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PV self-consumption regulation in Spainprofitability analysis and
alternative regulation schemes
Javier López Prol & Karl Steininger
IAEE 2017 Vienna, Sept. 5, 2017
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UNIVERSITY OF GRAZ
1. PV self-consumption
2. Method
3. Profitability analysis
4. Economic impacts of PV self-consumption
5. Conclusions
Outline
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1. PV self consumption
Towards grid parity
€/kWh
t
PV LCOE
Retail electricity price
Variable part of theretail electricity price
Taxes and grid costs
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1. PV self consumption
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1. PV self consumption
Electricity consumption
Electricity generation
Electricity self-consumption
Electricity surplus
How to value the surplus electricity exported to the grid?
Generation and load profiles
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1. PV self consumption
Regulation schemes (Price of surplus electricity):
Self-Consumption (SC): not remunerated
Net Metering (NM): retail price
Net Billing (NB): somewhere between 0 and retail price
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Residential
Commercial
Industrial
• Higher savings potential due to higher electricity prices
• Higher costs (interest rates and system price)
• Lower share of electricity self-consumed
Segments definition
1. PV self consumption
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Price of surplus electricity Backup charge
Self-consumption0
Exemption for systems <10kWHigh otherwise
Net BillingWholesale price
- Generation tax (7%)- Grid access charge
(5€/MWh)
Medium-high
Low
Self-consumption regulation in Spain
1. PV self consumption
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0
5
10
15
20
25
Retail Price PotentialSavings
Retail Price PotentialSavings
Retail Price PotentialSavings
R C I
€c/
kWh backup
savings
Fixed
VAT
Variable
0
5
10
15
20
25
Retail Price PotentialSavings
Retail Price PotentialSavings
Retail Price PotentialSavings
R C I
€c/
kWh backup
savings
Fixed
VAT
Variable
Savings potential in Spain
1. PV self consumption
% self-consumption 33% 41% 75%
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Methodology: Internal Rate of Return (IRR): discount rate at
which the net present value of the investment equals zero
𝑁𝑃𝑉 = 𝑃𝑊 𝐶𝐼𝐹 𝑁 − 𝐿𝐶𝐶𝑢𝑠𝑝 = 0
Revenues Costs
Savings from self-consumed electricity
Income from the electricityexported to the grid
Financing cost
Operation and maintenance
System price
2. Method
PW… Present value LCCusp: life cycle cost from the user standpointCIF…. Cash inflowN……. Project lifetime
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2. Method
ሿ𝐿𝐶𝐶𝑢𝑠𝑝 = 𝑃𝑊 𝑃𝑉𝐼𝑁 + 𝑃𝑊 𝑃𝑉𝑂𝑀 + 𝑃𝑊[𝛿𝑐
1 − 𝛼 ∗ 𝑃𝑉𝐼𝑁 + 𝑃𝑉𝐼𝑁 ∗ 𝛼 ∗ 𝑖 ∗1+𝑖 𝑁𝑙
1+𝑖 𝑁𝑙−1∗1−𝑞𝑁𝑙
1−𝑞
𝑃𝑊 𝐶𝐼𝐹 𝑁 = 𝛽 ∗ 𝐸𝑃𝑉 ∗ 𝑝𝑠 − 𝛿𝑒 ∗ 𝐴𝑠 + 1 − 𝛽 ∗ 𝐸𝑃𝑉 ∗ [ 𝑝𝑔 − 𝛾 ∗ 1 − 𝜆 ሿ ∗ 𝐴𝑔
Self-consumed electricity Electricity exported to the grid
Backup charge Grid-access charge Generation tax
Share externally financed
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Results residential
3. Profitability analysis
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
0 5 10 15
IRR
(%
)
Price of exported electricity (€c/kWh)
Residential
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Results commercial
3. