How we analyse commercial solar?

Hi, my name’s Stuart from IQ Solar. And I want to explain to you how we do a business case analysis for commercial solar. And why you should care. So the reason you should care is that solar is so prevalent at the moment, it’s a big investment, or it can be a big investment, and it’s very easy to get a price, and my point about prices is that a quote for solar is really only half the equation. Basically, if you were going to look at what something costs, it’s very hard to make a decision based on that. It’s really half of the coin. So the other side of the coin is the benefit. So we’ve got the cost of solar and the benefit, and in the middle, what we have is what I call the solar business case. This is really the economic reason to choose solar. So a lot of companies will just focus on the cost, “We can do this sized system for this price,” but really what matters is the benefit to you. So I’m going to break down for you how we derive this benefit. And the purpose of that is so that you can really have some confidence around the outcome that we would predict for you in terms of what solar would do for you. 

So, before I do that, I’m just going to  give you a very, very quick primer about what solar is actually doing for you as a business. If you imagine on any given business day, between midnight and midnight, you’ve got what we would call a pattern of consumption. So you might have a small base load over night, staff come in, use power, it’s up and down all day, everyone goes home, power goes back to the base load. So solar will, in essence, create energy in the shape of a bell-shaped curve. Now, depending on the size of the system you’ve got, we’ve now already determined three things that are happening here. This area here is what we would call self-consumption. This power here is exported, and goes back out to the grid. And this power here is still purchased from the grid and still costs you money.

Now, that’s one day as a snapshot. With a commercial analysis, we actually have access to this data. We don’t have to guess what your pattern of consumption is. We can contact your retailer, they give us data which is broken down into 15 or 30 minute increments. And for 365 days, we can build a model of exactly what your pattern of consumption is. And in fact, for most businesses, if you’re a manufacturing business, for example, you might have five days of the week, adds up to five. In fact, you might even have a short day on Friday, so you might not have this bit here. Then you’ve got bugger all on Saturday and Sunday, and then it all starts again. I like how my drawings are running into each other. 

So we’ve got to take into account these days, and they vary, there’s holidays and things, and these two days where nothing is happening. And we map solar against your actual consumption. So what we are looking at is basically, three things. The first of them is your actual consumption, which I’ve mentioned. The second, is the rate that you pay for power. And this is typically in cents per kilowatt hour. This itself is quite complicated because if we go back to this map of a day, a business can easily pay different rates between 7:00 and 9:00, between 9:00 and 2:00, and then from 2 o’clock onwards. So we have to work that out, so we have a model that lets us do that. 

Then we have the solar production. So if we look at the difference or the gap between consumption and solar, what we’re looking at here is the kilowatt hour savings. That’s part of the equation. It’s the amount of energy that’s used here, the amount that’s wasted, or exported. I say wasted because often there’s not much of a feed-in tariff paid for commercial. If we look at the intersection between the rate that you’re paying for power and the consumption, what we are looking at, between the rate of power and the consumption, this is what your energy is already costing you now. The intersection between the solar and the rate that you pay for power, this is the dollar savings. The center, the part that matters, is the dollar savings taking into account export. So it’s the heart of the savings in solar. You can’t just look at kilowatt hours produced because some of that’s wasted. 

So what we’re talking about is the ability to do a detailed breakdown and model of this and show you in a simple way, exactly what it is that solar will do for you. Of course, we’ll also give you a cost, that’s important, and there’s a big difference between the way that companies cost things. A lot of them leave out things that are essential, and that are going to cost you money anyway. So for example, they will leave out the cost of grid connection applications, which if you were in an Ausgrid area, is over $5000. They’ll leave out things such as moving equipment, or panel moving equipment, and they’ll put that burden back on you. Now very few people have a scissor lift. So our quotes will be comprehensive, start to finish, other than a couple of minor exceptions if you’ve got old cabling or difficult cable parts in your building that we haven’t encountered yet, you will get a very, very complete costing from us. So the purpose of all this is to come up with the solar business case, which you will have confidence in, and will let you know basically what a system costs, what it’s going to save, and really what we’re after here is the return on investment. 

What it’s going to save you per year, what that looks like as a percentage, and then we can actually talk about ways that you pay for it. So you don’t have to purchase a solar system outright. There’s other methods, I’ll discuss those in a separate video, but basically we can help make things non-capital purchases. So if you are interested in solar, the starting point is always curiosity. Is it worth having a conversation? For you to get involved in this, it doesn’t cost you any money, it costs us quite a number of hours to do the analysis and come back to you, but basically our goal is to present you with a solar business case so that you can decide, “Is this conversation worth pursuing?” It may be that the return on investment doesn’t meet your criteria. That’s absolutely fine. If it does, we keep talking. Anyway, love to have a conversation with you. If you’re interested in commercial solar, or you’ve looked at it before, but abandoned it for one reason or another. Thanks. 

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