One of our state government clients recently came to us with a challenge: they had over 2,000 properties that could have solar and batteries installed, but they had no clear idea where to start spending their limited budget. And they had to figure out where to use their money in much less time than it would take to do a traditional feasibility study on every property – which would also be prohibitively expensive.
This challenge required us to develop a new way of assessing multiple properties for solar and battery feasibility, while keeping a level of engineering detail that is at the heart of accurate financial modelling.
This kind of modelling becomes particularly complex when considering battery storage options and varying electricity tariff structures. These all need to be assessed together to produce an accurate return on investment figure.
Our analysis revealed potential annual savings of $10 million for our client across the most viable sites for solar installations, with 55% of sites showing payback within 10 years.
Our multi-site approach simultaneously conducts feasibility assessments across hundreds of buildings or more, and gives a single assessment of the entire suite of buildings – and we can update our findings contemporaneously with new data as required. This approach brings the cost of assessing the solar potential of each site down to as low as a few hundred dollars.
We found novel ways to pinpoint the most financially advantageous sites for rooftop solar across the property portfolio by evaluating the existing solar infrastructure and new installation potential.
We accounted for complex tariff structures and demand charges, optimising system size based on actual energy usage patterns, and then provided clear financial results to guide investment.
We follow a three-step approach to produce this data:
- Desktop Assessment: evaluate building suitability for solar and battery installations, using high-resolution geospatial data.
- Smart System Modelling: simulate optimal system performance using actual load data and tariff timing.
- Financial Analysis: calculate the best combination of solar, battery, and tariff options for each location.
For each site, we identified the optimum capacity of solar PV (kWp) and battery (kW and kWh) and generated performance metrics such as investment return (net present value and internal rate of return), annual electricity bill cost reduction, capital cost, simple payback time, emissions reductions, etc.
The portfolio assessment showed a positive financial case for solar PV investment at all sites, and a strong case at most of them, depending on load profile and available electricity tariffs. Optimal system sizes ranged from 5 kW to over 500 kW.
We found that optimally sized solar PV installations all have a positive Net Present Value —meaning that the investment will eventually pay itself off – but the time this takes varies from 3.6 years to 14 years. For 55 per cent of sites, the simple payback on an optimally designed system was 10 years or less.
The relationship between payback time and system size is shown in the graph below (1), which also compares PV systems with and without an optimally sized battery.
Ten per cent of sites showed a positive financial return when a battery is included in the system. However, batteries do universally increase payback time, and require a smaller PV system to be installed to achieve a viable rate of return.
While we stress in our assessments that the financial viability of solar and batteries varies significantly by location, battery installations also offer benefits beyond financial returns, especially in areas with unreliable power where a battery provides energy resilience. Their value proposition may improve as feed-in tariffs evolve and new commercial arrangements emerge.
On another current project, we are providing a much-needed comparison between on-site solar and battery installations with corporate power purchase agreements, energy efficiency improvements, and various carbon offset strategies. We look forward to sharing this research in a future article.
Joel Davy is manager of strategy and analytics at ITP Renewables
