USING INNOVATIVE SOLAR SYSTEMS IN COMMERCIAL BUILDING

n Business, September-October, 2006, Vol. 28, No. 5, p. 26

This report on photovoltaic systems shows how building owners benefit beyond energy bill-savings using value-added applications.

Wilson Rickerson

THE GLOBAL MARKET for solar electric, or photovoltaic (PV), systems has exploded in recent years. Interest in the technology has surged alongside concerns over climate change, air pollution, blackouts, rising energy prices, and oil dependence. Although the total amount of solar energy installed around the world remains small, the PV market is growing at rates comparable to the personal computer and cellular phone industries.
The primary driver for this rapid growth has been government policy. Germany and Japan have emerged as world leaders in solar power as a result of their aggressive support for PV. In the United States, California is the dominant solar state, although aggressive solar mandates have been passed in Arizona, New Jersey, Nevada, Pennsylvania and Washington, D.C.
Policy support for solar in the United States has opened up the market to new players. When most people think of solar power here, they think of PV panels on highway emergency phones or sited on houses owned by the environmentally conscious. Increasingly, however, larger facilities and corporations are emerging as leaders in the solar market.
Commercial buildings are not only installing larger PV systems, they are using them in innovative ways. Building owners are installing PV to capture value beyond simple energy bill-savings. This article reviews these so-called “value-added” applications and presents case studies of how PV has been used for peak shaving, uninterruptible power, architectural integration, price hedging and environmental marketing.

PEAK SHAVING
Electricity bills for many large buildings consist of a charge for the energy consumed (in kilowatt-hours) and a separate charge for the building load (in kilowatts), known as the demand charge. In many instances, the demand charge represents a significant portion of electricity bills and may even be larger than the charge for the actual energy consumed.
Numerous studies have demonstrated that PV generates power when demand is at its highest. For large buildings, this means that PV can effectively “peak shave,” or reduce demand charges by reducing a building's load. PV is an inherently intermittent resource, however, and this peak shaving capability is limited by the technology's reliance on the sun. If a building's peak load occurs in the late afternoon, instead of at noon when solar radiation is greatest, then a PV system will not optimally reduce demand charges.
To surmount this challenge, some PV owners have experimented with “dispatchable” peak-shaving and solar load controllers. Dispatchable peak-shaving involves the use of a battery system to store PV output during off-peak hours and then discharge electricity during on-peak hours to more effectively reduce demand charges. This approach, developed by the Center for Energy and Environmental Policy at the University of Delaware, has been successfully demonstrated in several pilot projects.
An alternative to battery-based peak shaving is the use of a solar load controller - an energy management system that monitors PV output. If PV performance decreases temporarily as a result of cloud shading, for example, the solar load controller temporarily shuts down or reduces electrical loads within the building to minimize demand. Solar load controllers have been deployed at several locations around the country. The following case study details one of the first commercial projects.

USPS MARINA PROCESSING AND DISTRIBUTION CENTER, MARINA DEL REY, CALIFORNIA
In November 2001, the United States Postal Service (USPS) completed the installation of a 127 kilowatt PV system on the roof of its Marina Processing and Distribution Center in Marina del Rey. The Center is a 409,630 square-foot facility that handles millions of pieces of mail each day. The system consists of 845 150-watt Shell Solar panels mounted on 15,000 square feet of the facility's flat roof.
Although the postal facility installed the system for a range of reasons, including energy savings and emissions reductions, a main driver for the project was a desire to reduce the facility's demand. The Processing and Distribution Center has a 1.2 mega-watt (MW) peak demand and demand charges are high as a result. In order to balance building load and PV output, a solar load controller was installed. When PV output drops, the energy management system modifies the building's air conditioning settings to achieve a corresponding demand reduction. By using the solar load controller, it is estimated that the building realizes a 10 percent, or 120 kW, peak load reduction and an annual savings of $25,000. The system was supported with incentives from the Los Angeles Department of Water and Power and the Federal Energy Management Program. The government estimates that the simple payback on the system will be nine years.
The team that installed this system, PowerLight Corporation and Chevron Energy Solutions, have successfully deployed several solar load controller systems around the country. Patterned after the USPS Marina Center project, these solar load control systems couple PV modules installed by PowerLight with energy management systems and energy efficiency upgrades installed by Chevron.
A second solar load controller project at Alameda County's Santa Rita Jail in Dublin, CA recently reported that the peak reduction achieved by the system during the first two years of operation far exceeded projections. The peak shaving capability of the jail's 1.2 MW system has prompted Alameda County to triple the PV capacity in the county with seven additional PV projects.

