Four easy steps to get your business started with solar

Solar energy adoption by Australian businesses continues to rise, with many companies taking advantage of the available proven solar technologies and price competitiveness to help meet their energy and sustainability goals. Before investing in solar, however, it’s important to do your research so you can make the right energy investment decisions – and avoid any potential pitfalls.  

This article shares some tips to help you get your solar decision right from the start, to know what to look out for when choosing a solar provider, and what you should consider when contracting. 

Tip 1: Get your solar decision right from the start   

Before you start to explore contracts and solar providers, there’s five important things to consider about your own operation:  

    1. Get started with energy efficiency: Some businesses choose solar as their first energy investment – but this can prove costly. First, explore all your energy efficiency options (e.g. upgrade the controls on your energy-intensive equipment or make operational changes for demand management). This might offer affordable and quick wins for improved energy productivity. By tackling this first, you can make sure your energy profile is right and avoid spending too much on an oversized solar system. 
    2. Confirm your site is right for solar: Solar suits some sites more than others. Sites need adequate sunlight, and rooftop space that is both large enough and structurally sound. A solar provider can help you ascertain whether your site is suitable for a solar installation. 
    3. Know your export limitations: Different parts of the National Electricity Market (NEM) have different export limitations. This refers to the amount of electricity you can export back to the grid. Find out what your network allows for and then speak with your retailer to find out if they cover export and to what amount. It’s important to note that what the network allows and what a retailer offers does not always align. 
    4. Make sure your main switchboard is compliant: Businesses sometimes connect their solar systems to main switchboard that isn’t up to standard. This can result in significant additional costs to upgrade the switchboard, causing a solar project to exceed budget. From May 2021, every switchboard in Australia must now meet the Australian compliance standard (AS61439) for 100A and above switchboards, so make sure your switchboard is compliant before undertaking any energy project. 
    5. Understand your energy consumption and size your system accordingly: To know whether solar will work for you – and to select the right sized system – you first need to understand your energy usage patterns. For example, your operating hours and days and electricity usage volumes are important factors to consider. This understanding will help you to size your solar system to better match your load so you minimise the amount that you export to the grid and avoid overcapitalising on your solar investment.  

Tip 2: Know the environmental certificate market opportunities available to you   

Solar energy systems may be eligible for small-scale technology certificates (STCs), large-scale generation certificates (LGCs) and Victorian energy efficiency certificates (VEECs), which might help you reduce your project costs or meet your environmental goals or obligations. By exploring these early in the process, you might improve your solar business case and even help you get your project over the line.  

It’s important to be aware that certificates have a market value and changes to these prices might affect your project’s business case. For example, the spot market price for STCs and VEECs may be lower when you commission your system than when you planned your project. For greater price certainty, it may be possible to agree a fixed price for your certificates when you contract with your provider.  

    1. Small-scale technology certificates (STCs): If you invest in a small-scale renewable energy system, you may be eligible to recover some of the cost through STCs. Small-scale systems include solar panels, solar water heaters, small-scale wind and hydro systems, and air source heat pumps. STCs are provided up front for the renewable energy you expect to produce, from the year you install your system, until the scheme ends in 2030.  
    2. Large-scale generation certificates (LGCs): Larger renewable energy projects can create LGCs from the energy they generate, which can be used to meet renewable energy target obligations or be sold or traded to reduce project costs. If you choose to sell your LGCs to reduce the system cost, options are available to reduce price risk. Most retailers and suppliers now offer three and five-year fixed price payments for LGCs.  
    3. Victorian energy efficiency certificates (VEECs) for project-based activities (PBAs): VEECS are certificates created under the Victorian energy certificate scheme for certain energy efficiency activities. There’s a potential that solar installation projects in Victoria may be eligible for VEECs, and some providers are now offering VEECs as part of their solar solutions. VEECs may offer an advantage over LGCs in that they potentially offer significantly higher revenue. However, it’s important for you to do your own research, understand the risks and complexities associated with the current VEEC process, and recognise that there is no guarantee that your solar project will be verified and receive full payment. This is why businesses need a clear business plan before proceeding with VEECS. Two of the main risks associated with VEECs for solar are: 
        • Measuring savings: PBA VEECs require savings to be calculated based on site energy consumption, so solar metering can’t be used to determine benefit. Instead, site grid information (before and after installation) is used to assess the reduction in energy imported from the grid. 
        • Clean baseline: The site needs a clean baseline and operating period for 9 to 12 months prior to and after the project. If your business changes its energy baseload during this time, such as through other energy efficiency projects or adding or removing equipment, there is a risk that your solar project may no longer be eligible under this scheme.  

Tip 3: Do your due diligence on solar providers and manufacturers 

With the rapid uptake of solar in Australia, the market is saturated with solar providers. Do your research to know the business you’re contracting to and find out:

    • Their insolvency status and history 
    • Whether they have previously traded under another name 
    • Whether they use reputable manufacturers that deliver quality solar products  
    • What the contract inclusions and exclusions are (and make sure you compare like for like amongst providers)  

This could save you from contracting with a company that lacks the transparency, experience and credentials that you can count on. When businesses choose price above quality products or reputable partners, they run the risk of choosing a solar company that may no longer exist when called upon to service warranties, pay liabilities, etc.  

Tip 4: Make informed contracting decisions  

There are a few important things to consider when contracting with a solar provider, including: 

    • Pricing: the face value of the contracted price might end up being significantly less than what you pay, so make sure that your contract pricing includes project variations to avoid future problems. Take pricing to specification as an example. If a solar provider offers a set meterage of cabling and that meterage is exceeded, you may find a dramatic increase in your final project cost.  
    • Safety and construction plans: review in detail their health and safety and construction planning as this will give you a good indication of how the site works will be completed safely and to standard.   
    • Workmanship warranties: in addition to having quality, long-term manufacturer warranties, it may be worth your while having a workmanship warranty included in the contract that covers the installation of the solar system.  
    • Uncapped liability: if your business specifies uncapped liability – and a solar provider agrees – then this may be a red flag. Most solar providers’ insurances will not cover this obligation and by agreeing to this condition, they are taking a significant risk that no issues will arise.   

Above all, make sure a comprehensive legal review of solar contracts is performed before you sign and that you have an energy expert working with you to help you make the right energy decisions for your business. 

Shell Energy is a trusted name in energy solutions, including solar planning and delivery. Our team of energy experts has a deep understanding of the wholesale and retail markets and has the technical understanding and proven experience in solar that you can rely on. Get in touch with us today to discuss your solar needs at [email protected].

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