March/April 2011

Cover Story

Solar power coming of age

Not long ago considered a novelty or fringe technology, solar is a mainstream proven technology for alternative energy and sustainability

Fast Forward

  • Solar electricity lowers risk.
  • Solar technology is refined and reliable.
  • Solar electricity lowers cost.
 
By Bill Lydon
cover story1
McCormick's estimated electricity cost savings are $3.4 million over the term of the agreement.

Solar power is becoming an alternative for industrial plants to consider as the technology has improved and been refined. In just one hour, the earth receives more energy from the sun than the entire world uses during a whole year; the challenge has been to efficiently convert this to useable energy. The conversion of solar to electricity is no where near this ideal, but efficiencies have improved enough for consideration as an alternative energy source for industrial plants.

As technical experts, industrial automation professionals are being asked more often to determine how to reduce energy consumption and the cost of energy in production. Energy has become a larger component of the bill of materials for producing products, and in many cases, it is one of the most unpredictable cost components. Automation professionals are in a unique position understanding processes and technology to improve operations. Automation methods can be used to more efficiently use energy to achieve higher yields with a number of strategies, but this is a part of the puzzle. Alternative energy is another piece of the puzzle. In a recent interview, Peter Kelly-Detwiler of Constellation Energy (www.constellation.com) commented that using solar electricity can be a "de-risking strategy." Once a solar system is put in place, there is predictable cost of electricity generated by it.

Several large production facilities in the past have implemented cogeneration plants as a way to improve energy costs by generating electricity and using the heat generated from turbines in their processes. Alternately, other cogeneration systems use waste heat from processes to drive turbines to generate power. There are other variants on this approach, but all create a dependency between a process and electric generation essentially slaving one to the other. There is an ongoing operations and maintenance cost with these approaches that needs to be factored into lifecycle savings. These approaches have their place in the right applications but are not useful if there is no need for process heat or heat demand requirements are unpredictable.

An average solar Photo Voltaic system saves thousands of tons of carbon dioxide emissions annually, equivalent to removing hundreds of cars from the road. Solar power is one of the few distributed generation options for businesses to take advantage of that does not emit any pollutants into the atmosphere and can directly reduce a company's carbon footprint.

Solar energy is an option for consideration as an alternative energy source for industrial plants. Solar energy, considered a novelty or fringe technology a number of years ago, has been improved and refined to become a mainstream technology. Solar has the additional benefits of being a sustainable, "green" technology, and there are government incentives in many areas. Some corporations are now committed to sustainability to improve operations, prove they are good corporate citizens, and create goodwill. The business investment community is also paying attention to sustainability. The Dow Jones Sustainability World Index is a good example with an index that assigns a number to companies based on economic, environmental, and social criteria. The index is based on the cooperation of Dow Jones Indexes and SAM, an investment boutique focused exclusively on sustainability investing. Based on its Corporate Sustainability Assessment, SAM has compiled one of the world's largest sustainability databases and analyzes over 2,000 listed companies annually.

Solar basics

Photovoltaic devices use semiconducting materials to convert sunlight directly into electricity. Solar radiation, which is nearly constant outside the Earth's atmosphere, varies with changing atmospheric conditions (clouds and dust) and the changing position of the Earth relative to the sun. Nevertheless, almost all geographic regions have useful solar resources that can be accessed.

Some of the first solar panels were designed in the late 1950s for applications in space programs. In the 1960s and 1970s, the first commercially available solar photovoltaic panels were installed, many of which are still in use today. Once installed, solar power systems require little or no maintenance and will provide electricity cleanly and quietly for 40+ years.

Andy Black, chief executive and founder of OnGrid Solar (www.OnGrid.net), provided some insights on solar power. His company does research, providing software and training to calculate the financial payback of a potential solar photovoltaic project. They use a 25-year lifespan for these systems in financial analysis, but he noted these systems typically last another 10 to 20 years. The system efficiency degrades 0.5% to 1% per year as they age. Asked about the predictability of electricity generated by solar, he said there is little variation in performance year to year with solar, "plus or minus 5-10%, long term very little variation. Lots of sunlight is just one of the many factors that must be included in a system performance calculation. Across much of the United States, the amount of available sunlight is surprisingly uniform, with most areas within ± 20% of the sunlight level of Miami, Fla.

"Certainly there is variation day to day, but that is not what matters; it is year to year performance that averages out, the sun is pretty stable," he said.

