The covid-19 pandemic is delaying new commercial solar project development and construction. Across North America, many facilities powered by solar have reduced or zero occupancy. Oil prices went negative for the first time in history.
Energy managers watching all of this unfold wonder what these ripple effects mean for investments in renewables.
Whether your organization has photovoltaics onsite now, a solar installation in development, or a solar deal under consideration, here’s what you need to know.
Temporary Slowdown for Commercial Solar Projects
“Total installations this year might be tough compared to expectations three months ago, but I believe those are just going to be delayed a few months and will still get built,” says Jamie Hutson, VP of structured finance for the GE spinoff Distributed Solar Development, which develops solar projects for commercial, industrial, and municipal organizations.
Hutson observed that, in many jurisdictions, the professionals who would normally review commercial solar applications or issue permits aren’t in the office. Construction has generally slowed down rather than stopped, though, he said. Teams in the field are following local, CDC, and OSHA safety guidance, he added.
“For the most part, customers are continuing to press forward with projects in development,” Hutson said.
Natural Disasters Strengthen the Case for Solar
For energy managers, seasonal natural disasters could add a layer of risk on top of the pandemic.
Atlantic areas prone to hurricanes have already started preparing for the season to begin in June, which researchers anticipate will be above average this year. Meanwhile, Western states could still be dealing with the pandemic when the wildfire threat increases. Public safety power shutoffs in California last year affected scores of C&I customers.
“The failing electrical grid, coupled with fallen power lines, have historically sparked wildfires during high wind and heat seasons,” said Brett Joerger, CEO of Westhaven Solar, an alternative energy provider servicing Northern California whose clients include schools, churches, and businesses. “In times of crisis, businesses and schools can become even more vulnerable without power.”
When organizations pursue solar plus storage, and generate their own power, they are less reliant on the grid, he said.
Hutson has noticed more interest in adding batteries to solar projects, which can also help reduce demand charges.
Cratering Oil Prices Unlikely to Affect Electricity Bills
On April 21, for the first time ever, one American oil futures contract plunged into negative territory, Forbes reported. But don’t expect that to translate into lower electricity bills, renewable energy project experts cautioned.
“Utilities still have peak rates that increase the cost of electricity for many during specific hours. This doesn’t change on the backend, plus annual rates generally increase about 6%,” said Joerger. Much of the cost in an electrical bill stems from the work and materials required to distribute the power, he added.
DSD’s Hutson sees commercial solar projects retaining value into the future. He advises organizations that are interested in signing a power purchase agreement to make sure that the contract offers them long-term savings.
“As businesses and municipalities look at their budgets going forward, saving a few hundred thousand or more dollars a year on their utility expenses is going to look more appealing than it already does,” he said.