Going solar at home and in business

Energy Matters

Monday, November 12, 2018

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Renewable energy or 'clean' energy, such as hydro, wind and solar, are rapidly powering their way up the energy agenda and into people's homes and offices across the globe. In fact, growth in clean energy is increasingly seen as unstoppable.

Statistics produced by the International Energy Agency show that nearly half of all new electricity generation capacity installed in 2014 was clean energy, which constituted the second biggest source of electricity worldwide, behind coal.

One of the reasons for the growing attractiveness of renewables, especially solar, is the fall in prices for the associated equipment, enabling customers and utility companies to embark on the journey to 'go solar', at least partially. In this regard, Jamaica has 'seen the light' and has been tapping into the opportunities and benefits presented by the solar photovoltaic industry.

Richard Gordon, manager for business development projects at JPS, is a knowledge expert in the industry. He explains that, “The most viable energy projects were previously large-scale energy projects but because of the scale of solar, meaning, it is something that can be done at both a very small scale and a very large scale, there are opportunities not only for the utility and investors but also for customers to make their own investments in energy. Now they are able to produce some of the energy for themselves and, in some cases, all of their energy needs.”

Cognizant, of the global trend, Gordon says that JPS has been enabling Jamaicans to go solar “by making the technology available to customers by offering solutions, doing design installations and providing advice and education to customers on the pros and cons to guide their decision-making when investing in energy”.

He points out that JPS is actually best positioned to provide holistic guidance on going solar for residential and business customers. “We are among the better solution providers mainly because, based on our experience from the utility scale and knowing what it takes to invest in assets and have those assets last you an entire lifetime, and knowing where you need to place due diligence. We take that expertise over into the solar photovoltaic industry and we work to provide the best solutions for our customers and best advice in making their investment,” Gordon asserts.

But competitive advantage aside, doesn't helping individual customers to go solar eventually put a grid scale utility (largely based on oil) out of business? Gordon says it depends on your business objective. “If you look at it from the original business model of a utility, yes there is conflict, but the conflict comes about because of technology. But if you step back and re-evaluate what your business really is and how it is that you go about creating value for customers and improving service, and once technology allows for a lower cost you should embrace it,” the business development manager insists.

Essentially, “If your business is providing energy and there is a more economical way for energy to be provided, then that is your business,” Gordon explains.

That business has been growing steadily in Jamaica with customers noticing JPS' unique ability to interpret and meet their needs in a changing environment. “Frequently, customers will ask us to give them proposals and they will compare (with other suppliers) and they will ask why is it that our proposal seems smaller and we will tell them that if your objective is to reduce your energy cost, there is a point to which you have achieved that objective, and when you invest more you are starting to reduce the impact that you are going to have. Your return on investment starts to diminish. There is an economic balance that you want to achieve,” Gordon explains.

Gordon shares that customers who are looking to go solar often express an objective to 'not have a light bill' or a very low bill. In response, JPS will seek to determine how much energy they use in the day time versus night. “Solar energy is energy from light, from the sun, so if the sunlight isn't available to us in the night then it means that you will have to use storage of the energy from the day time to provide your energy needs at night time.” This involves utilising an energy storage system which can be quite expensive.

Customers will therefore need to understand and be aware of the cost to operate that system over its lifetime, which is generally how a utility company looks at energy. “When you take the lifetime cost into perspective it paints a totally different picture than when you just look at it in your first year of operation when everything is running perfectly, and light bills are low and it seems as if the system is going to pay off in no time. But the truth is, the system won't be able to sustain itself in that mode without new investment. You have to replace equipment,” the industry expert cautions.

Continuing, he notes that once customers factor in the replacement of equipment (primarily replacing batteries), the real cost of energy sometimes ends up being higher than the cost they were paying to a utility previously.

Greater benefits for businesses

Being able to use solar power as it is generated rather than having to store it for night time or later use is therefore one of the factors that has shaped the evolution of the industry, resulting in the emergence of small systems that literally convert light into energy at low production costs. For the average residential customer who goes out to work daily, solar is able to produce energy at a lower cost in the day time; however, they are typically not at home to truly maximise the energy that is generated. On the other hand, commercial customers who can utilise solar energy while it is being generated in the day time stand to gain more.

“If their business is operating between the hours of say 8:00 am and 5:00 pm whether five days a week or seven days a week, they are able to extract greater benefits from solar because of the alignment between when they consume energy and when it is produced from solar,” Gordon highlights.

Still, alignment is only part of the consideration. Next there is the cost factor. Gordon explains that residential systems are typically smaller and tend to be more expensive per watt than commercial systems. “Anywhere from US$1.7 up to US$2 per watt on the residential side. On the commercial side it can vary from US$1.5 per watt all the way down to US$1.4 per watt.”

Furthermore, when it comes to the investment in the system itself, the average household could spend around $350,000 for a simple system, which could save them approximately 20 per cent in energy costs. So, if that household's monthly bill is $15,000, they could look at saving $3,000 monthly. Commercial customers tend to realise even greater savings from solar, varying from 30 per cent to 55 per cent saving in energy costs, which Gordon points out is as a result of the alignment between their consumption and production of energy.

“If you are a cafeteria where workers come in at about 10:00 am and cook for lunch when you get peak demand and slow down after that then you are almost following the sunlight when it comes to production and consumption of energy.”

In the end, as the technology evolves, both residential and commercial customers can't know for sure exactly what the future holds but the trends suggest that prices will continue to fall and access to the infinite power of the sun will increase in Jamaica and the region.

The challenge is finding an economical way to store that energy in the night. For now, it appears that one of the best approaches to going solar involves a type of hybrid system where homes and businesses generate some of their energy and rely on a utility to provide the balance, usually during nocturnal hours.

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