Overcoming Hurdles to Solar Investment

Energy is one of the highest operation expenditures for manufacturing facilities and investment in solar power can be a good way to mitigate some of those costs. Solar power is appropriate for manufacturing for a number of reasons, according to an article on Sustainable Plant. Manufacturing plants usually need most of their energy in the middle of the day – the time when solar plants are at their generating peak. Such facilities also often have large flat roofs perfect for the placement of solar panels, the article says.

The correct use of a number of leasing options and incentives can overcome most of the hurdles that can hinder a manufacturing facility’s investment in solar energy.

For facility managers with access to cash reserves, taking advantage of local, state and federal incentives and tax credits can be the best way forward. This approach usually has a relatively short return on investment period as well  Companies such as Urjanet track energy and incentive data and supply it to customers for a fee. Subscribers pay on a per-meter basis.

Urjanet customer media company Cox Enterprises uses the service to evaluate locations throughout the US that offer the best incentives for renewable energy projects.

However, many facility managers don’t have the luxury of on-hand cash with which to seed a renewable energy investment. For these situations a power purchase agreement may be the way to go. In a PPA a third-party investor pays for the up-front design, installation and maintenance costs as well as owning and operating the unit. The electricity generated by the installation is then sold, by the investor, to the plant at a rate cheaper than from their existing supplier but high enough to return a profit to the investor over a set period.

In November, Solis Partners announced it had installed a 125-KW ground-mounted solar array for the Church of the Resurrection in the Burlington County township of Delran, N.J. ?The 518-panel array will offset 80 percent of the parish’s annual electricity usage. The system will produce 165,000 KWh of electricity annually.

Under the PPA, Solis Partners will retain ownership of the system for 15 years, during which time it will maintain and operate the system. The clean electricity generated will be sold to the Church of the Resurrection at a large discount to their current utility cost. After 15 years, the parish will have the option to assume ownership of the system and receive free electricity for the remaining life of the system, which is more than 25 years.

One other way to save some money through solar power is simply to rent roof space to a solar developer. The plant may or may not consume the power generated on its land, but will receive a steady income stream from the space rental. General Mills uses this approach on the roof of its San Adrian plant in northern Spain. The company has agreed to install nearly 4,500 solar panels on the facility’s roof in a 25-year lease with Spain-based MB Solar. Energy goes into the network of the Spanish utility Iberdrola. Although the plant already receives all of its electricity from renewable sources such as wind power, it could purchase the electricity generated from the solar panels on its roof from Iberdrola.