NEM Group Solar Project
NEM Group is a laser cutting business based in Stuart, Townsville. They are currently using 300,000kWh of electricity annually and operate Ergon Energy’s Tariff 20 (Large).
Tariff 20 (Large) is a transitional tariff and only available until 30 June 2021. After this they will be moved to a demand based tariff that will see annual costs rise by $15,000.
Tropical Energy Solutions has been engaged to provide a 132kW grid connect solar power system. This complements a 50kW system already installed, bringing total solar capacity to 182kW.
While remaining on Tariff 20 (Large) the system will provide savings of $0.41/kWh. Allowing for weekend shutdowns this equates to a maximum of $69,300 annual savings if all generated power can be utilised during the week.
This is where the story would end for most solar companies: sell the system, install it and get paid. At Tropical Energy Solutions we do things a little differently though. NEM is a very forward thinking organisation and asked the big question – what do we do when the transitional tariff ends?
The answer is interesting, and one that will affect a lot of businesses that are currently operating transitional tariffs, whether they have solar or not.
The commercial transitional tariffs are consumption based. This means that you pay for the electricity you use over a bill period (called kilowatt hours or kWh) and a daily service fee. The kWh rate may be fixed or change on a time-of-use basis, commonly called peak and off peak.
The demand based tariffs that replace these are different. Here, you still pay for the kWh, but much less. The daily service fees are still there as well, but much higher. There is also a Demand Charge. This is where your electricity retailer meters the amount of electricity required from the grid every half hour and charges for the highest reading, called “peak demand”, over the bill period. Generally speaking, this leads to cost increases for most customers.
Solar on its own may help reduce demand a little bit but only during the day. And if one cloud reduces solar generation during a bill period (usually one month) then demand will spike and so will the demand charges.
Tropical Energy Solutions and NEM have taken a very strategic approach to this project. The initial solar capacity increase will deliver fantastic savings while the transitional tariff remains. During this time, we will monitor solar generation, site consumption and demand (we are installing energy meters as part of the project). This data will provide the basis for the design of a smart battery bank that will discharge when the system sees a peak demand event about to occur. This will take the sting out of demand charges and reduce annual electricity costs.
This approach takes the guesswork out of designing the battery bank, enabling a correctly sized system that will deliver a sound return on investment.
This project is a great example of local businesses coming together to provide solutions to a customer. Our knowledge of Ergon’s tariffs and solar power system systems allowed us to design a system that will deliver long term, strategic, results. We sourced all components from a local supplier, Haymans Townsville, which eliminated any logistical issues. The system was installed by our local electrical contractor partner, Kolby’s Electrical, a well respected and professional firm that we have a long standing professional relationship with.