Characteristics of a good site for behind the meter community solar
This guide is designed to provide a community group with the preliminary information to quickly assess whether a business or organisation is potentially suitable for a community solar project. This guide is most relevant for investment-based behind-the-meter community solar projects from 20-100kW or > 400kW on commercial premises (RePower Shoalhaven, ClearSky and SRPC models).
Below is a checklist for the pre-screening of possible host sites. If the site passes most of the conditions below, only then it is worthwhile approaching the possible host site to appraise their interest before conducting a full feasibility assessment.
1. Is there space on the roof (or in adjacent land) for a solar array8?
- Each kW of solar requires 6-10m2 for flush mounted systems and 12-18m2 for raise mounted systems depending on a number of factors such as the module efficiency, array configuration, roof inclination, longitude, etc.
- Solar can’t be installed on roof surfaces that are transparent, have vents or antennas
- Solar should be ideally installed facing north, although some commercial premises may benefit from slight deviation of NE or NW.
2. Is shading an issue?
- If the roof has substantial shading on the north, east, or west side of the array location, it could substantially impact the viability of the array. Take into consideration growth of nearby trees over the investment life of the project (7-25 years) and what type of development is permissible on adjacent sites under applicable Local Environment Plan (LEP) zoning and development controls.
3. Is the roof structure sound?
- If the roof structure cannot support the panels, or the roof will need to be repaired over the investment life of the project (7-25 years), this may add costs, potentially making the project unviable.
4. Is this customer likely to have sufficiently high minimum demand during daytime hours?
- To be economic, solar must be offsetting onsite electricity consumption at the time of generation, year round. This is because electricity customers gain little value, if any, from exporting solar energy into the grid.
To quickly assess whether their demand may be suitable, does this site utilise any of the following electronic processes during the day?
- large heating, ventilation and cooling systems
- cool rooms and commercial refrigeration
- pumps and/or motors which are in constant use
- a large quantity of lights
- The more diversity of processes in operation, the steadier the demand load will be, and hence the more suitable the building will be for community solar.
- Ideally the site should operate 7 days a week 52 weeks a year. Consider if the business has downtime where the demand falls below its typical daily use, for example, weekends or holiday periods. Insufficiently high load at these times (leading to greater exports) may negatively impact the financial viability of the project.
5. Does the business pay a sufficiently high price for its electricity?
- The higher the electricity price, the more economic it will be for the business to install solar.
- Typically the more electricity a business uses, the lower their price and vice-versa. This means that buildings which often have sufficient demand load for a community solar power facility often have very low electricity prices, and therefore they attain less value by installing community solar. Alternatively, buildings with high electricity prices often have insufficient demand or roof space for a community solar facility.
Therefore, appropriate buildings are often medium sized businesses or organisations which fall into the ‘sweet spot’ of having sufficiently high electricity price and steady daytime demand.
Investment security characteristics
6. One of the biggest risks to a community solar project is if the host site business defaults on their payments. Therefore, the viability of the business should be taken into consideration at the outset.
- Typically safe host sites include government buildings such as council facilities, or other public buildings such as police, health or education buildings.
- When assessing a business, consider how established the business is and how resilient the business might be to possible risks in the medium to long term. These include sensitivity to enhanced competition, foreign exchange rates, regulatory change and trends such as the changing retail economy, or changing demographics. A more diverse income stream often means more inbuilt resilience.
- To provide project and investor confidence, you may need to request financial account records from the possible host site. Depending on the business type, this information may be commercially sensitive and may not necessarily be available for release to the community group or prospective investors.
If the host site has passed these basic pre-screening tests, you may feel ready to approach them to see whether they are interested in community solar.
It is vital to note that the experience of community energy groups to date has been that while hosting a community energy project can be an attractive financial proposition, it is unlikely to be able to ‘compete’ in purely financial terms with self-financed PV system installation (for businesses with access to funds to purchase the system), or commercial solar leasing (for businesses who want a no upfront cost option).
If the motivation of a business are strictly financial, there is a high risk that the community group will expend time working with the organisation, after which they decide to pursue a self-financed or commercial leasing model. As such, when contacting the organisation, it is important to quickly establish whether their motivations align with some the following characteristics.
- To engage with local community or constituent/customer base for marketing, public relations or other benefits
- Interest in innovation, particularly with regard to technology and social enterprise
- Willingness to pay a small financial premium for the opportunity to work with the community
- Reduction of carbon emissions for social good, or marketing and public relations benefits
- Provide opportunities for members, employees and supporters of the organisation that will use the power generated to invest in their own organisation and their own local community
- Provide a renewable energy investment alternative for those wishing to divest their fossil fuel investments
- Increase the long term resilience of the organisation that will use the power by dramatically reducing electricity costs once the system has been paid off (typically 7-10 years).