General Motors is not in the solar game just so we can tout it on our environmental blog.
There are very real benefits to using solar to power parts of our facilities, not the least of which is the fact that it’s better for the environment.
It can save money, too.
Last year, we were recognized by the Solar Energy Industries Association as the No. 1 automotive user of solar power in the U.S., so we know a thing or two about this abundant source of renewable energy.
If your organization has ever thought about getting into solar, but were afraid to ask questions, consider this post the one where we throw you a life preserver.
And now is as good a time as any to start.
Before we had even flipped the calendar on 2012, analysts confirmed that the U.S. solar photovoltaic market had installed more solar capacity through the first three quarters of 2012 than all of 2011. The 1,992 megawatts that were in place before the year was out were more than the 1,885 megawatts deployed in 2011.
Coupled with the fact that the cost to install solar dropped from around 11 dollars a watt to just under five dollars in 2011, now is as good a time as any to think about deploying solar within your organization.
But getting into the solar game is not as simple as buying solar panels and putting them on your roof.
There are a few considerations that need to be taken into account before your company can reap the benefits of power from the sun.
Risk: Not Just a Board Game
Risk assessment is a step that must be taken before you give any further consideration to installing solar.
“If you’re putting solar assets on your roof, you need to ask if it’s structurally strong enough to handle loads, like heavy snow,” says Rob Threlkeld, GM’s manager of renewable energy.
While a roof can be fixed, and a location in a region known for severe weather doesn’t mean you can’t get into the solar game, it does mean you have to address the issues before you can move on.
Just like with stocks, risk doesn’t have to be a bad thing, but you have to be smart about the amount of risk you take on.
In order to realize solar power, you must be interconnected with the local utility.
“Some utilities force you to work through the interconnect agreements,” says Threlkeld. “These can be challenging in some countries. In other countries, or states in the U.S., it might not be as difficult.”
An interconnection agreement allows you to sell to the utility any excess solar electricity that is generated by your solar panels. For example, if you don’t put all of the solar power back into your facility, you can sell a portion to the utility, which can then be used to power homes and businesses in the area.
However, if your facility doesn’t need all of the solar power that is generated, it makes a lot of sense to give it back to the community.
Solar Two Ways
There are two main structures you can follow to get into the solar space, once you’ve assessed the feasibility of your program.
The first is through a power purchase agreement, where your company pulls renewable energy directly from the grid, putting that energy into your facility. In this case, the utility acts as the host.
The second tactic is through a lease agreement where your company is the host. This is found quite often in feed-in tariff areas, like Canada and Europe. Renewable energy credits and power are sold to the utility, and the host gets a lease payment for utilizing roof space. This is a good way to earn cash on a roof that would typically do nothing more than protect you from the elements.
Of course, the other option is to own the array outright. If your company has the capital available, this is another investment possibility.
Put Agreements in Place
Once you have worked out all of the above, it’s time to come to an agreement.
“Ensure financing is available up front. If not, you can go through the entire negotiation, only to see if fall through at the end,” says Threlkeld.
A preliminary agreement is usually the second-to-last step that needs to be taken on the road to realizing a solar powered company, and it usually involves the third party you have chosen to design and install your panels.
This agreement focuses on how they will construct the array, how they access your facility during the construction process, and if they have the right safety plans in place for both your company and their construction workers. Costs are typically identified during this phase, as well.
“There are a lot of developers out there, so you want to ensure they will stand by a commitment for 20 years,” Threlkeld adds.
Once this agreement is in place, the final contract can be agreed upon; chief among the details here is finalizing costs and cash flow between you and your chosen third party.
Putting solar in place can be a boon for your company, both from a financial standpoint, as well as an environmental standpoint. But like we said above, it’s not a simple process.
By following these steps, you will be empowered to come up with a solar strategy that fits your company, and begin the process of pulling power from one of the most abundant energy sources in the universe.
Article by GM, appearing courtesy 3BL Media.