It sounds logical: harvest solar energy on the roof of your business and then sell it back to the grid for a profit. However, this is not the best strategy for any business looking to convert to renewable energy and maintain profitability.
There are a range of factors that would mean this is not cost-effective or beneficial and why businesses are better off keeping the solar energy they produce for themselves. In this post, we shed the light on how pushing back to the grid isn’t all it seems.
You don’t get paid extra to push power back onto the grid
If you’re trying to assess whether solar energy is cost-effective, there’s a lot to think about. While solar feed-in tariffs (FIT) can make an impact on your home bill, it may not be viable for business once you reach a certain threshold –FIT’s may not be paid to businesses to put surplus energy back into the grid.
This varies between providers and different states and territories, but the general consensus is that it is not worth it. For example, many providers will provide a reduced feed-in tariff for systems that are greater than 10kWh, which would apply to most businesses.
Others will cap the feed-in tariff rate at either 3000 or 5000 kWh for the year. And some operate daily, with the high feed-in tariff only applied for the first 14kWh per day.
In Western Australia, Tasmania and the Northern Territory there are very few providers offering a solar feed-in tariff at all, with only Jacana Energy offering this discount at the top end.
While it may sound good in theory to export the power you are generating to the grid for credits, you are actually selling your power for around 8-15 cents per kWh when you could be using it yourself and saving a substantially higher 20-35 cents per kWh.
The infrastructure cannot handle it
It would not be a good idea for Australian businesses to come on board with solar at high take-up rates and then export to the grid, as it could cause critical damage to the infrastructure.
Essentially, Australia’s energy network is dated and was built for coal-fired power stations. Andrew Dillon of the network industry peak body, Energy Networks Australia (ENA) spoke to ABC News in 2018 and described how feeding solar energy back to the grid could cause damage.
“The engineering reality is once we get too much solar in a certain space it does start to cause technical issues,” he said.
“If there is too much energy coming back up the system in the middle of the day, it can cause frequency voltage disturbances in the system, which can lead to transformers tripping off to protect themselves from being damaged and that will cause localised blackouts.
“There are pockets of the grid already where we have significant penetration and we are starting to see technical issues.”
Could this change in the future?
As more coal-fired power stations reach their end of life, there is scope for infrastructure to be improved to better accommodate solar in time.
Both sides of government have differing National Energy Guarantee (NEG) policies but the common thread is improvements to distribution and transmission.
For a NEG to become legislation, it would need the backing of all of the states and territories as well.
In time, there will likely be a point that the infrastructure can better handle solar feed-in and businesses can find an extra profit stream by doing this. But for now, businesses are advised to generate the power for themselves and enjoy the cost savings it delivers.
Contact us on 1300 180 616 today to better understand your renewable energy-based savings potential.