Commercial organizations are under growing pressure to make better use of clean, renewable energy options. While solar is an increasingly popular choice, sometimes a business’s site isn’t ideal for solar. Not every rooftop, parking lot or piece of land is suitable for onsite commercial solar equipment. Plus, not every organization owns its facilities or has the resources or desire to support a large solar installation of its own. Luckily, there is an alternative: Organizations can purchase solar energy that has been generated by an offsite commercial solar installation.
This business brief will help you understand the basics of a commercial offsite solar solution, including:
What is offsite solar?
Offsite solar refers to a large-scale commercial solar installation located away from your organization’s physical premises. In one delivery and financing model, the solar energy is carried directly to your facilities. In another, the green solar power your offsite installation generates is used to offset the “brown” (i.e., fossil fuel-generated) power your organization uses, but the energy is carried to the electrical grid to be used by homes and businesses.
How does it work?
Offsite solar is “grid-connected.” That means the solar installation delivers energy straight to the electrical grid, which then carries that electricity to homes and businesses. In contrast, a more typical onsite solar solution would be “behind-the-meter,” which refers to generating solar energy on your own site to directly power your facilities. Because offsite solar is grid-connected and can be delivered by your existing energy provider, it’s a viable renewable energy solution for organizations that can’t install solar on their physical premises, have nowhere to put solar or can’t install enough solar onsite to meet their needs.
Why do organizations choose offsite solar?
To overcome facility or site limitations: Perhaps available roof space is limited, you don’t own the building(s) or property restrictions (e.g., historical site constraints) preclude installing solar on your premises. Other physical characteristics—such as the weight-bearing ability of the roof or shading from nearby structures or trees—can also limit a site’s viability.
To reach economies of scale: Offsite solar can allow companies to realize significantly better economies of scale, compared to deploying solar via onsite installations. For example, a large commercial rooftop system might range from 500 kW to 1 MW, while a ground-mounted offsite solar system typically ranges from 2 MW to 5 MW in size. In fact, a single offsite solar power plant can replace dozens of smaller solar systems scattered across roofs and carports. Additionally, this single offsite system can be optimally sited and sized to meet an organization’s total energy needs.
To manage energy costs and risk: Electricity prices fluctuate over time in fossil fuel markets such as coal and natural gas, so there is no way to accurately predict your future electricity bills. This leads to uncertainty and risk. In contrast, most offsite solar is financed with a commercial power purchase agreement (PPA), which fixes the price of energy for a predetermined time—usually 10 to 20 years. Because offsite solar can be sized to meet each organization’s unique energy needs, much (if not all) of its energy costs can be fixed through a PPA contract.
To achieve ambitious renewable energy goals: 100% renewable by 2020? Getting to net-zero by 2050? Renewable energy projects take time and attention to develop, whether they are onsite or offsite, and facility managers have to keep an eye on their limited resources. A large-scale offsite solar power plant can help you achieve your energy goals more quickly by producing more energy from a single source.
To go beyond Renewable Energy Certificates (RECs): Some organizations choose to purchase RECs—credits for clean energy generated remotely—to meet government-mandated or self-imposed renewable energy goals. Purchasing RECs means you’re supporting renewable energy being generated somewhere and being used by someone, which is good for the planet, but you’re not actually consuming that solar-generated power yourself. Many organizations start with RECs, but eventually move to reduce local carbon emissions by initiating offsite solar projects in their community or state.
Offsite solar may be a viable renewable energy solution for your organization, especially if a solar installation cannot be built on your premises. You might choose an offsite solution for a number of reasons, including:
- Meeting ambitious renewable energy goals
- Reaching economies of scale with your commercial solar power
- Managing risk associated with volatile energy prices
- Showing your commitment to a cleaner environment