Saving Money On Electricity Bills With Solar

Transcription

1 Saving Money On Electricity Bills With Solar A Net Metering Case Study As electricity rates continue to rise, smart businesses are locking in their energy costs to protect themselves against growing operating expenses, and the unknown future of the electricity market. Through Solar Net Metering, businesses can install solar panels on their roof and use the electricity generated to offset their consumption. This reduces the monthly expenses to only the fixed charges on the electricity bill, and an annual fixed cost to pay for the system and associated maintenance. These fixed costs can be properly budgeted for, taking any surprise out of changes in electricity policy. The savings seen from decoupling your electricity costs from the provincial rate can pay for the cost of the system in under 10 years. Following that milestone you continue to save money through renewable energy generation. While electricity rates continue to rise, you will see your savings increase. See how Solar Net Metering can work for a business in Waterloo Region through the following Case Study. vigorcleantech.com You can t control the price of energy, but you can control your cost.

2 The Building Trillium Drive in Kitchener s South end is part of an industrial park full of office, warehouse, and manufacturing space. Our building is 7,500 square feet, with a flat gravel roof, and is oriented slightly off of South. The building is owned by the occupant, who anticipates maintaining this location, and does not foresee a drastic change to their electricity consumption in the near future. Although solar systems tend to increase the resale value of homes and businesses, it is difficult to forecast how a building sale would affect your initial investment. Before making an investment in a solar system, you should be confident that your operations will remain in the same building throughout the payback period. Building Details Size Orientation Roof Type 7,500 square feet major axis 13 off of south Flat, gravel Electricity Details Consumption Cost Fixed Cost 36,781 kwh / year $7, / year $ / year The building size, shape, and orientation allows us to design a system that will produce 100% of the annual electricity use. This will reduce the electricity cost to the fixed portion of the bill ($ / year), reducing the annual electricity bill by $7, Annual Costs (Cost $), kwh Consumed (Cons.), and Potential kwh Generated (Gen) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Cost ($) $ 677 $ 665 $ 660 $ 663 $ 582 $ 644 $ 638 $ 638 $ 631 $ 631 $ 615 $ 614 $ 7,658 Cons. (kwh) 3,495 3,338 3,239 3,308 2,714 3,072 2,918 2,918 2,891 2,819 2,976 3,021 36,781 Gen. (kwh) 1,053 1,455 2,861 3,962 4,797 5,036 5,220 4,632 3,676 2,934 1, ,607

3 The Solar Photovoltaic System The key to designing Solar Net Metering systems is to properly match the system s production to the building s consumption. Ideally in one year your system will produce exactly what you consume. Since credits for overproduction are carried forward for 12 months, we don t have to worry about matching production to consumption each month, as long as the final kwh produced and consumed are equal. This could result in a system that either doesn t use the full roof space, or requires an addition such as an awning to add area. You don t get paid for generation above your annual consumption, so if your system is too large, you re sending electricity to the grid for free. If your system is too small you will have to draw and pay for energy from the grid. Our 7,500 square foot building only needed 5,000 square feet of roof space in order to completely offset their consumption. This is an ideal situation where, should they expand operations, additional panels can be added to the system to offset the additional demand. System Information System Size 30 kw A/C / 35 kw D/C 5,000 square feet Components Required 15 fixed tilt racking 104 x 335 W panels 52 optimizers 2 SolarEdge Inverters Electricity Generation 37,607 kwh/year System Cost $ 87,500 Annual Costs 6000 Monthly Production (kwh) Payments $ 5, Annual payments to repay a 20 year loan for the full cost of the system at 3.0% interest Maintenance $ Increase to insurance premiums to cover the system, plus maintenance and monitoring to ensure optimum performance Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

4 The Financials The full table outlining the financial implications of the system through 25 years is on the next page, with assumptions and definitions below for clarity. Payback and Return This system will result in a 9.83% Internal Rate of Return over 25 years, and an After-Tax Payback of 9 years. Where else in your business can you invest and earn returns like this? IRR (Internal Rate of Return) 9.83% Simple ROI 8.37% $250,000 $200,000 $150,000 $100,000 $50,000 Payback Pre-Tax Payback After-Tax Payback 10 years 9 years $0 -$50, Assumptions -$100,000 Electricity Rate Increase 4.0% / year Small Business Tax Rate 15.5% CCA (Depreciation Rate) 50.0% Cost to Borrow 3.0% Cash Flow Fixed Costs The annual amount saved on electricity bills, assuming a 4.0% increase in electricity rates each year. This is a conservative estimate, given that on-peak rates have risen by an average of 5.2% per year since Net Savings The amount saved on electricity bills, less the amount paid for system maintenance. Total Savings The sum of your annual savings to date. After-Tax Payback The savings after depreciation and taxes are accounted for. This is the sum of the Total Savings and the Depreciation multiplied by the 15.5% Small Business Tax Rate. Payments The annual amount to pay of the cost of the system, assuming funds are being borrowed at 3.0% Cash Flow The Total Savings, less the Payment.

