Approaches to solar energy procurement
There are many viable options for businesses to go solar. Explore ideas of how a mix of these approaches, combined with energy efficiency and other measures, can help make your business more renewably powered.
When it comes to renewable energy initiatives, two of the most important considerations are the state and utility territory that your business operates in. What works for one facility or business may be a non-starter for someone served by another utility (or in another state).
On-site solar installations
Behind-the-meter systems interconnect with the electrical service on the customer (your) side of the utility meter. On-site systems represent the most direct way to bring renewable energy to operations. Many electric utilities allow your company’s behind-the-meter system to be “net-metered,” which means all (or most) of the electricity produced by qualifying systems is credited at the per-kilowatt energy rate, whether it is consumed in real-time or exported to the grid. For some customers, all energy will be used on-site.
This method produces visible, on-site commitment to renewable energy and direct, on-bill energy cost savings. For-profit businesses are eligible for federal tax credits. And, companies may qualify for utility-based rebates and other incentives.
The negatives though are that your company is limited by physical and other site characteristics and in utility policy in size. In many cases, this installation only produces a modest amount of total business electrical use. And, your company is responsible for observations, measurements and other non-warrantied repairs.
Alternative approaches to solar procurement
These approaches allow businesses to incorporate larger projects into their portfolio that can be achieved with a single facility or building, often in partnership with the utility.
This method typically pertains to larger projects, and allows large scale projects to incorporate pollinator and other agricultural benefits.
The downfall of this option is it often takes place off-site and sometimes in another state/region.
The concept of “additionality” is critical when evaluating the relative merits of each approach, especially if a company plans on publicizing their use of renewable energy as a carbon reduction strategy. Acquiring the right to label the electricity as “green” or “renewable” may not result in a net addition of clean electricity flowing through the facility or the wires outside.
Direct power purchase agreement
In some states and utility territories and typically for rather large end-users, this option presents an excellent opportunity to procure significant amounts of renewable power. An independent power producer installs and operates a large-scale solar installation. The end-user contracts directly with the owner of that solar project and purchases the power at an agreed-upon value typically bundled with the renewable energy credits (RECs). If the project is new, full additionality is guaranteed.
Renewable energy rider
This utility service connects larger customers to new renewable generation sources. Qualifying business customers can purchase energy directly from an off-site renewable generation project either owned by their utility or an independent entity. Whatever amount of renewable electricity the customer contracts for displaces the system power that the utility would typically provide. The utility bills the customer an agreed-upon rate for electricity. Because the output comes from a new renewable generator, full additionality is guaranteed.
Commodity REC purchase
It may be possible to purchase generic RECs from several aggregators and sources. Some regions and states have lower priced RECs available, but may be quite a distance from your facilities or lack additionality. Knowing the vintage and source of the RECs can help give some assurance on additionality. This is the only option that usually doesn’t require utility involvement.
Community solar program
Through a community solar program, a utility customer can subscribe to a share of a much larger array than what can fit on that customer’s property. This service can be particularly valuable to businesses that lack a suitable location for solar. The subscriptions help pay for the array’s construction, and for that reason, full additionality is guaranteed. Community solar projects are typically owned by and located within the local utility’s territory. Under this arrangement, a customer will pay upfront for the equipment used in generating and delivering the electricity received under the subscription.
I encourage you to further explore ideas of how a mix of these approaches, combined with energy efficiency and other measures, can help make your business more renewably powered.