By Shalinn Yeap
Re-published with consent from Green Review August 2024
Page 30–32 of Green Review.
There has been a significant increase in solar energy system investments within the commercial and industrial sectors in recent years.
According to the International Energy Agency, global investment in solar photovoltaic technology is projected to exceed US$500 billion in 2024, surpassing investments in all other generation sources combined. This surge in solar deployment, driven by technological advancements and policy support, is expected to reduce wholesale electricity prices in some countries. However, it also highlights the need for complementary investments in flexibility and storage capacity.
In an effort to mitigate rising energy costs, contribute to achieving net zero targets, and stay competitive, many businesses and major corporations are swiftly transitioning to solar power. While there are many incentives and benefits to adopting solar energy, it requires a substantial initial investment, which can vary depending on the system installed. The fast payback is a key driver, as solar energy can significantly lower energy costs by offsetting consumption and enabling businesses to sell excess energy back to the grid.
The typical cost of grid electricity ranges from approximately 20 to 40 cents per kilowatt-hour. For large businesses or corporations with high energy demands, this can become quite costly. Solar energy offers an opportunity to substantially reduce these costs by decreasing the amount of energy purchased from the grid.
Transitioning to solar energy offers both financial and environmental advantages for businesses. Key government incentives include the Small-scale Renewable Energy Scheme, which provides upfront discounts through Small-scale Technology Certificates, as well as various federal and state government rebates and grants. For eligible small businesses, the Instant Asset Write-Off allows immediate tax deductions on solar installations up to $20,000. Additionally, green energy loans can offer favourable financing terms, reducing initial installation costs and contributing to long-term savings.
Both commercial and industrial solar systems offer substantial returns on investment (ROI). Commercial solar systems typically provide a shorter payback period and higher ROI due to their smaller scale compared to industrial systems. Businesses often recoup their initial investment within a few years. In contrast, industrial solar systems, which are larger and use more advanced technology, involve higher upfront costs but yield greater ROI over time. Industrial systems can also generate surplus energy, which can be sold back to the grid.
As decarbonization becomes a priority across various industries, renewable energy sources, particularly solar energy, are emerging as the best alternatives for businesses aiming to reduce their carbon footprint. This transition not only enhances a company’s brand image but also aligns with the growing demand from consumers and shareholders for environmentally responsible practices. This is especially significant considering that only 100 companies are responsible for 71% of global greenhouse gas emissions, as reported in The Carbon Majors Database by the Carbon Disclosure Project. This underscores the substantial impact companies and investors have in addressing climate change.
Rising energy costs and market volatility present significant challenges for businesses, especially those in energy-intensive sectors like manufacturing and hospitality. These surges in prices can directly impact operational costs, leading to reduced profit margins. However, businesses that generate their own renewable energy are better positioned to protect themselves from rising costs, achieving both energy independence and stability.
For companies in remote locations or with unreliable grid connections, off-grid solar solutions and solar farms can offer significant advantages. Commercial and industrial solar systems, while both designed to harness solar power, differ greatly in scale, purpose, and design. Commercial systems, which range from a few kilowatts to several hundred kilowatts, are smaller and designed to meet the energy needs of businesses, public institutions, and smaller facilities like schools, hospitals, and retail stores. These systems often integrate with a building’s existing infrastructure and may employ innovative technologies such as tracking systems to optimise energy capture throughout the day.
In contrast, industrial solar systems are much larger, ranging from hundreds of kilowatts to several megawatts. These systems, designed to meet the substantial energy demands of large manufacturing plants or utility companies, use advanced technologies like Concentrated Solar Power and extensive solar farms. Not only do they offset a significant portion of a facility’s energy consumption, but they also contribute power to the larger grid or local utilities, sometimes supplying power to entire communities or industrial complexes.
The rapid growth of commercial and industrial solar investments reflects a transformative shift in the energy landscape. As businesses increasingly recognize the financial and environmental benefits of solar power, the solar industry is poised for continued expansion. With advancements in technology, supportive policies, and a growing commitment to sustainability, solar energy is becoming an integral part of the commercial sector’s strategy for a cleaner, more cost-effective future.
