Photovoltaic self-consumption: what is it and when is it profitable for my company?

The concept of photovoltaic self-consumption, although it has been heard for a long time, has experienced a new boom in the face of the unstoppable rise in electricity prices. Since then, many companies are considering investing in self-sufficiency to achieve a higher percentage of energy savings and reduce costs. 

Throughout this post we will analyze the advantages of photovoltaic self-consumption as an alternative to energy purchased directly from the supplier, what impact it has on the energy bill, what types can be found and what are the first steps to start implementing it in the organization. 

What is photovoltaic self-consumption?

Photovoltaic self-consumption is a form of energy sufficiency that allows producing and consuming the energy generated by the installation of solar panels, contributing to be more environmentally sustainable and less dependent on variations in electricity market prices.

The photovoltaic self-consumption system is connected to the building's electrical system, producing instant savings: the energy produced by the photovoltaic system is consumed at the same time it is being generated. 

When is photovoltaic self-consumption profitable for my company?

Photovoltaic self-consumption will be profitable in a company when decisions on energy consumption have to be made and priority is given to factors such as: self-sufficiency, sustainability, energy and economic savings and modernization of facilities.

If we look at the evolution of self-consumption over the last few years, we see several developments driving the adoption of this way of generating and consuming energy in companies:

• The approval of the National Integrated Energy and Climate Plan (PNIEC) 2021-2030, which defines the objectives and lines of action to be followed in terms of CO2 reduction, renewable energy penetration and energy efficiency.
  

• Royal Decree 477/2021 supported with European funds within the "Next Generation EU" plan, with the roadmap for the modernization of the Spanish economy and the subsidies available for self-consumption. It promotes the approval of 6 incentive programs for self-consumption, storage and thermal uses of renewable energies. In addition, the Government has approved more than 900 million € in subsidies.
  

• The new electricity pricing that includes a higher variable % in the final bill. For consumers of more than 15 kW, it is calculated at around 40% fixed and 60% variable. The increase in the variable term to the detriment of the fixed term, together with the introduction of hourly discrimination, are very positive elements for self-consumption.
  

• Photovoltaic is claimed to be the most economically competitive energy source. If we look at its evolution in the last 12 years, it has decreased up to 90% in costs, with a range of $31-42/MWh on average worldwide in 2020. It is estimated that between the 2020-2030 decade, they are expected to decrease by up to 34% at higher rates.

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Worldwide, the demand for solar panels has shot up considerably in the last year, with a clear upward trend. According to data from the Spanish Photovoltaic Union (UNEF), up to 596 MW of photovoltaic power was installed in Spain for self-consumption purposes in 2020, which is 30% more than the previous year.

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In some sectors, such as the industrial sector, the impact of energy consumption can be very high, which makes organizations look harder for a way to reduce their costs in the face of the volatility of the electricity market. If we look at the distribution of PV self-consumption use divided by sector, the industrial sector accounts for almost 60% of PV self-consumption in Spain in 2020. 

In this scenario, self-consumption becomes a great alternative, achieving up to 40-60% savings depending on your activity, in a more environmentally sustainable way.

Advantages of photovoltaic self-consumption for companies

In the previous point we have analyzed how, in recent years, the implementation of self-consumption systems has grown exponentially thanks to lower costs and a greater amount of aid to facilitate the use of renewable energy. 

If you are part of an organization, these are the advantages of photovoltaic self-consumption for companies:

• Greater energy and economic savings: The energy generated is consumed at the same time it is produced. In addition, in most organizations their daily activity is concentrated during the central hours of the day, thus maximizing the amount of savings.
  

• Rapid recovery of the initial investment, thanks to the savings generated month by month. In addition, the surplus energy generated can be sold or part of the land can be rented to other companies to install their own photovoltaic panels.
  

• Less dependence on changes in the price of electricity tariffs and variations in electricity prices, since the energy is covered by the self-consumption system.
  

• Security in the power supply in the event of power failures or outages. ‍

• Increased business competitiveness, by achieving lower cost reductions, which translates into the possibility of offering more competitive prices.‍

• ‍‍Improvedperception and image of the organization, by firmly betting on renewable and environmentally beneficial energies, reducing CO2 emissions.
  

• It helps accelerate the energy transition and meet the PNIEC's proposed objectives of decarbonization, energy efficiency and greater implementation of renewable energies to combat climate change.

What types of photovoltaic self-consumption are there?

Before analyzing the steps to follow in order to implement a self-consumption installation in our organization, we will distinguish the different types of photovoltaic self-consumption:

Off-grid photovoltaic solar installation

In this mode, the photovoltaic system is totally disconnected from the grid, supplying the company's needs on its own. Its main drawback: the energy that is not consumed is lost. This deficiency can be made up for by using batteries, storing the energy that is not consumed so that it can be used at a later date.

Grid-connected solar photovoltaic system

In this modality, the photovoltaic installation allows to cover part of its own consumption. This means that, in the event that not all the electricity produced that day is used, it can be fed back into the grid. On the other hand, if we have not produced enough electricity, we will always be connected to the grid. 

In turn, there are two ways to compensate the surpluses produced:

• Surplus compensation: This category includes those companies whose energy generation is equal to or less than 100 kW. Under this model, the surpluses produced (the energy we have discharged into the grid that month) are compensated by means of a discount on the monthly bill.
  

• Compensation of surpluses not subject to compensation: This option is given when any of the requirements of the previous modality (More than 100 kW) are not met or when this alternative is voluntarily chosen. In this case, the surpluses are sold directly to the regulated market through a marketer. In addition, it must be officially registered under the category of "energy producer", which can lengthen the processing of the process and implementation of the installation.

Tips and final conclusions 

Throughout the post we have seen how photovoltaic self-consumption becomes a great bet when it comes to saving costs and being more sustainable with the environment. However, before starting with a self-consumption project, we must make a detailed study and become aware of how our organization consumes energy because, otherwise, we will be oversizing our photovoltaic installation, which will result in a higher ROI.

The objective of properly sizing the installation is to self-consume as much of the energy generated as possible without producing surpluses, since the more the energy generated is used, the greater the savings and the faster the investment is amortized.

In our next post, we will discuss the steps to be taken before implementing a self-consumption system in our organization. In addition, we will see how to monitor everything that happens with our energy consumption and the energy generated through the photovoltaic panels.

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For more information about sizing of photovoltaic installations and detailed analysis of how your company consumes energy, please contact us through our contact form or through info@smarkia.com.

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