UNINTERRUPTIBLE POWER
The 2001 blackouts in California and the 2003 blackout in the Northeast clearly demonstrated that power outages are expensive. The US Department of Energy estimates that blackout costs range from $41,000 per hour for cellular phone companies to over $6.4 million for brokerage firms.
During blackouts, standard PV systems cannot continue to generate power because they pose an electrocution hazard to utility line workers. If configured correctly, however, PV systems can serve an emergency power function. PV systems can charge batteries that are connected to critical electrical loads, for example. During a blackout, the PV system shuts off, but the battery system continues to provide emergency power without interfacing with the electrical grid.
As will be seen in the following case study, PV can also be configured to power certain off-grid loads during blackouts without the use of batteries.

D.T. LOCKE RANCH, FIREBAUGH, CALIFORNIA
The D.T. Locke Ranch is a fourth generation family-owned farm located in the western San Joaquin valley in Firebaugh. The 1,250 acre ranch, whose primary crop is cotton, installed a 38 kilowatt photovoltaic system on its property in 2002. The photovoltaic array consists of Shell Solar panels mounted on top of a 108-foot long pole-barn structure.
The owners of the Locke Ranch have stated that they hoped to capture a number of benefits from the PV system, including cost savings and using the PV array as a shading structure for ranch equipment. One of the primary drivers for the system installation, however, was that the PV array can be used to provide power to ranch operations even in the event of a power outage. Because the ranch is situated in a relatively remote location near the end of the distribution lines, power outages occur fairly frequently.
To keep irrigation equipment running during power outages, Locke Ranch hired WorldWater & Power Corporation to install a PV array for provision of back-up power. This system employs a technology called the AquaMax that uses PV to power variable frequency drives. By connecting the PV array directly to the variable frequency drive of the Ranch's irrigation equipment, the AquaMax allows ranch operations to continue during power outages without creating safety risks for utility line workers.
The Locke system generates approximately 179 kilowatt-hours of electricity each day and is used to power a 50 horsepower irrigation pump and other equipment on the farm. During a power outage, all power from the solar energy system is automatically redirected to keep the pump motor operational, while completely isolating the solar energy system from the utility grid. When the grid is operating smoothly and the irrigation pump is not in use, the AquaMax system reconnects to the grid and offsets retail electricity from the main residence.
The total cost of the system was $290,000, of which the Locke Ranch paid $145,000. The remainder was covered by state grants through the California Self Generation Incentive Program, which provides rebates of $3.50 per watt of systems between 30 kW and 5 MW in size. It is expected that Locke Ranch will save between $18,000 and $20,000 on its annual electricity bills alone and realize a simple payback of 6.5 years on the system.

ARCHITECTURAL INTEGRATION
PV systems have traditionally been mounted on existing roofs. Increasingly, however, PV systems are being used as construction materials in new buildings. Architects have successfully substituted PV panels for roofing materials, awnings, shading structures, and facade cladding. In these applications, the value of the PV system is determined by both the amount of the electricity it generates and by the cost of the building material it replaces.

THE SOLAIRE, NEW YORK, NEW YORK
The Solaire is a 27-story, 293 unit apartment complex that opened in New York City's Battery Park section in 2003. Developed by the Albanese Development Corporation, the Solaire is billed as “America's first environmentally advanced residential tower” and is built in conformance with the Battery Park City Authority's (BPCA) Commercial Environmental Guidelines. The Guidelines are a set of mandatory green building standards for all new construction in Battery Park City. The Guidelines require that 0.75 percent of the electricity consumed in a building's common areas be generated from on-site renewable energy. To meet this requirement, the Solaire replaced a portion of its facade cladding with 11 kW of PV panels, installed 20 kilowatts on the building's bulkhead, and integrated another three kilowatts into the glass entrance canopy. All PV systems at the Solaire were installed by altPower of New York City using AstroPower (now GE) solar panels.
Project developers familiar with the Solaire have stated that the architectural value of façade mounted PV goes beyond the value of the replaced façade materials. It is a well recognized fact of real estate that an attractive facade will increase both property value and the potential rent per square foot. Facade-integrated PV can similarly increase the attractiveness of buildings to environmentally-conscious consumers. Over 45 percent of Battery Park City residents reported that they would pay higher rent to live in a green building, and the Solaire now has a waiting list even though it charges five percent more than other buildings in the area. For the burgeoning green building industry, PV is often the clearest advertisement of a building's “greenness.”
Unlike fossil fuel technologies, solar fuel is cost-free. By purchasing a solar system, facilities can effectively lock in a fixed price for electricity over the 30 to 40 year life of the solar system.