The National Solar Radiation Database is a reference that has 30-year hourly solar history data by geography from 237 sites in the U.S., plus sites in Guam and Puerto Rico. The database can be found at the OpenEI (Open Energy Information) website: http://en.openei.org. Black emphasized the importance of utility rates and incentives from the utility and government in calculating the economics of project. He recommends selling excess power back to the utility where possible to avoid using batteries to store power. These systems work seamlessly today in concert with the power grid connection to a facility automatically delivering the power needed to meet facility demand.

Solar application examples

  • ALZA Corporation
     

ALZA Corporation's manufacturing facility in Vacaville, Calif., (a member of the Johnson & Johnson Family of companies) installed a 1-megawatt (MW) photovoltaic solar energy system working with SPG Solar (www.spgsolar.com). The ALZA solar panel field, dubbed SPF-1000, is one of the largest privately owned commercial solar energy systems of its kind in California. The physical layout and location of most pharmaceutical facilities make them perfect candidates for solar energy. Acres of mostly flat roofs can be turned into productive real estate with unobtrusive, silent solar arrays, which offer the additional bonuses of insulating the building, reducing the effects of UV radiation, and thermal cycling on the roof, often extending its life substantially. Open land around buildings and parking lots provide acreage for ground-mounted PV systems and SolarPort PV covered parking.

SPF-1000 enables the manufacturing plant to produce one-third of the power the plant requires on a high-power-demand summer day. This system is built by SPG Solar Inc., of San Rafael, Calif., and generates the equivalent amount of energy to power 250 homes, as well as offset nearly 1.4-million pounds of greenhouse gas emissions annually.

SPF-1000 uses an active single-axis sun-tracking mechanism to collect the most sunlight per acre of land by orienting the solar panels to the sun as it moves across the sky from east to west throughout the day. The 1-MW field covers approximately 6.5 acres adjacent to the ALZA Vacaville facility.

Parent company Johnson & Johnson has company-wide goals for reducing its carbon footprint at its facilities nationwide. Committed to environmental stewardship for several decades, Johnson & Johnson has a company credo: "We must maintain in good order the property we are privileged to use, protecting the environment and natural resources." In addition to the ALZA Vacaville site, Johnson & Johnson has installed solar power systems at a number of other corporate locations, including Janssen Pharmaceutica in Titusville, N.J.; Cordis Corporation in Warren, N.J.; J&J Consumer in Skillman, N.J.; J&J Corporate Headquarters in New Brunswick, N.J.; and Neutrogena Corporation in Los Angeles.

  • Johnson & Johnson Pharmaceutical Research and Development (J&JPRD) 
     

Johnson & Johnson, working with SPG Solar, installed a 243-kilowatt (kW), roof-mounted DC solar PV system estimated to offset 10% of the annual electricity consumption at the 122,000-square-feet J&JPRD facility in San Diego, Calif. This is in addition to the 90% offset by their existing co-generation system. This helps to completely offset the building's net annual energy consumption and makes the facility carbon neutral.

SPG Solar designed and built the system using a non-penetrating roof mounting system that not only created an aesthetically pleasing design, but also satisfied the strict City of San Diego building height requirements. Oriented to face south in order to maximize sunlight collection all year, the 1,216 Kyocera 200-watt solar modules are tilted to allow ventilation by the cooling winds from the adjacent valley and lessen excess heat that can cause electrical resistance in solar panels, reducing their efficiency. The facility achieved Leadership in Energy and Environmental Design and ISO-1400 certifications, and it won several awards for its energy and environmental performance.

The project was eligible for performance-based incentive funding from the California Solar Initiative Program. Funding will be paid out over the first five years of system operation from the California Center for Sustainable Energy. The system is expected to generate annual energy savings of approximately $50,000, depending on how quickly electricity rates increase. Producing this much power offsets a portion of the facility's net annual electricity bill and provides protection from future energy price hikes. With a panel degradation warranty for 20 years, in addition to the 40+ year expected lifespan, the system should continue to provide energy long after it pays for itself.

The 243-kW DC solar PV system at J&JPRD offsets 473,994 pounds of carbon dioxide that would have been emitted into the atmosphere annually by a fossil fuel power plant. At peak performance, the J&JPRD solar energy system generates enough electricity to power the equivalent of 80 homes. This is equivalent to removing 47 passenger cars from the road, or preventing 500 barrels of oil from being burned each year. It would require 179 acres of forest to store this much CO2 from the atmosphere.

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  • Benjamin Moore
     

Benjamin Moore & Co., a Berkshire Hathaway company, teamed with the retail division of Constellation Energy to develop a 1.7-MW system. Under a 20-year solar power purchase agreement, Benjamin Moore is providing the land and will purchase all of the electricity from the solar panels. Constellation Energy has built, owns, and maintains the system. The solar power system at the company's Flanders, N.J., R&D facility comprises 8,600 crystalline photovoltaic solar panels, making it one of the largest on-site solar power systems in the state.

