Minnesota manufacturers are installing on-site solar to reduce their dependence on fossil fuels for a myriad of reasons, and in doing so, are reaping significant economic benefits.
Commercial Solar for the Manufacturing Industry
The clean energy transition is happening in real time here in Minnesota. Power generated from solar energy in the state has increased significantly in recent years. In 2021, solar energy powered 3% of the electricity generated within Minnesota, according to preliminary data from EIA (US Energy Information Administration).
The industrial sector consumes more than one-third of Minnesota's total electricity use. Within the industrial sector, manufacturing accounts for the largest share of annual industrial energy consumption at 81%.
Read on to learn about all the ways that on-site solar makes sense for manufacturing facilities and can help you achieve your goals while improving your bottom line.
- Factories Have Huge Electricity Appetites
- Buildings are Designed for Solar
- Irresistible Economic Logic
- Solar is Good for Public Image
Factories Have Huge Electricity Appetites
Manufacturing facilities are hubs of activity. They use enormous amounts of energy in a wide variety of processes, all of which are scaled up for maximum intensity. The average manufacturing facility in the United States consumes 95.1 kilowatt-hours of electricity per square foot annually, which is at least 10 times the amount of electricity used in the typical American home.Electricity accounts for about 20 percent of a facility's energy consumption and this percentage is rising, even as the use of renewable energy has increased. The growing supply of clean energy is being met by rapidly growing demand for a variety of reasons:
- Traditional sources of power are being steadily replaced
- Plant construction activity has rebounded in a terrific way from the depths of the COVID-19 pandemic
- Increased automation as companies struggle to find/retain workers
This electrification of production processes comes at the cost of increased energy consumption at a time when rates are steadily increasing. On-site solar provides an opportunity to replace the energy purchased from the grid with energy produced from your own solar array.
Buildings are Designed for Solar
Besides their large appetite for electricity, manufacturing facilities are also a great use case due to the efficient design and construction of these facilities. These buildings are often optimally designed for solar from both an architectural and structural standpoint.
- Large, Flat Roofs
- Repetitive Framing
- Minimal Obstructions
- Huge Electrical Demand
Large contiguous arrays also allow installers to work more swiftly and efficiently, cutting down on both labor and material costs.
The Irresistible Economic Logic of Solar
Despite the obvious environmental benefits, manufacturers aren’t going to convert to solar energy unless it makes good economic sense. Like many technologies, solar energy gains efficiency as its scale of deployment increases.
On-site solar provides manufacturers a unique opportunity to improve their bottom line by reducing their overall utility expense while hedging against rising utility rates. With costs for installing on-site solar flattening out, and incentives galore, installing on-site solar just makes good business sense. Here's how it works:
Tax benefits alone pay for ~65% of the total cost of the solar project. The balance is paid for by energy savings. Leverage your existing tax burden to help pay for an income producing company asset instead of sending a check to the IRS.
Energy generated from your solar array is fixed from the onset and is produced at a lower unit rate than electricity provided by the utility. As utility costs increase with inflation, the value of the energy provided by the solar array increases in kind providing a natural hedge against the rise in utility expense. After your solar array is paid off, the energy is produced for free for decades producing immense economic benefits.
On-site solar arrays typically produce an ROI of ~3 to 5 years with an IRR of ~25 to 40%. Whether paying cash or financing, minimal need for maintenance over the ~40 year lifespan makes energy from an on-site solar array essentially free once the solar array is paid off.
Manufacturing a "Green" Public Image
In addition to the attractive economics of solar, having renewable energy as part of a good brand story gives businesses a leg up in the ever-intensifying battle for talent as well as retaining loyal customers.
Increasingly, manufactures are beholden to their customers to have corporate responsibility plans, putting pressure on their suppliers to make investments in environmental initiatives as they look to green their own supply chains. That’s especially the case for consumer-facing companies but it also increasingly matters in manufacturing.
Organizations understand that sustainability is critical to modern manufacturing, as it provides a market competitive edge and visibility into a sometimes inconspicuous part of the supply chain.
Manufacturer Case Studies
Many Minnesota manufacturers have paved the path to saving on their energy expenses while boosting their sustainable public image. Air Quality Engineering, Brotex, Condux International, Graham Research, Hirshfield’s, Mikros Engineering, Plymouth Foam, St Paul Corrugating, Thorud Manufacturing are just some of the early pioneering companies that worked with iDEAL and participated in early incentive programs to installed small (~40 kW DC) on-site solar arrays at their manufacturing sites.
Since then, large scale on-site solar (~1 MW AC) projects pencil out and produce incredible financial benefits that leveraging reliable state of the art equipment.
Click below to read a case study on how some manufacturing companies worked with iDEAL to install larger scale on-site solar arrays.
Solar is a Win-Win for Manufacturing
The manufacturing economy is ripe for expanding the use of on-site solar in Minnesota. As an industry that consumes huge amounts of electricity to power equipment and facilities, solar power has become a sustainable and cost-effective energy alternative with a fixed-cost solution and a lifespan of ~40 years. This makes energy bills more predictable at lower costs.
iDEAL Energies is committed to growing the use of renewable energy for Minnesota's manufacturing industry by helping companies maximize their savings with rooftop solar.
We are developers, engineers, electricians, finance wizards, and O&M gurus.
Our solar A-Team has installed over 450 commercial systems with over 100+ projects under construction across multiple sectors including commercial for-profit businesses, schools, local governments, and non-profits. By marrying our technical expertise with a combination of tax incentives, utility grants, and multiple financing options, we provide cashflow positive projects from Day 1.
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