Should Our Company Get Solar Power?


The Sun is the Ultimate Power Source.

Solar PV Panels Convert Sunlight into Electricity.

At a glance, the reasons to go solar seem obvious. The sun is the ultimate source of virtually all of our energy resources so why not go directly to the source? Further, sunlight is free. All you need is a way to capture it and convert it into a usable form.

Photovoltaic Converts Sunlight into Electricity.

Solar photovoltaic (“PV”) cells provide one way of doing exactly that. I’m going to assume that you already have a basic understanding of how PV cells work so I’m not going to go into it here, but if you are interested in learning more about how these cells function, you can find a wealth of information through a quick Google search (try “how PV cells work” for example).

Three Rules of Thumb.

There are basically three things that control the effectiveness of solar PV:

  1. The size of the array. The bigger the solar panel array, the more power it can generate with a given amount of sunlight,
  2. The duration, intensity, and directness of the sunlight. The more light, the more power.
  3. Things that block the light. Clouds, dirty panels, shade from trees or shrubs, snow or any other obstacles all reduce the output of the array.  (Ok, that is really a restatement of (2)).

In other words, one of your biggest considerations should be whether you have an available, unshaded location with suitable size and orientation to optimize a solar array to your needs.

Initial Hurdle is Expense.

Solar arrays and the associated equipment are still expensive to buy and install. While prices are coming down, true economies of scale won’t be achieved until there is widespread adoption of the technology. The biggest hurdle to widespread adoption is expense. In other words, it is a bit of a catch-22 situation.

For this reason, government and power company incentives have been implemented to help defray some of the initial costs for early adopters. These incentives vary depending on your location, and even with incentives, an investment in solar must be made with an eye toward the long-term benefits.


  • Solar energy is clean energy. Solar PV panels do not generate greenhouse gases or other pollutants.
  • Net metering can keep track of excess kWh generated by the solar system at times of peak sunshine and credit it against kWh provided by the power company when the sun isn’t shining. If the system is sized properly, the net consumption can be close to zero.
  • Solar arrays have a projected lifespan of up to 30 years. Even if the ROI on the initial investment is 10 years, solar PV arrays can still provide up to another 20 years worth of almost free energy (some maintenance is always required).
  • Solar arrays can reduce the impact of grid-based power outages.

Where Solar Falls Short

While solar is certainly interesting for off-the-grid and for residential grid-tied situations, I now want to focus on the commercial, manufacturing and industrial (“CMI”) users.

Many CMI users with solar installations have expressed disappointment that their overall bills were not reduced as much as they expected – even when the net kWh usage is reduced to zero. To understand why this is so, it is important to understand the different types of charges on your power bill and why solar fails to address all but one of them.

Typical CMI Power Bill Charges.

  1. kWh charges. This is your actual net power consumption. One kilowatt over a one hour period of time is one kWh. Note that this is time-based. Note also that whether you use 1 kilowatt for 10 hours or 10 kilowatts for one hour, the total kilowatt hours are the same. The capacity available from the power company, however, has to be 10 times higher for the second example.
  2. kW charges, also referred to as “demand” charges. These are charges based on maximum instantaneous usage or “demand” and reflect the capacity that the power company must make available to you in order to cover your peaks in demand. Demand kW is billed at a much higher rate than kWh – even if you only peak a couple of times during your billing period. The amount of difference depends on the billing schedule you are on.
  3. Taxes and fees. Not much you can do about this part.

In other words, the power company charges you for the cumulative volume of electricity that flows through your facility (kWh) and also for the maximum capacity that they have to provide you at any instant in time (demand).

How This Relates to Solar.

As mentioned above, the maximum generation capacity (kW) of a solar array is a function of the size of the array and the amount of light striking the panels. This changes throughout the day depending on the intensity and angle of sunlight at any given time. If the array is sized appropriately, however, it can produce enough kWh during the peak sunshine hours to compensate for the no-sunshine hours resulting in “net-zero” kWh consumption at the end of the month or year.

But we must remember that kWh is time-base. In other words, it calculates the total consumption over time. So how do we deal with consumption at a specific point in time (especially when solar isn’t producing anything)?

kW Over Time Versus Instantaneous kW.

kW Over Time Versus Instantaneous kW.

If we look at a hypothetical facility that starts an early shift at 6:00 am, in the red line we see a steady demand for power (kW) during the night hours to run security lights, HVAC, and whatever else. At 6:00 am, the heavy equipment is fired up to start the shift resulting in a peak surge in kW. This settles back down to a steady pace throughout the day.

By the way, in a real facility we would see far more fluctuation. This graph is merely to illustrate the point.

At 2:00 pm, the second shift starts the equipment they’ll need resulting in another spike but it settles back down to the level they need to run. Then at 10:00 pm, everything but the bare essentials shuts down for the rest of the night.

The good thing is that this facility also has a solar array. The blue line shows the kW output of that array throughout the 24 hour period. At night, it produces nothing. As the sun comes up, production increases until it peaks mid-afternoon. Then it gradually drops back down to zero as the sun sets.

At the end of the day, the solar array has generated more kWh than was used by the facility, but the biggest demand for kW occurred when the solar wasn’t producing any kW. In other words, the solar array has had no impact on the requirement for the power company to provide:

  • generating capacity to meet the facility’s demand, or
  • the infrastructure to deliver the generated power.

These are real costs to the power company and they have the right to be compensated.

The Bottom Line.

  • Solar is expensive to install but utilizing available incentives, it can pay for itself in as little as 5 to 7 years – longer in some areas. With an expected lifespan of up to 30 years, it can still be a very good long-term investment.
  • Solar, if properly engineered, can virtually eliminate kWh charges from your power bill. The resulting savings are the basis for the ROI mentioned above.
  • Solar will probably not reduce the demand charges on your bill. In fact, if appropriate measures are not taken, it might actually increase those charges. We’ll speak to those measures in our next blog.

Question: Have you installed solar at your facility? What did you like or dislike about the experience?


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