Understanding Solar Energy, Its Cost, and How to Efficiently Plan for Its Use
Erich Noack |February 17, 2015
This article originally appeared in the February 2015 issue of Mini Storage Messenger Magazine.
Talk on the news and internet often finds its way back to the issues of global warming and the rise of oil prices. It isn’t surprising, then, that many people are considering the benefits that alternate, renewable energy sources can bring to their homes and businesses. Within the last five years the use of solar energy as an alternative power source has become increasingly common and continues to gain popularity as the technology gets better and the prices of equipment and installation get lower.
But, what is “solar energy”? What is “renewable energy”? Here’s what you need to know:
While there are multiple ways to harness and store the sun’s power, the mainstream method is through the photovoltaic cells, or panels. The use of solar panels in the practice of producing your own electricity for your home or business is far more common than other, more industrial means. These glass and silicon plates work by simply converting collected light from the sun into electrical energy.
Alright, maybe not so simple. However, the idea behind using renewable energy at your storage facility is:
The energy produced by the sun is endless. Fossil fuels are finite. That’s what makes the sun’s power renewable; it’s infinite.
Using renewable energy at your facility can save you money. You can also shrink your carbon footprint over several years. Who wouldn’t like saving the world while saving money?
Understanding solar energy and how it is beneficial to you, your business, and the Earth can help you begin to develop and implement a plan to convert your grid-based system to one that provides a majority of its own energy through the use of a solar power system.
The Dawn of Solar Power
The sun’s energy is obvious on any clear day. Anyone can go outside and feel the warmth of its light on their face. What is more, that plant in your window is fueled by the sun’s light, converting its energy into sugars to help it grow. Scientists throughout history have worked hard to capitalize on that understanding:
The work of these scientists opened the door for further development and experimentation, eventually bringing us to where we are today in the level of efficiency offered by modern photovoltaic cells.
The Advancement of Efficiency
The more the technology and the process to produce it advanced, the more apparent it became that photovoltaic cells would be practical for civilian use. In 1977, the founder of SunPower Corporation, Richard Swanson, made the prediction that the price of photovoltaic cells would drop 20% every time the world’s ability to manufacture the materials doubled:
In reality, Swanson’s observation is actually a simple learning curve, displaying the relationship between experience and process; the more experience you have in doing something, the more efficient that process becomes. This is good news for you, should you decide to convert your facility to solar energy. As the graph represents, Swanson’s Law is being proven with each progressive year. The cost per kilowatt has dropped from $76.67/kilowatt in 1977 to $0.36/kilowatt today.
The cost efficiency of converting your business to solar energy is becoming more and more practical. Investing in this endless energy today would mean that eventually you would be providing yourself with a truly cost effective means of electrical power for your facility. The curve in Swanson’s Law has a long way to go, however. In fact, the equation has several more decades to run before solar energy will be as cost effective as possible. Smart investment now will bring you returns and put you ahead of the curve in the future.
The Necessary Knowledge
It’s clear that solar energy, having been around for years, is now far more efficient and cost effective than it has ever been. But what about the initial investment? How can you make an educated decision about converting? Here are some things to keep in mind when setting out to implement your solar energy conversion plan:
Solar energy is not practical in all regions. Consider your location. Some cities make it illegal to disconnect from the grid. Other regions don’t support the products. Also, remember that the weather is important as well. Storage facilities have lots of roof space, but if you live in a place that gets little to no sun throughout the year, then solar energy may not be viable.
Photovoltaic cells are expensive to install. In fact, average upfront expense for installation on a single-family home is somewhere in the region of $40,000. Your facility is probably larger and uses more electricity, so expect the price to be doubled or tripled. You will immediately begin to save money, but you’ll have to make the investment in time and money before you’ll see returns.
Federal and state government incentives are available. Despite the fact that installation of a solar energy grid is not cheap, there are programs designed to help you out. While it isn’t clear how long the money will last, government funding can help those that convert to renewable energy. This could be enough to help you make the shift.
The Direct Benefits
What can the owner of a storage facility get out of this? Well, you can and will save money. In the long term, solar energy will make back what it cost and then some. In many cases, you’ll be able to sell extra electricity back to the grid, thereby adding to your savings. And while recent research has shown that solar energy is the least cost effective renewable energy, this is mainly because of production methods, which are constantly getting better.
This year, Mamoroneck Self Storage in Westchester County, NY, has applied to receive a $110,000 tax break for the installation of solar panels, thereby creating a tax exempt renovation. Another facility based in New York and New Jersey, Safeguard Self Storage, began a $6.7 million project in May to upgrade 25 facilities to solar power systems. At completion, the project will cover at least 95% of their energy needs and save the company $50,000 in utility costs per month. That means they will spend an average of $250,000 per facility and save around $2,000 at each in utilities.
You can expect to spend between $100,000 and $300,000 on the installation of a solar energy system that will provide between 40% and 60% of your energy needs. Because of this upfront expense, you will only begin to see a return on your investment after about 7-10 years. But the return will come.
The Next Step
If you aren’t totally committed to installing a solar energy system, that’s okay. You have to be entirely sure of your finances and your ability to stay afloat during the period between installation and return. The best thing for you to do is to keep your eyes and ears open. Solar technology is always getting better and becoming cheaper to use. Continue researching and talking to those in the industry. Connect with those who have made the move to renewable energy. If you are serious about going green, begin planning and appropriating funds to the project. Get quotes from providers. Understand your state and city utility laws. But most importantly, listen to your customers’ needs. They will tell you if the investment is worth the risk.