August 2019

Is solar energy suitable for my business?

You may have heard of solar PV – perhaps you even know other businesses that are using it. However, you might be wondering if solar PV is relevant for your business. It is worth considering that various factors affect the overall costs and tariffs of solar PV systems. 

Is solar PV right for my business?

At the outset, the best way to determine if your business could benefit from solar PV is by asking a few simple questions:

  1. Are you based in an area with good irradiation (solar resource)?
  2. Do you have a good quality, spacious roof or available open land near to your business?
  3. Do you use the bulk of your energy during the day?
  4. Are your reliant on diesel generators to keep your operation running during power cuts or because of lack of grid access?

If you answered “yes” to any two of the above, solar PV is definitely worth considering for your business. The aspects mentioned above are explored in more detail below. 

1. Good solar irradiation

It goes without saying, but solar PV performs better under conditions with great solar irradiation. If you are based in Africa, you are lucky: Africa has some of the best solar irradiation in the world, so it is generally a no-brainer. However, there are a few factors that might influence the quality of irradiance, which could affect the overall PV system size and thus the cost.

  • Weather: Weather can influence the quality of the irradiance. Things like extreme heat and humidity can affect how well solar modules perform, making irradiance quality vary in different geographic locations.
  • Pollution: pollution in the form of smoke and gases or particles can lower irradiation; it can also collect on solar modules and reduce their efficacy. 
  • Shading: Factors such as large buildings, highways and trees can shade roof areas during the day, causing the solar PV to stop producing. If your solar PV engineering firm is reputable they should be able to carry out an extensive shading analysis. 

2.Roof space and quality

Rooftop solar PV is often the most cost-effective solution for Commercial and Industrial businesses. As such, the size of your business’s roof, including the type of roof and if it is structurally sound, is an important factor to consider when scoping out the feasibility of solar PV.

If your roof is not suitable for mounting solar panels, it is important to consider if there is land nearby that could house a ground-mounted solar PV solution. All of these factors can affect the cost, and therefore the feasibility, of solar for your business. 

3.Energy Demand and use

An essential factor to evaluating the efficacy of a solar PV system is energy demand and use. Two factors come into this: the business’s peak power (kVA) requirements, as well as its electricity use (kWh). If the business is a high energy consumer, especially if it runs 7 days a week, the costs of solar will likely be much cheaper. However if the business has large amounts of electricity usage at night, for example, it might make the cost of the system more expensive. 

4.Diesel generator usage

In Africa, many business operations rely on diesel generators in order to keep the power on, either due to weak or unreliable electricity grids, or because they have no access to the grid. In general, electricity generated by diesel is very expensive, making a solar PV microgrid, including batteries, a great way to save and cut back on this. 

Procuring solar: your options

If you are convinced that solar PV sounds like a good intervention, remember that the following options exist to procure solar PV for your business:

  • Buy solar energy directly – enter into a solar PPA in order to use solar PV electricity without any capital expenditure. The solar PV system belongs to SOLA, and you simply pay for the electricity that you use. The longer the term of the PPA, the lower the tariff over the system’s lifespan (20 years).
  • Build a solar PV system – purchase a solar PV system that your business will own, and simply pay for annual maintenance and upkeep. SOLA will design and construct the PV system for you, ensuring that it performs as predicted, and will maintain the system going forward.

Is solar feasible for my business?

If you spend over R100 000 (US$ 7000) on electricity per month, fill in some basic information in our Solar Feasibility Tool. We will evaluate the efficacy of solar for your business free of charge, and provide you with a few simple options to go forward, should you wish to proceed. 

Industrial and Commercial solar PV projects

SOLA secures R400M to finance solar PV projects for Commercial and Industrial properties through Power Purchase Agreements

A clean fund for the future

The SOLA Group has secured R400m in order to build commercial and industrial solar PV facilities across Southern Africa. The renewable energy fund, Orionis, will enable 40 MW of solar PV projects to be built without capital expenditure by the electricity off-takers.

The deal is a result of a partnership between the SOLA Group, African Infrastructure Investment Managers (AIIM), and Nedbank Energy Finance, who have partnered to provide affordable solar PV solutions for businesses that are in dire need of electricity security.

Chris Haw, chairperson of the SOLA Group, believes that  the clean energy solutions created by the fund are timeous.
“This partnership brings together three highly experienced entities whose combined skills offer consumers clean energy solutions at a time when our country desperately needs it,” he said. 

“This partnership brings together three highly experienced entities whose combined skills offer consumers clean energy solutions at a time when our country desperately needs it”

SOLA’s extensive track record of developing and building solar PV has allowed for the development of the Orionis fund, which will have the ability to fund 40 MW worth of projects. The forthcoming pipeline already includes 15 MW of solar PV Power Purchase Agreements, including several breweries and other industrial facilities around South Africa. The consumers pay for their clean energy directly, through a PPA tariff that is typically 20% lower than Eskom or their municipal provider’s rates.

The financed model would allow sectors focused on short-term cost reductions in their Opex budgets, such as FMCG companies, the opportunity to tap into solar power. This would allow reductions in operating costs and in carbon emissions, which are generally very important to industrial sectors. The financed solar PV is provided through a legal arrangement called a Power Purchase Agreement.

What is a PPA? 

A commercial solar PPA enables a fully integrated solar photovoltaic system to be installed and provide electricity to the entity through a customised monthly payment plan, typically at a tariff that is 20% lower than Eskom. PPAs can also include the option to take ownership of the PV system at the end of the financed period, with no upfront installation costs. The conditions of power purchase are detailed in the PPA which is negotiated directly with each client to ensure the agreement is workable for both parties.  

How do clean energy funds reduce opex?

As mentioned, financed renewable energy projects will enable industrial facilities to access secure and cheaper power, and free up capex for investment into their core business activities. But how does this work? 

Over the last few years, reduced costs of embedded electricity generation such as solar PV have interrupted the traditional model of electricity production. In other words, solar PV power is rapidly becoming the cheapest form of power to procure globally. In order to fund solar PV projects, however, large sums of capital are needed in order to permit, design, construct and keep the solar PV operational – similar to a regular utility such as Eskom. 

Whilst companies can opt to buy their PV systems outright, through an Engineering, Procurement and Construction (EPC) option, there is often little need for the entity to own the PV system themselves, as their main goal could be to reduce their operating expenses. Without available Capex, companies would need to secure financing in order to fund the construction of these projects.

SOLA’s PPA offering, through consolidating the finance, design, construction and operation of solar projects, allows companies to access cheaper finance than procuring it individually. “Operating at scale allows SOLA to provide lower tariffs and more competitive rates, reducing costs of financing,” adds Haw. 

For large commercial and industrial companies, PPAs enable flexible procurement of electricity, allowing them to consume the cheapest electricity available at a given time whilst also reducing their carbon footprints.

How financed solar PV can support the African Economy

Allowing small-scale, and flexible embedded generation of electricity is a key aspect to transition to a low-carbon economy, as it allows for increased penetration of renewables. 

Supporting the further deployment of small-scale embedded generation (SSEG) plants, according to Council for Scientific and Industrial Research (CSIR) Energy Centre, will also create thousands of full-time jobs and help to grow hundreds of small businesses across the country. The SOLA Group currently employs 50 full-time staff members for its South African operations, and the construction of 40 MW of solar PV projects through the fund is likely to create an additional 880 jobs in the coming years.

“The model of electricity generation that incorporates both centralised and distributed electricity will improve the ability for South Africa to meet energy demand, reduce electricity costs and strengthen resilience to outages,” concludes Haw.