If your business participates in the Industrial Conservation Initiative (ICI), then you will pay a Global Adjustment (GA) charge, which is determined by calculating the average demand during the top five peak periods over a timeframe of 12 months. These customers are referred to as Class A Businesses.
Class A businesses fall into three categories. The first category involves those customers whose peak demand is greater than 1MW but less than or equal to 5MW. The second category is those customers who fit into certain industrial sectors and whose peak demand is greater than 500kw and less than 1MW. (This threshold was reduced by the Ontario Government in 2017 and companies with demands in this range had the option to opt-in). Finally, the third category is certain customers whose demand exceeds 5MW. (These businesses are automatically listed as Class A.)
What exactly is the Global Adjustment (GA)?
The GA is part of Ontario’s energy billing. Its purpose is to ensure that there will always be enough energy when it is needed, and it does this by covering the costs of Ontario’s energy infrastructure as well as by funding conservation programs.
How solar power can help reduce electricity costs for your business.
In general, there are two main ways in which solar power can help reduce energy costs for a Class A business.
The first and most obvious way is that it reduces the company’s need to rely on the power grid for its energy since through the use of solar panels, the company is now able to produce much of its own energy.
The second way that solar power helps to reduce costs for businesses is locking in your electricity price per kWh over a 20-30 year period (the typical life of a solar array). As electricity rates rise annually (as much as 6-9% per year), it makes it very difficult for large consumers to forecast energy costs. By installing a solar array, the cost per kWh produced can be estimated over the life of the solar array with a very high degree of accuracy. Barring some major climate event that severely affects solar irradiation, estimating energy production for a solar array over the course of its useful life is very accurate. Therefore, by estimating the annual energy production, divided by the capital cost of the array, you can very easily come up with a cost per kWh over the next 20-30 years. Another way to lock in electricity rates is through a power purchase agreement (PPA) with your solar provider. This type of arrangement sets the cost per kWh of electricity produced by the array over a 20-year contract that is payable directly to the solar provider. This allows the client to get the benefit of solar without the upfront capital cost, and at the end of the contract, they can purchase the array for a nominal amount and reap the benefits for another 5 – 10 years.
In addition to these ways, there are often also grants available for companies that are looking to reduce their carbon footprint.
How solar power can reduce your Global Adjustment (GA) charge.
Since the GA charge is proportional to your business’s demand during the five highest peak times, solar energy can also help to reduce how much your company will pay on the GA. Unfortunately, however, there is no guarantee that it will be sunny during those peak periods. It is, therefore, advisable to invest in a battery storage system to ensure you have stored energy during peak periods. The more your business can rely on solar power – particularly during the peak periods – the more savings your business will see on the Global Adjustment.
If you are ready to considerably reduce your company’s energy costs and invest in a solar system, contact Daisy Energy today.