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Maximize a return on investment on solar energy projects

A widespread misconception needs to be dispelled if solar energy projects are going to show higher rates of return, in a market with low rates. Many solar project managers are willing to trade performance and return on investment for lower upfront costs. “People tend to buy lower priced photovoltaic racking and design, to save some cash. By doing this, they also generate a lower return on investment,” says Alexandre G.-Vanasse, vice president of development at Opsun.

However, it's time to reconsider how tilt can impact investment returns. Here’s why.

Tilt impacts returns

Energy generation simulated through photovoltaic software, PV SYST, shows an increase in energy yield of 10-11 per cent when a solar installation has modules set at 25 degrees compared to those set at three degrees, depending on inter-row distance.

“At three degrees, a photovoltaic system traps heat under the modules, especially if wind deflectors are used,” G.-Vanasse says. Heat can degrade PV performances as much as two per cent and increases the chances of module failure over time. Conversely, in winter, snow can cause significant losses when tilt is low, since as much as 25 per cent of solar radiations reach earth during winter.

“Snow can cause energy losses from five per cent to as high as nine per cent more at three degrees, than at 25 degrees,” he says.

These challenges may be resolved, in part, by higher tilt and elevating the modules from the roof. Yet, solar project managers are reluctant to increase a solar system tilt because of increased costs. And that's a mistake.

Beyond racking prices

Racking prices increases are one reason for the reluctance but they needn’t be. Taking into considering Ontario Feed-in Tariff (FIT) rates, operating costs (leasing, operations & maintenance, administration and insurance), depreciation, and taxes, there may be a 12 per cent increase of internal rate of return (IRR) when modules are set at twenty five degrees instead of three degrees, even if the cost of racking increases from 15 to 30 cents/W.

“PV racking prices should not be considered a sufficient reason to deter higher tilt at the profit of lower tilt PV modules on flat roofs,” G.-Vanasse says.

More not always better

With expensive roof leasing fees and space at a premium, it's common to want to add more panels in order to generate higher revenues. Yet this approach is often at the expense of performance and return on investment (ROI).

Also, because of low tilt, there's radical loss of performance, particularly in winter. Better to negotiate leasing fees that are proportional to the power installed on the roof or look for installations on owned roofs instead.

“Large roofs where space is not limited will always produce better return on investment,” he adds.

Solar project managers need to reconsider how the tilt can impact the bottom line. Increasing the tilt from three to 25 degrees can make a huge difference. “Project designers seeking higher return on investment should always attempt to install modules at higher tilt, even if racking prices are higher,” G.-Vanasse says.

For more information, visit www.Opsun.com.

Connect with Alexandre on LinkedIn or via email to discuss your solar energy project.

 

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