Solar Array Economics Report

With current interest rates, exchange rate and electricity price, it is economic for farmers to install solar arrays on most dairy sheds and irrigators, and with careful design as stand alone solar grid tied arrays. Arrays need to be correctly sized, designed and financed. An installed solar array isolates you from power price increases.

We have used best practice to calculate returns.

Our systems are designed to ensure the following:

• Maximum power generation.
• Have the flexibility to be scaled to meet future energy needs.
• Reduce the impact of future increases in electricity costs.
• Allow you to trade on the spot market to further increase returns from the solar array by selling into high spot prices and purchasing at lower spot prices.
• Improve supply security due to generation capacity.
• Reduce farm carbon and greenhouse emissions and meet farm emission targets and reduce financial liability under the emissions trading scheme.
• Ultimately allow you to become energy self sufficient.

Return on Investment :– Our calculations are based on current electricity prices and depreciating the solar array over thirty years. The arrays typically last well beyond that time frame.

Installation considerations; We carry some stock of solar panels and other equipment but be aware with current supply chain problems and manufacturing constraints it may take time for us to install a system. Cost may vary from current costs.

Finance: Most trading banks have rural clean energy loans typically with loans upto $150,000.00 interest free over five years. Conditions do vary, check with your bank for details.

 Increases in electricity prices and the extended life of the system means that returns will significantly increase over time.

General principles:  Economic returns from a solar array can vary significantly depending on the design of the system;

• Size matters: As the size of the array increases there are economies of scale, the type of installation also has an effect. For small arrays mounted on the roof of a house the cost per kilowatt of installed capacity is typically of the order of $3,000 to $4,000 per kW ( say 5 to 10 panels ). As the size of the array increases costs per kW reduce. An array of 100kW or more  ( say 250+ panels ) will typically cost less than $2,000/kW.
• Orientation and tilt: Having the correct angle and tilt to capture the most energy significantly affects the economics of a system. Often house mounted can have both angle and tilt compromised to fit the slope of the roof. Compared to a ground mounted array with optimised angle and tilt roof mounted systems can have more than a 20% reduction in output.
• Trading profile: On a house, maximum energy requirements are in the morning, at night and in the winter. Most of the energy produced has to be exported and then energy purchased when needed. Solar arrays associated with irrigation systems often have better generation to utilization profiles. Excess energy in the winter can often be sold at higher winter spot prices than summer prices.

Buy/sell plans: Getting the best plans from retailers. Buy prices for generated electricity can vary from 8c/kWhr to 21c/kWh. Fixed prices are typically in the 12c to 13c/kwhr. Some retailers offer variable rates depending on time of day and season. These rates can vary from 10c/kwh for summer off peak power to over 20c for winter peak power. Selecting the best plan for your generation and usage profile can significantly affect the economics of a solar system.

Location in country: The more sunshine hours a year you have the more profitable your system will be. Sunshine hours in Central Otago are higher than in Auckland.

Be wary of: Often electricity retailers offer attractive buy rates, but unseen conditions can erode or negate the premiums paid. Often domestic buy rates can be higher than commercial ones. Retailers know that typically houses have to trade most of their energy. They use it in the early morning, evening, and in winter, produce it during summer days. The high buy price is paid for by imposing high purchase prices.

Typical returns: If a house has say has 5 or 6 panels with poor orientation and tilt and having to trade most of the energy, returns on capital can be less than 3% even before the cost of depreciation of the system. With a well designed system associated with an irrigation pump the returns on capital can approach 15% per annum. Standalone system can return 10% per annum.

Returns over time: A solar array when installed has a fixed cost of generation. With inflation the price of electricity increases over time. The return on your investment increases with time. Whole of life returns to an investment in a solar array can over the life of the array reduce energy costs by up to 80%. Return on capital can average more than 50% return on capital a year.