What Could Be Better Than Free Solar Panels?
Updated: Feb 25, 2020
How can DemandEx demand-charge management software possibly be better for commercial solar customers than free solar panels?
Hear me out. For this type of economic analysis, let’s break out that most reliable tool, the Net Present Value (NPV) calculation. That will give us an apples-to-apples comparison of the value of any two options in a commercial solar project proposal. So, let’s imagine a California commercial office building customer with a peak demand of 150 kW, and a proposed solar array of 200 kW. Behold the current market costs in $ /Watt DC:
Solar panels: $0.35
Balance of System: $0.30
Margin, overhead, etc: $0.73
Sales Tax: (5%)
Total: $2.00 /Watt
Sure, everyone's costs will vary in markets across the U.S., but the above is a decent commercial solar benchmark for 2020, right? Right. Now, using the above for NPV, what if you could bake in your solar panels at no charge? For a 200 kW system, the customer NPV would go up by $70,000! Hold that thought. Now let's work in adding our DemandEx demand charge reduction software. In our same 200 kW example, the customer is paying $13/kW in monthly demand charges. With their current peak of 150 kW, that’s $1950/month or $23,400 per year. Ouch. But wait, DemandEx can ease that pain.
When we analyze the building’s flexible loads—primarily HVAC—we estimate that DemandEx can save 25% of the customer’s demand charges. That’s $5,850/year above and beyond what solar alone can save. After the cost of our software, the net estimated savings is $3,900 /year for the next 25 years. With reasonable assumptions regarding the discount rate (5%) and the escalation rate of utility prices, the NPV of these 25-year extra savings is $74,432.
Remember when I told you to hold that thought of $70,000 in NPV solar panel costs? You can recall it now. You, the developer, can show your customer a higher NPV by delivering DemandEx than you could by delivering solar panels at $0.00 /Watt! But wait, it gets even better. This calculation gets more favorable for areas with higher demand charges. If demand charges are $25 /kW (as they are in Alliant’s Iowa locations, Public Service of New Mexico, and many other utility service territories today) savings from DemandEx would deliver a higher NPV value than free solar panels, free inverters, and free installation labor combined! Check this handy graph to see how much DemandEx is worth for this example customer for any demand rate.
So, if you want to offer your commercial solar clients with high demand charges a solution with more value than free solar panels, become one of our certified Extensible Plus partners. Just give us some basic information about your project, and we’ll deliver a free demand charge analysis with NPV savings that will impress solar customers and help close more sales.