Review a commercial solar proposal using consumption and export value

A commercial solar quote can show a credible annual generation estimate and still overstate the financial benefit. The missing question is what happens to the electricity when it is generated. Some may reduce purchases at the site, some may be exported under a different payment arrangement, and some may have no usable value under the proposed operating conditions.

Begin the finance review with the site's load profile, the proposed generation profile and the actual tariff and export agreement. Match their time periods and units. An annual consumption total that exceeds annual generation does not prove that all generation will be used on site. A business that operates mainly after sunset may buy electricity at night while exporting much of its daytime production.

NREL's report on distributed-generation compensation distinguishes metering and billing arrangements, export compensation and retail pricing. These are separate inputs to value. Ask the provider to identify the arrangement assumed in the proposal, including the period over which generation and consumption are netted. The applicable contract determines the calculation; a report describing general mechanisms does not establish the site's entitlement.

Have a qualified technical reviewer assess the proposed generation, shading, equipment, orientation, losses and availability assumptions. Finance should be able to trace the annual total to the underlying period estimates without presenting itself as the engineering certifier. Record whether the quote uses expected production, a contractual performance commitment or a marketing illustration.

Use an interval schedule where the consumption and generation relationship requires it. For each interval, identify the generation used within the site, electricity imported and electricity exported, subject to the actual metering rules. Check that those quantities reconcile to the generation and consumption totals. Do not allocate the same generated unit to both an avoided purchase and an export receipt.

Explain changes already planned for the site. A weekend shutdown, a new night shift, a tenant departure or relocation can change the value of the same solar equipment. Use the operating plan management expects to implement, and preserve a comparison with the historical load data so reviewers can see what has been assumed rather than measured.

Consider an invented first-year estimate of 100,000 kilowatt-hours of generation. Assume 70,000 kilowatt-hours would replace purchases carrying an avoidable energy charge of $0.16 per kilowatt-hour. The remaining 30,000 would be exported and paid at $0.05 per kilowatt-hour, with no other adjustments in this simplified example.

The avoided energy purchases are worth $11,200, and the exports are worth $1,500. Combined first-year energy value is $12,700. Multiplying all generation by the retail energy charge would produce $16,000, overstating this particular example by $3,300. Neither price is a market estimate or a statement about a real utility program.

Now hold generation constant but change the operating profile so only 40,000 kilowatt-hours are used on site. At the same assumed prices, avoided purchases are $6,400 and exports are $3,000, for $9,400 combined. The project produces the same electricity but $3,300 less financial value. This is why a proposal should show the consumption assumption alongside its generation estimate.

The Department of Energy separates energy charges, demand charges and fixed charges when explaining utility rates. A generation forecast should not turn the whole historical bill into an avoidable per-unit price. A fixed charge may remain, and a demand charge depends on the relevant billed peak rather than annual energy alone.

Ask the provider to show a modeled bill with and without the project under the applicable tariff. If demand savings are claimed, inspect the intervals that set the charge and the contractual billing conditions. Production at noon does not establish a reduction in a peak that occurs later. Keep an unsupported demand saving out of the approved case until the relevant evidence is available.

Check whether installing generation changes the rate category, introduces additional charges or requires a different export arrangement. Obtain confirmation from the utility or qualified adviser where needed. The comparison should reflect the tariff the completed project would use, with its effective date, rather than assuming every current billing term continues unchanged.

Include the quoted installation scope and separately identify work that another party must supply. Roof work, site access, electrical upgrades, connection work, monitoring and commissioning should be assigned to an owner and a supported cost where relevant. A proposal with exclusions is not necessarily poor, but those exclusions cannot disappear from the investment decision.

In the first illustrative case, assume recurring maintenance and monitoring require $1,600 in the first year. The $12,700 energy value then leaves $11,100 before financing, tax effects, replacements and other omitted costs. This is a partial operating comparison, not a complete return calculation. Show the upfront payments and later obligations on their expected dates.

Review the useful operating period against the business's control of the property. A long production forecast needs a credible way to keep the equipment in use or deal with a move. Have appropriate advisers assess ownership, access, removal, insurance and contractual terms. Include incentives or tax effects only after the applicable conditions and timing have been supported for this project.

Request the financial model or a sufficiently detailed calculation schedule to reproduce the claimed saving. Keep generation, consumption, retail charges, export compensation and operating costs as identifiable inputs. A single unexplained savings-growth percentage makes it hard to see whether the provider has assumed price increases, more self-consumption or improving equipment performance.

Run cases for lower daytime use, delayed commissioning and different future prices. Ask the technical reviewer to supply supported production and maintenance cases rather than inventing a universal degradation rate. If management values environmental or resilience outcomes, record those objectives separately and explain the evidence used. A benefit does not need a fabricated cash amount to be considered.

The approval should identify the proposal version, the metering and tariff assumptions, required technical and contractual confirmations, and the person responsible for checking results. After commissioning, compare measured generation, use on site, exports and actual billing effects with that record. This gives the business a way to distinguish a generation shortfall from an operating-pattern change or an incorrect price assumption.