Putting a Solar Power installation on a large commercial building seems like a simple way to cut electric bills. The bigger the rooftop, the bigger the solar plant could be. More capacity would mean more electricity it could generate and the more that could be used or sold to the grid. But what determines the size of a commercial Solar Power installation isn't always the roof available or the electric needs of the building. In some cases, the net metering provisions in place could effectively cap the generation capacity.
This is a key point to consider for enterprises looking into solar power commercial buildings.
What a Net Metering Cap Entails
Net metering, in general, lets the owner of a solar plant consume the electricity in their premises first and export the remainder to the grid. Based on the applicable regulations, the units of electricity generated but not consumed can get credited at a certain rate with the units of electricity drawn from the grid.
A net metering cap, in effect, prevents the solar owner from drawing benefits in excess of a defined limit. That limit could be set in terms of capacity or as a percentage of the sanctioned load or contract demand plus any other conditions.
In effect, then, net metering creates a situation where commercial solar projects have a ceiling on plant capacity for which they can draw benefits. While the rooftop might have capacity to accommodate a larger plant, the benefits aren't available for that extra capacity.
Why This Happens More Often with Large Commercial Buildings
This situation is more common in large commercial buildings simply because compared to residential buildings the available area is much larger. Warehouses, factories, shopping centres, office campuses and institutions have significant roof area. This roof area provides scope to accommodate solar plants of much larger capacity than what's typical in residential solar plants.
The same goes for the consumption. Large commercial buildings have higher consumption and it varies during the day depending on the kind of establishment. A large commercial building could have a significant amount of consumption during the day that can be met by a solar generation.
However, the presence of a net metering cap means that a developer can't always install a solar plant that meets the needs of the building. That consideration has to factor in the net metering provisions, if any, that apply to the structure.
In effect, then, when considering Solar Power Commercial Buildings developers have to take into account the roof size, consumption and the net metering provisions applicable. Not considering all three could result in proposals that either don't match the needs of the client or have an unnecessarily large capacity.
The Difference Between Available Rooftop and Approved Capacity
Many people overlook this, but the electric infrastructure and the regulatory framework have to support the proposed capacity of the solar plant.
Let's assume a commercial building has a rooftop that can accommodate a plant of 800 kW. In effect, the developer could design a plant around that capacity. However, if the building's applicable provisions on net metering mean that a solar plant of only 500 kW is possible, designing around the higher capacity isn't viable.
The developer has to factor in the alternate provisions on the additional 300 kW of generation. That could mean something else entirely as far as the design of the plant is concerned. Captive consumption, other forms of export or arrangements around battery storage might all be considerations. The economics change as well because the 300 kW of additional electricity wouldn't be exported at the same rate as the first 500 kW.
This is also the reason why a site survey isn't enough to decide the capacity of a solar plant.
Self-Consumption Becomes More Important
With net metering in place, self-consumption plays a larger role in the economics of a solar plant.
Solar generation peaks around noon. So, if a commercial building has equipment, heating, cooling or other devices that consume a lot of electricity during daylight hours it can consume a considerable amount of the solar electricity. Even if the plant capacity exceeds the sanctioned load or electricity needs of the building during the day, the excess could be exported.
Self-consumption becomes much less relevant if the building has low consumption during the day and a high consumption during the night. If the capacity of the solar plant exceeds the consumption during the day but the export mechanisms for the additional electricity is limited or the economics aren't viable, the excess electricity can't be utilised and the developer would have to consider options.
This, in turn, means that a load profile is much more relevant than simple monthly consumption when considering Solar Power Commercial Buildings. The developer needs to know how much electricity the building consumes during the day and how it can utilise any additional electricity during those hours.
What Happens When the Rooftop Hits the Cap?
Exceeding the net metering cap isn't the end of the road. It simply means the project has to consider other options.
The developer could limit the grid-connected capacity of the solar plant to the available capacity. In essence, the project would be sized around the sanctioned limit.
Or, the developer could consider other ways around the limitation. If the building's consumption could be shifted to daylight hours some of the additional electricity could be utilised.
Or, battery storage could be considered. The additional electricity could be stored in batteries for use during hours when the building consumes electricity. However, battery storage comes with additional costs and complexity.
The most viable option for a developer would be to review the load profile and consumption pattern of the building and identify the options.
Why Oversizing Can Be Problematic
Adding more capacity requires more solar modules, more racking, more electrical equipment, cabling, inverters, installation and so on. If a large amount of the added capacity can't be utilised effectively because of the limitation on net metering it would be a waste of resources to add that capacity. It would be a case of diminishing returns.
This is a much larger concern for large commercial buildings. In residential solar projects the added capacity isn't that significant. But for commercial projects the capacity that can't be utilised would be significant.
A viability study, then, for a commercial solar project should factor in the expected generation from the added capacity and the ability of the building to utilise that capacity. That's why load profiles and the time of consumption are relevant.
Designing Around Regulatory Constraints
Designing a commercial solar project should take into account the provisions applicable to the building at the outset.
In the case of commercial projects, the design has to consider:
- The sanctioned load or contract demand and the applicable solar capacity limit
- The daytime consumption
- The roof size and capacity
- The treatment and value of surplus generation
- Additional electrical infrastructure requirements for the plant
That, in turn, helps the developer identify the most viable option for the location. Should the project be designed around the sanctioned load, the roof size or the consumption?
Infrax Renewable works in the renewable energy sector, supporting enterprises that are looking at solar solutions for commercial applications. Its role in such projects could extend to working with the enterprise to determine the suitability of the location and design the project around the practical considerations.
Net Metering Caps Can Influence Project Economics
The provisions around net metering affect not just the maximum capacity of a solar project, but its economics as well.
When the export of electricity isn't viable the value of each unit of electricity depends on the time and place of consumption. A commercial building with high consumption during the day would still be viable for a large solar plant. However, a commercial building with low consumption during the day would need to consider other options before adding additional capacity.
That also means comparison between solar projects based on size or even annual generation isn't always relevant. A smaller plant with a higher rate of self-consumption could be more viable than a larger plant with a lower rate of self-consumption.
Conclusion
Net metering caps are a limiting factor for commercial solar projects in some cases. The availability of the roof isn't the only consideration. The applicability of provisions and the consumption patterns of the building also play a role.
In the case of commercial solar projects, then, the best approach is to treat the capacity needs like an energy management issue. Understanding the net metering provisions applicable can help a developer avoid overspending on a project and identify alternate utilisation for additional capacity.
As commercial solar projects grow in scale, greater attention needs to be paid to their design and planning. A well-sized commercial solar project isn't necessarily the largest possible, but one that can utilise the available solar resource effectively based on the technical and regulatory context.
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