Commercial-scale solar systems and farming are becoming increasingly popular investment options in South Australia. Large-scale solar installations and solar farms in SA offer owners and operators either an additional, low-input income stream or a way to cut electricity bill costs.
Commercial solar power and solar farms in SA: Benefits
There are a number of reasons why solar farming–and commercial solar PV in general–can be an attractive investment in SA. Solar farms can help their owners save money on power bills, or in cases where a power purchase agreement (PPA) has been arranged with an electricity retailer, provide owners with an income stream.
Federal government subsidies for solar PV
In order to realise the environmental benefits of solar power–in particular its ability to reduce greenhouse gas emissions–the Australian Federal government has introduced a number of incentives that make solar PV systems financially attractive. Most notable and most directly influential with regard to solar power and other forms of renewable energy is the Enhanced Renewable Energy Target (eRET). The eRET, in its current form, mandates 20% of Australia’s electricity generation to come from renewable sources by the year 2020, and creates the framework by which this goal can be reached.
The Federal Government has required carbon polluting electricity generators and heavy industries to surrender a set number of Renewable Energy Certificates (RECs) every quarter. These ‘liable entities’ may either purchase RECs from 3rd parties or install their own renewable power generation facilities to create them themselves. RECs can be either Small-scale Technology Certificates (STCs) or Large-scale Generation Certificates (LGCs).
For 100kW solar systems or smaller: STCs through the SRES
The eRET’s Small-scale Renewable Energy Scheme (SRES) provides an up-front discount in the form of STCs on solar PV installations and solar farms up to 100kW in size. The amount by which a solar farm’s outlay will be reduced through the SRES depends on the solar farm’s size and location–regions that receive more sunlight will be allotted a greater number of STCs–as well as the price at which they are able to sell their certificates.
For systems greater than 100kW: LGCs through the LRET
Systems over 100kW in capacity may be accredited to create Large-scale Generation Certificates (LGCs) through the Large-scale Renewable Energy Target (LRET). LGCs are created on an ongoing basis once the generation system is up, producing power, and accredited, and therefore do not constitute an up-front subsidy. As with STCs, however, returns on these larger systems and their generation capacity are nevertheless determined in large part by their location and climate.
The price of STCs and LGCs fluctuates with supply and demand. Current spot prices can be found on the Clean Energy Council’s website: CleanEnergyCouncil.org.au.
Increasingly attractive return on investment (ROI)
SA offers a Transitional Feed-in Tariff for systems up to 10kW (for single-phase power lines) or 30kW (for tri-phase power). The Transitional Feed-in Tariff rewards those who export solar power to the grid by paying them a premium (currently nearly 30c) for each kilowatt-hour of power they export.
Larger commercial solar installations that are not eligible for the state’s Feed-in Tariff can still offer their owner savings on electricity bills by reducing the need to purchase power from the grid. As time goes on and SA’s electricity prices continue to rise, this will make solar PV an increasingly attractive value proposition. Investing in a solar farm can potentially be a wise move particularly for businesses, which usually consume the majority of their power during the daytime, when the sun is shining.
Solar farm owners in SA may also be able to work out power purchase agreements (PPAs) with their electricity retailer and get paid a rate for each kilowatt-hour of solar power that they export to the grid in addition to the revenue they receive from LGCs. At the moment, however, PPAs are not the norm, and most large-scale systems are installed with offsetting power bills in mind.
Low maintenance investment
Solar systems–unless they are on solar trackers, which are considered uneconomical in light of the sharp drop in solar PV prices in recent years–generally have no moving parts and require very little in the way of maintenance or inputs once they are installed and functioning.
Tax benefits for businesses with solar farms
ABN holders may be able to claim depreciation and GST credit on system production.
Falling cost of solar PV technology
The cost of installing a solar PV system has fallen dramatically–as much as 70% in the past couple of years by some estimates. A report by the consultancy firm McKinsley estimates that unsubsidised solar power will be cost-competitive with coal and nuclear power by the year 2020. In the meantime, the purpose of subsidies is to levelise the cost, ‘filling the gap’ and making it affordable for ordinary homes and businesses.
Typical commercial solar power installation size in South Australia
Ideal solar system size for a home, business, or investor depends on a number of factors, including the purpose of the install (e.g. to use the energy or sell it?), capital available, and financing options. The ‘best’ system size may be as small as 5 or 10 kilowatts (kW) for homes and small businesses, or upwards of 50kW, 100kW, or larger for larger businesses and investors.
Typical power production for commercial solar installations in SA
Each solar power system has its own nameplate capacity. Real solar system output relative to this figure will ultimately depend on component quality, climate, and the presence or absence of shading. Most postcodes in South Australia fall into REC Zone 2 and 3 (read about REC Zones).
Depending on where in South Australia they are located, commercial solar system owners can expect between about 3.5 and 4.5 hours of “peak sunlight” daily, averaged across the year (higher in summer, lower in winter). In such conditions, a 30kW solar system would produce between 105 and 135 kilowatt-hours (kWh) on an average sunny day. Assuming an electricity rate of 22c, self-consumption of all this power would result in a power bill savings of between $23 and $30 per day.
Commercial-scale solar power and solar farm tender management & financing
Solar Choice Commercial has been managing tenders for large-scale solar projects since 2009, and is well-positioned to find the best-value solar system deals for customers throughout South Australia, as well as Western Australia, NSW, Queensland, and the rest of Australia. Additionally, for larger systems, a unique financing package for commercial solar power is available exclusively through Solar Choice. Benefits include: No capital expenditure and instant parity with commercial electricity tariffs. Contact Solar Choice to learn more.
© 2012 Solar Choice Pty Ltd
He is now the communications manager for energy technology startup SwitchDin, but remains an occasional contributor to the Solar Choice blog.
James lives in Newcastle in a house with a weird solar system.
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