How Off-Grid Businesses Can Outshine Big Corporates in Clean Energy

Michael Pullinger

If you follow the headlines, you might think big companies like Apple and Amazon, and their pledges to move towards renewable energy demonstrate the epitome of business leadership. But there’s a category of smaller to medium businesses that have the opportunity to make a far bigger impact in reducing greenhouse gas emissions, all while dramatically cutting their operating costs

Businesses located away from main power grids have the opportunity to make a much bigger impact compared to the size of operations, because the default position is often to provide the power they need using diesel generators. The challenge is that diesel generators produce a very high amount of greenhouse gas emissions compared to their power output - they’re usually much dirtier than the typical electric grid. Any opportunity we can take to cut down on the amount of diesel fuel we have to burn will substantially reduce the environmental footprint of the businesses’ operations. The bonus is that since diesel fuel is expensive, cutting down our fuel use will usually save a lot of money too.

​​I have analyzed the operation of a typical (hypothetical) business - an off-grid eco-resort. This project hasn’t been built, but I developed it as a reference project to test some analysis methods, and run ‘virtual experiments’ to demonstrate the opportunities for off-grid businesses.

A hypothetical off-grid eco-resort. A "reference project" to demonstrate the opportunity for off-grid businesses.

I then looked at the total cost of energy per year - this includes fuel costs, maintenance costs, and financing costs - loan payments to cover the initial equipment purchases. Far and away, the energy system that relies totally on diesel for power, and propane for heating is the most expensive. However, we can combine several resources to reduce costs and emissions - in our case solar, batteries, and wind coupled with energy efficient building systems (advanced control systems, high performance insulation, and heat pumps). Configuring these resources in an optimum way, we end up with our lowest annual energy costs and substantially reduced greenhouse gas emissions.

Now, every project is different - so mileage will vary. It’s critical to look at the unique aspects of each and every opportunity. The optimum combination of resources will change, and you might find sites, for example, where wind energy is not worth considering, but perhaps others like hydropower or tidal make more sense.
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Despite these variations, the overarching principle remains - you can make huge gains in both greenhouse gas emissions, and cost, when your off-grid business thinks about optimizing the mix of all energy resources most effectively.

This isn’t just a theoretical concept - this is a very real and practical way for off-grid businesses to produce significant environmental and financial benefits. Possibly a greater relative impact than the headline-grabbing pronouncements from the much larger multi-national corporations.

This paints an overview of the impact that an off-grid business such as an eco-resort can make. But, for those who want to dive a little further into the details, please read on below.

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What are the Details of The Reference Project?

Some of the design data I assumed for this reference project:

• 12,900 m2 total building floor area (138,000 ft2). This drives our total energy demand, and includes lodges, cabins, utility buildings, and powered camp sites.
• Average annual wind speed of 7.2 m/s (26 km/h or 16 miles per hour). Lower than we’d like if we were selling to the grid, but reasonable for an off-grid project.
• Annual solar radiation of 1,227 kWh/m2 (13,207 kWh/ft2). Again, this is not the best spot in the world for selling solar power to the grid, but for an off-grid project, it becomes much more worthwhile.

What Energy System to Start With?
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An off-grid eco resort like this one would need to keep the guests happy with a continuous supply of mood lighting, delicious meals, and hot showers. While renewable energy and storage systems have come a long way, I wouldn’t recommend relying on them alone for most situations. For that reason, we use diesel generators for electricity, and propane for heating systems.

So, let’s add some renewable energy. But how much?
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This is an area where off-grid projects differ substantially from grid-connected projects. If we were connecting a solar power plant to the grid, we can usually sell most of the excess power to the grid. If we’re looking at an off-grid project, we don’t have that luxury. We don’t want to produce much more than we need, so we need a reliable estimate of our energy demand.

​I produced these estimates using leading edge building energy simulation software. This gives us a reasonable estimate of energy use down to the month, day, or even hour of an entire year. However, a word of caution is that the estimates are only as good as your assumptions, so it’s important to back the estimates up with experience, a good understanding of unknowns, coupled with a healthy dose of salt.

Adding Solar Power
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Once you have an energy consumption estimate, you can start estimating how many solar panels to add. In the chart below, I’ve looked at the impact of total energy costs and how this changes in comparison to a pure diesel-powered electricity system as the size of the solar power system increases. 

As we start adding solar panels, the total costs of the power system start to decrease, since the solar panels are producing power that then doesn’t need to be produced by running the diesel generators. The total costs come down. But, beyond a certain point, the costs start increasing again. The reason is we are now producing more power than we need on the bright sunny days, so the excess goes to waste.

A solar power system that produces more power than needed in the middle of the day will waste the excess power.

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Naturally, we want to find the size of a solar power system that gives us the minimum cost - a fun but nerdy process called optimization.

Finding the optimum (minimum cost) size of a solar power system.

Adding Batteries
So, what happens if we take some of that extra power and put it into a battery? You might guess that we can then use this power at a later time when it’s not so sunny, as tends to happen at night time. We can save up some of that energy and it can run well into the night. With an even bigger battery, we might be able to go all night without needing our diesel generator. But, how big should the battery be? Once again there’s a balance, and we want to find the combination that minimizes the total cost of power. For our project, that seems to be somewhere around 4-6 hours of battery storage, but your mileage will vary. 

One hour of battery storage reduces energy costs compared to installing no batteries.

Finding the optimum battery size for the off-grid eco-resort.

An Efficient, Hybrid Energy System

In our case, we also added wind turbines, which produce more power in the winter to balance the lower solar energy production.

Monthly energy production of wind compared to solar. There is more wind in the winter for this project, which offets the lower solar production.

But there’s one more “clean energy” resource that is critical to mention, and often overlooked. That resource is energy conservation. For the analysis of this reference project, I looked at several options all of which would reduce energy consumption for the proposed facility. 

• High efficiency pumps, control systems, and lighting.
• Improved building envelope (insulation and windows).
• Use of high efficiency heat pumps instead of propane.

Where Do We End Up?

But what does this mean for an off-grid business? How does it affect your bottom line?

The upfront (capital) costs of a renewable energy system are higher than a simple diesel system. But, you also need to pay for fuel and maintenance (operating costs), and this is where the diesel system loses.

For projects where environmental performance is a high priority, it’s worth noting that the lowest cost systems also have close to the lowest possible emissions. While it’s possible to push emissions even lower, the ‘bang for the buck’ starts decreasing once you go beyond the minimum costs system. While many of my clients have opted to push harder to achieve lower emissions levels, for those who choose to build a minimum cost system, it’s worth recognizing that they have already reduced greenhouse gas emissions far more than the large grid-connected corporations that grab the big headlines.

​If you work with eco-conscious customers, they will be pleased you made such a big impact, and with much lower energy costs, so will your balance sheet.​