Self-consumption 2022: How to reduce your company’s energy costs?
Operation, advantages and investment sectors in self-consumption photovoltaic solar energy
The year 2022 began with yet another headache for Portuguese entrepreneurs: The increase in energy prices. There are companies that may pay up to four times more for electricity. Consequence: the competitiveness of national industry goes down, due to the high energy prices practised in our country.
However, Portugal is one of the countries in Europe with the highest availability of solar radiation: our country has 2,500 to 3,200 hours of sunshine per year, an average of 4 to 6 hours in winter and 10 to 12 hours in summer. In this way, the competitive advantage for companies in exploiting solar energy for self-consumption is clear.
At a time when many entrepreneurs are already taking advantage of this, others are still in doubt as to whether solar energy is really a viable solution. In this article, we will give you some answers: find out how self-consumption works, what the legislation is and, finally, how your company can take advantage of self-consumption of solar energy in 2022 – with your own investment or through an investor.
UPAC = Production Unit for Self-Consumption
In Portugal, individuals, condominiums, institutions and companies can install a Production Unit for Self-Consumption and directly reduce their energy bill. The technical name of the installation that produces energy for self-consumption is UPAC (Production Unit for Self-Consumption).
The installation generates electricity that is consumed instantaneously at the production site and thus reduces the need to buy energy from the public grid. The energy produced by the photovoltaic system is only used when there is consumption. The accumulation and storage of surplus energy (not consumed energy) for later phased consumption requires the installation of batteries.
A Self-Consumption Production Unit (UPAC) contains photovoltaic panels, inverter, protection equipment, energy meter and optionally batteries.
The UPAC may or may not be connected to the RESP (public grid), the choice being at the producer’s discretion. You can choose between the two modalities, depending on the destination to give to the surplus energy:
- Self-consumption without surplus: A zero injection system that prevents surplus energy from being injected into the grid.
- Self-consumption with surplus: A system with injection of the surplus energy into the public distribution network in which the user can sell their energy. An intelligent energy meter controls and counts the energy that is injected into the grid.
What rules apply to self-consumption in 2022?
The current legal regime has been in force since January 2020. In order to simplify and streamline the licensing process for Production Units for Self-Consumption (UPAC), Portuguese Law No. 162/2019 was published in October 2019, revoking Portuguese Law No. 153/2014, of 20 October, on the distributed production regime, framing Production Units for Self-Consumption (UPAC) and Small Production Units (UPP).
Thus, prior notification is no longer necessary for installations of up to 350W and the sharing of electricity with neighbours and surrounding dwellings is now allowed.
Advantages of commercial self-consumption
A company can produce its own energy through its self-consumption installation and replace part of the energy purchased from the grid. As the price of the energy produced is lower than that of the energy supplier, it can obtain a significant reduction in the electricity bill, which is reflected in the following advantages:
- Reduced electricity costs
- Decreased energy dependency
- Guaranteed return on investment
Besides the financial aspects, your company gains in terms of marketing and can benefit in rationalization plans (PREN) and certification processes. Without a doubt, solar energy is an investment in the sustainability of your company. A clear sign that transmits your commitment to the future.
Which sectors should invest in self-consumption in 2022?
Self-consumption responds particularly to the needs of companies with significant energy consumption during the day, since the production of the solar panels occurs during the hours of sunshine. In addition to reducing their electricity bill, they can fix the cost relative to the energy self-consumed. The result? They are less exposed to cost rises.
Controlling energy costs is pertinent for all companies, but especially for industry, which remains one of the biggest consumers of electricity. Thus, in the case of industry, the recent increase in energy prices assumes even more dramatic proportions, since it translates into a loss of competitiveness as competitors in the global market benefit from lower energy costs.
As with all investments, it will always be necessary to make an assessment between the investment and the benefit. Below, we explain what needs to be taken into account.
How to calculate ROI?
In recent years, technology prices have fallen, while the price of electricity is increasingly high. This trend has made it possible to achieve financial returns in just four years.
The return on investment depends on the cost of the installation, the energy production capacity and the potential benefits obtained when not consuming energy from the grid. The technical dimensioning of the system is an important process that also directly influences the profitability of the installation.
Unlike self-consumption in private households, industrial and commercial consumers are subject to a greater fluctuation in energy consumption and load profile. Therefore, the self-consumption shares of companies cannot be generalised.
The simplest evaluation is based on the comparison of the amount of energy generated and consumed. This calculation gives a first estimate of the self-consumption potential but should not be the only indicator for an investment decision.
The consumption profile of your company throughout the day and on an annual basis allows a detailed evaluation as it takes into account the temporal distribution of energy consumption and production. The greater the synchronisation of production and energy consumption, the greater the profitability of the photovoltaic system. In certain sectors it is possible to install intelligent load control systems that allow for the optimised distribution of electricity consumption. In this case, electricity consumers are activated when solar energy is available.
Since we are talking about technical and differentiated issues for each case, the ideal is to resort to the analysis and evaluation of a specialist with proven experience in the area of self-consumption. A SOLVasto consultant will provide independent services and simulate your individual return.
Take advantage of self-consumption without investing
Companies that for some reason prefer not to invest themselves can also benefit in 2022 from the advantages of solar self-consumption. In fact, there are attractive solutions.
There are investors available to take on the financial obligation and ownership responsibilities, as well as the management of the installation. In return, they receive part of the savings/income generated. The company hosting the installation commits only to purchase all energy produced by the installation at the value of the annual tariff updated with the discounted contracted benefit. At the end of the contract term, the installation’s income reverts entirely to the company.
Important note: Interested companies should only make agreements with entities that do not oblige loyalty, that is, that do not require the maintenance of an energy supply contract from the network during the duration of the photovoltaic system contract. In this way, they guarantee their independence in their choice of energy supplier and, consequently, in obtaining the best price.
By harnessing a renewable energy source, self-consumption is a clean and environmentally friendly way of producing energy. Solar self-consumption is profitable for the majority of Portuguese companies, namely the domestic industry.
SOLVasto offers turnkey self-consumption installations which include licensing, investment, installation and performance monitoring of the solar installation, focusing on its performance. Contact us.