The long-term solar power purchase agreement structure enables Benjamin Moore to undertake renewable energy generation with no upfront capital expenditure. Depending on conditions, the system is expected to produce nearly 2,230,000-kW hours of electricity each year, enough to supply 68% of the electricity of the facility.

Constellation Energy estimates using non-renewable sources to generate the same amount of electricity expected to be produced by the new solar installation would result in the release of more than 1,600-metric tons of carbon dioxide, a greenhouse gas, or the equivalent emissions from more than 300 passenger vehicles annually.

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  • McCormick
     

One of the largest solar power installations in Maryland is at the McCormick and Company, Inc., Hunt Valley Distribution Center. The project was performed by Constellation Energy's Projects & Services Group who installed 2,100 Solar World 175-watt crystalline solar panels and 92,000 square feet of lightweight, flexible thin-film photovoltaic material. The system is expected to generate approximately 1 MW of electricity supplying energy equivalent to the electricity used by about 110 homes in a year. It is estimated McCormick's electricity costs for these buildings will be reduced by approximately 30% in the first year alone, and the electricity produced by the system will reduce greenhouse gas emissions equivalent to removing about 150 vehicles from the road annually.

Constellation Energy financed the project, including design and construction of the installation and will own and maintain the solar power system for a period of 20 years. McCormick purchases energy produced by the solar installations hosted at its facilities. Structuring solar projects in this way creates an attractive business model that creates no upfront costs for customers and provides them with firm power costs over a long term. Constellation Energy expects McCormick to save an estimated $3.4 million in electricity costs over the term of the agreement.

Economics

One of the most intriguing things about solar is once installed the electricity generated is a fixed price, which fixes energy cost risk. The major economic models for solar projects are:

  • Direct investment: The user pays for the equipment, installation, and operations. The installation can be done with in-house people or contracted to companies specializing in solar projects. Purchasing a solar powered system outright can yield the highest return on investment but consumes capital. The user takes advantage of any rebates and tax benefits available for installing solar. The system can be financed through standard means or as a separate transaction through financial institutions and third-party financiers that specialize in solar.
  • Power Purchase Agreement (PPA): PPAs are financial vehicles that enable customers to take advantage of the benefits of a solar energy source with no capital outlay. Clients can be cash flow positive from day one. A third-party financial institution can own, operate, and maintain the solar power system for terms of 20 to 25 years. Customers buy power at an agreed upon rate at/or below market rates.
  • Lease: Solar systems can be leased in the same way you would lease a vehicle or a building. The leases have fixed monthly payments and at end of the lease term (typically 10 years), the user will own the solar system.

Financing a system or engaging in a PPA, users may realize net savings as early as the first year. Commercial solar systems have a typical payback period of five to 10 years, but the exact payback period will depend on system cost, electrical usage, electric rate schedule, government, utility, and tax incentives.

At OnGrid, Black provides software that can be used to model the economics of a solar system for a specific application. Once the value of the savings, maintenance costs, and other amounts are properly adjusted to their pre-tax values, they can be inserted into a 25-year financial timeline (the warranted life of most solar electric/PV modules) representing the cash flows for each year, to calculate the Compound Annual Rate of Return. This allows the accurate inclusion of all relevant cost and benefit components.

LCOE

Another term used in the industry is the Levelized Cost of Electricity (LCOE), which is a valuable metric. LCOE allocates the costs of an energy plant across its useful life, to give an effective price per each unit of energy (kWh). Effectively, this is averaging the up-front costs across production over a long period of time. LCOE gives a single metric that can be used to compare different types of systems including renewable projects-where the up-front capital cost is high and the "fuel" cost is near zero-and natural gas plant, where the capital cost is lower, but the fuel cost is higher. And it can even be compared against the price you pay on your utility bill ($/kWh).

Energy is becoming an increasingly more important production input and variable cost. In addition, there is more interest in sustainability. Companies will do well to understand the technology and develop an integrated view of their energy systems to determine the best ways to control energy costs and meet sustainability goals. The price of energy and government incentives are a big part of the economics for solar projects that need to be considered. Each investment is a contribution to a portfolio that collectively produces a high-performance energy system built on continuous improvement. If there is no long-term integrated energy planning, it will be harder to integrate renewable energy.

ABOUT THE AUTHOR

Bill Lydon is chief editor for InTech. His e-mail is blydon@isa.org.

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