Solar energy mythbusting for commercial properties

Many people assume Canada is too dark for solar energy to be viable.

October 1, 2019
By John Watkins
solar panelsPhoto courtesy FSC Lighting.

A wide range of energy-efficiency tools and strategies—such as professional energy audits, lighting replacements with ‘smart’ LED systems, HVAC updates with automated controls and general energy-saving practices—can have a significant impact on the bottom line for commercial property managers. Once such steps have been taken and begun to reduce your facility’s energy consumption, however, there may still be other ways to decrease energy costs, by transitioning away from grid-based supply to solar.

Ostensibly, the capability to source free energy from the sun will save money over time, following the initial costs of photovoltaic (PV) panel installation—but given Canada’s often limited periods and intensities of sunlight, along with low costs for traditional power in some areas, it is not necessarily a foregone conclusion that transitioning to solar will benefit your bottom line.

To answer that question, it is essential to address some common myths about solar power—both good and bad—and assess the scenarios to which they apply.

Myth 1: Solar energy provides complete self-sufficiency

It is extremely rare for a commercial building that collects solar energy to be fully self-sufficient (i.e. functioning completely independently from the grid). For one thing, installing a system equipped with enough storage to power a commercial enterprise through Canada’s long, dark winters would involve huge expense—and a lot of potential complications.

Instead, most commercial solar arrays are connected to the local power grid through net metering. This system transfers any surplus energy your building does not consume to the grid for municipal use. In return, the municipal government grants credits in the form of rebates or tax breaks.

Through this arrangement, a commercial building will generally receive enough credits in the spring and summer to offset the cost of buying grid-provided electricity in the darker months, when solar-generated energy is not sufficient.

It is important to note (a) not all provinces are set up for net metering and (b) most that are have limitations on both the maximum quantity of credits you can receive and the length of time over which you are able to accrue them. These factors are significant when considering a transition to solar.

Myth 2: Solar energy is always cheaper than grid power

Given solar energy is available for free, channelling it to power buildings may seem like a no-brainer, but installing a localized system to gather it is a relatively expensive undertaking and it is not always possible to yield enough savings within a reasonable time frame to offset those costs.

In parts of Canada where traditional power costs are high enough, including Yukon, Alberta, Saskatchewan, most of Ontario, Nova Scotia and Prince Edward Island, you can expect a reasonable return on investment (ROI) from converting to solar.

In others, such as British Columbia, Manitoba, Quebec, New Brunswick, Newfoundland and Labrador, the cost of traditional power is so low—and net-metering credits are so minimal—that the transition would not provide enough financial benefits.

There are also province-specific installation costs, rules, regulations and rebates to consider, such as the following:

– In the Northwest Territories, only 15 kW of collected solar power is allowed to go back to the grid and rebates are capped at 33% or $5,000, whichever is less. While traditional power is relatively expensive, which might otherwise indicate solar viability, high installation costs and a lack of rebates—also the case in Nunavut—make the transition a riskier investment.

– Alberta’s rebates for contributed solar power are essentially limitless, reimbursing $0.90 per W and capped at 5 MW.

– Manitoba has no system in place for net metering procedures.

– In Quebec, tax credits are offered instead of direct power rebates.

With so many differences across the country, it is very important to take your location into consideration before making the jump to solar.

It is also important to look to the future. The costs of PV installations have been steadily dropping from year to year, as the technology becomes more ubiquitous and reproducible. Meanwhile, costs for non-solar sources—including hydroelectricity, nuclear and natural gas—have been susceptible to fluctuations. While switching to solar might not make financial sense for your commercial building right now, that does not mean it should be ruled out for the future.

Myth 3: Canada is too dark for solar energy to be viable

Even though Canadian winters are dark, most provinces receive more than enough light for solar energy to save money for users. Other parts of the equation are more significant, however, in determining viability.

By way of example, an analysis by non-profit organization Energy Hub shows Manitoba receives the third-highest amount of solar irradiation among all provinces, for example, but has no infrastructure in place or incentives available to support a viable solar energy market. Nova Scotia, meanwhile, ranks 10th for available sunlight, but second for overall solar viability, due to a combination of low installation costs and the availability of rebates.

The lower the amount of solar irradiation, the bigger (though, given the other aforementioned factors, not necessarily more expensive) the PV system will need to be to collect sufficient energy.

To take a somewhat extreme example, a large warehouse lit 24-7-356 by 50 100-W LED lights will consume 43,800 kW per year. In Alberta, which averages 1,276 hours of sunlight per year, the building would require 35 kW of solar capacity. In Nova Scotia, which averages 1,090 hours of sunlight per year, the system would need to increase to 40 kW.

The average cost of installation per W is $2.89 in Alberta and $2.83 in Nova Scotia. Before rebates and incentives, the warehouse’s system would cost $101,150 in Alberta and, due to its larger capacity, $113,200 in Nova Scotia—a difference of $12,050.

For commercial properties, applying Alberta’s rebate of $0.75 per W brings the installation cost down to $74,900, while Nova Scotia’s rebate of $0.85 per W brings it to $79,800—meaning a final, lower difference of $5,000.

While irradiance is only one component of the cost of solar energy, optimizing its benefits will make a system more effective. Tracking-mounted solar panels, which shift their positions and angles to maximize the amount of light they receive throughout the day, absorb more light than fixed-mount systems, making them a better choice for darker locations.

Generally reserved for commercial and utility applications, tracking mounts include single-axis setups, which move from east to west, and dual-axis setups, which can move in all four directions (which is particularly beneficial in limited spaces, including rooftops and small plots of land).

While tracking mounts are more costly, they can hasten ROI. Dual-axis mounts, for example, can absorb up to 45% more energy than their stationary counterparts.

With all these factors to consider, a cost-benefit analysis is important for assessing your options. For some buildings, solar power is an excellent method for saving money on utility bills, while for others, the switch would not make financial sense.

John Watkins oversees profit and loss (P&L), purchasing, operations, product development, sales and marketing for FSC Lighting, which manufactures LED fixtures. He has a background in energy efficiency, lighting controls, power management and the Internet of Things (IoT). For more information, visit www.fsclighting.com.