimes called the “peak usage charge”) can become a big monthly expense. Here’s how it works: every 15 minutes, utility companies monitor kW usage to identify the highest demand “peak” over each billing period. Then, they set their rate for the month based on that peak number. This can be up to $25 or $30 per kilowatt-hour. For commercial facilities drawing a lot of power, that charge quickly multiplies to become a significant expense!
By investing in a solar-plus-storage solution, companies can produce and store their own energy. That stored power can be dispatched at key times to “shave the peak,” which has a cascading effect on their entire utility bill. That’s why alternative energy investment is as much a business imperative as an environmental one.
Peak Shaving: Riding the “Duck Curve”
Commercial facilities that incorporate PV systems have the ability to “peak shave,” that is to draw on reserve power to level off demand peaks. To understand this impact, we can examine the “duck curve,” a graph of power production over the course of a day that highlights the timing imbalance between peak power usage and solar power production.
At Greentech Media, Jeff St. John explores the phenomenon of the duck curve (with sample graphs). He explains the origin of the duck curve, named “for its distinctive shape -- a deep midday drop in net load, driven by lots of solar flooding onto the grid, and a steep ramp-up starting in the late afternoon and extending into evening.” When commercial facilities charge their energy storage batteries with solar energy at mid-day for deployment in the late afternoon, they can lower their energy usage during the peak of the duck curve. This practice results in significantly lower peak usage charges and leads to major savings on utility costs.
A Case Study for Commercial Savings
Earlier this year, Solar Design Studio had the opportunity to explore a test case for commercial solar and peak shaving at a large commercial facility. Utilizing records of previous energy usage and a simulated hybrid solar PV with storage system, we were able to confidently predict a significantly lower demand peak resulting in impressive savings for the facility through peak shaving. These savings were achieved using a modelled energy consumption mix of approximately 15% solar PV power alongside 85% utility usage, demonstrating that even a relatively small percentage of solar power can have a large impact on utility costs.
The Business Case for Commercial Solar
In addition to a compelling environmental and corporate social responsibility case for commercial facilities to lead the way in solar adoption, utility savings through peak shaving demonstrate that the business case cannot be ignored. For companies that consume large amounts of power, the ability to lower demand charges results in significant savings that augment standard utility reductions through the use of solar power. These savings often quickly pay for the cost of the initial solar installation and only grow in value as they add up over the long term, especially when continually rising utility rates are considered.
At Solar Design Studio, our insight and experience in both design and installation ensures that every solar project we undertake maximizes the client’s savings and impact. If your business is ready to embrace the benefits of commercial solar-plus-storage, gather 12 months of your electric bills and contact us today for an assessment!