WHOLE FOODS MARKET, CHESHIRE, CONNECTICUT
Whole Foods, the largest organic and natural foods supermarket in the U.S., installed a 120 kW PV system on the roof of its Cheshire facility in September 2006. The system is the largest in the state of Connecticut, and it is projected to generate over 137,500 kilowatt-hours of electricity annually. Like many other PV investors, Whole Foods is using the PV system to demonstrate environmental stewardship and to realize energy savings. What sets the project apart is the contractual relationship that Whole Foods has entered into in order to have its system installed.
Rather than owning the PV system, Whole Foods has signed a Solar Services™ agreement with SunEdison, a Maryland-based solar energy developer. Under the agreement, SunEdison maintains ownership of the solar system and sells Whole Foods solar electricity that is competitive with utility rates. Retaining ownership of the systems allows SunEdison to take advantage of a 30 percent federal tax credit for commercially owned PV systems, the federal accelerated tax depreciation schedule, and state PV incentives. For the Cheshire project, SunEdison received a $516,223 rebate from Connecticut's Clean Energy Fund.
By signing the10-year Solar Services™ agreement, Whole Foods has effectively hedged a significant portion of its electricity purchases by “locking in” to a fixed price. The agreement also removes the financial, performance, and operations risk of the solar project from Whole Foods. The Cheshire project is the fourth Whole Foods market to install a PV system with SunEdison.
The popularity of models like SunEdison's have grown rapidly in the past two years, spurred on by recent sharp increases in electricity prices. As of September 2006, SunEdison had contracted to install close to 12 megawatts of solar projects around the country since 2003. This is a considerable amount of capacity when one considers that there were only 11 MW of grid-connected PV in the country in 1996.

ENVIRONMENTAL MARKETING
For many companies, large and small, investment in green power is a way to demonstrate environmental commitment and to appeal to green consumers. Green power investments can help improve public relations, differentiate products, and help satisfy corporate social responsibility targets.

JANSSEN PHARMACEUTICA, TITUSVILLE, NEW JERSEY
Janssen Pharmaceutica, a prescription medication manufacturer located in Titusville installed a 500 kilowatt solar array in February 2003. The system covers 42,000 square feet of the facility's flat roof and was the largest commercial rooftop system in the state at the time.
Capturing the system's environmental value was the primary driver for Janssen's installation of the PV system. Janssen is owned by Johnson & Johnson, which has established company-wide environmental standards known as Next Generation Pollution Prevention Goals. The Goals serve as a framework for reducing resource use in areas such as packaging, raw materials, water, and energy. The energy goals include a four percent absolute reduction in CO2 emissions from 1990 by 2005 and a seven percent reduction below 1990 levels by 2010. To achieve these goals, Johnson & Johnson has been working with nonprofit organizations such as the World Resources Institute's (WRI) Green Power Market Development Group to install on-site generation and purchase renewable energy. As of 2005, Johnson & Johnson derived over 24 percent of its corporate electricity demand from renewable energy sources. By installing the solar system on its Titusville facility, Janssen is able to credit the CO2 emissions that the system offsets toward Johnson & Johnson's corporate goals.
Janssen took advantage of New Jersey's PV rebates, but opted not to sell its solar energy credits to utilities. While the company could earn between $0.12 and $0.20 per kilowatt-hour in extra revenue given current solar credit market prices, the PV array will offset 5,000 tons of CO2 emissions. By retaining its solar credits, Janssen maintains the right both to count these reductions towards Johnson & Johnson's corporate goals and to capture the public relations benefit from these reductions.

VERSATILITY OF SOLAR POWER
Taken together, these case studies reveal the versatility of solar power as both an energy supply technology and an energy service technology. In addition to generating kilowatt-hours, solar energy systems can produce emissions-free electricity when it is needed most; they can be seamlessly integrated into the built environment; they can operate independently of the electrical grid; and they can mitigate or eliminate fuel price risk.
By taking advantage of these value-added services, solar entrepreneurs and investors are capturing value above and beyond simple energy savings and improving the economics of solar power.
While solar electricity is not yet competitive with retail electricity from utilities in many parts of the country, the importance of these non-energy benefits should not be underestimated. There are those who doubted, for example, that “personalizing” the computer and “mobilizing” the telephone would amount to much. As solar energy continues to grow exponentially during the next decade, it is probable that we will see more examples of innovative solar-based services being offered to both commercial and residential building owners.

Wilson Rickerson is a Boston-based renewable energy consultant focusing on policy and market development (whrick@ hotmail.com).

Copyright 2007, The JG Press, Inc.