5 System Costs, Savings, Payback, and Cash Flow Year Fixed Costs Maintenance Net Savings Total Savings Depreciation After-Tax Payback Payments Cash Flow Cumulative Cash Flow 2017 $ 7, $ $ 6, $ 6, $ 21, $ 10, $ 5, $ $ $ 7, $ $ 6, $ 13, $ 32, $ 22, $ 5, $ 1, $ 1, $ 7, $ $ 7, $ 20, $ 16, $ 31, $ 5, $ 1, $ 3, $ 8, $ $ 7, $ 28, $ 8, $ 40, $ 5, $ 1, $ 4, $ 8, $ $ 7, $ 36, $ 4, $ 49, $ 5, $ 2, $ 7, $ 8, $ $ 8, $ 44, $ 2, $ 57, $ 5, $ 2, $ 9, $ 9, $ $ 8, $ 53, $ 1, $ 66, $ 5, $ 2, $ 12, $ 9, $ $ 8, $ 62, $ $ 75, $ 5, $ 3, $ 15, $ 10, $ $ 9, $ 71, $ $ 85, $ 5, $ 3, $ 18, $ 10, $ $ 9, $ 81, $ $ 94, $ 5, $ 3, $ 22, $ 10, $ $ 10, $ 91, $ $ 105, $ 5, $ 4, $ 26, $ 11, $ $ 10, $ 102, $ $ 115, $ 5, $ 4, $ 31, $ 11, $ $ 11, $ 113, $ $ 126, $ 5, $ 5, $ 36, $ 12, $ $ 11, $ 124, $ 8.01 $ 138, $ 5, $ 5, $ 42, $ 12, $ $ 12, $ 136, $ 4.01 $ 150, $ 5, $ 6, , $ 13, $ $ 12, $ 149, $ 2.00 $ 163, $ 5, $ 6, $ 55, $ 13, $ $ 13, $ 162, $ 1.00 $ 176, $ 5, $ 7, $ 62, $ 14, $ $ 13, $ 176, $ 0.50 $ 189, $ 5, $ 7, $ 70, $ 14, $ $ 14, $ 190, $ 0.25 $ 203, $ 5, $ 8, $ 78, $ 15, $ $ 14, $ 205, $ 0.13 $ 218, $ 5, $ 8, $ 87, $ 16, $ $ 15, $ 220, $ 0.06 $ 234, $ 16, $ $ 16, $ 236, $ 0.03 $ 250, $ 17, $ $ 16, $ 253, $ 0.02 $ 266, $ 18, $ $ 17, $ 270, $ 0.01 $ 284, $ 18, $ $ 18, $ 288, $ 0.00 $ 302,392.60

6 Conclusions Smart businesses have an opportunity to lock in their electricity costs in the face of rising rates. By investing in a Solar Net Metering system, your highly variable energy bills become lower fixed costs. You can take control of your costs now, and benefit from free energy once your system is paid off. As electricity rates climb, you save even more. With depreciation and tax treatment for small businesses taken into account, the payback on a Net Metering system can come in under 10 years, with a 25-year IRR close to 10%, making it an excellent investment in your operations. In addition to the financial incentive, businesses that undertake projects such as the addition of solar panels benefit from a green boost. Consumers look favourably on organizations with an environmental focus, and sustainability programs can improve your standing when working with other businesses or competing for RFPs. Vigor Clean Tech Your solar solution from system set-up to lifetime service The team at Vigor Clean Tech are experts in renewable energy. We have been helping businesses and individuls save money on their electricity bills and support clean energy since With more than 400 ground mounted solar trackers and 75 roof top projects on buildings of all shapes and sizes, Vigor Clean Tech finds a solar solution to each customer s unique needs. In addition to developing over 6 megawatts of FIT 3 contracts for clients, we are also owners of over 1 megawatt of solar installations, and managers of over 7 megawatts with a value of $30 million. We stand by every system we install, knowing that keeping them in top operating condition is essential to meet their expected returns. Opportunities are bright for solar power. Wtih Net Metering you can take your energy use into your own hands, reducing your reliance on fossil fuels and saving money. Join the customers who, together with Vigor Clean Tech, have generated well over 30 million kilowatt hours of clean, green energy! Set up your Solar Net Metering System Is the uncertainty of rising electricity rates hurting your business? Lock in your electricity costs with a Solar Net Metering system. We can help you take control of your energy. Contact Vigor Clean Tech info@vigorcleantech.com 1633 Snyder s Road East Petersburg, Ontario N0B 2H0 vigorcleantech.com You can t control the price of energy, but you can control your cost.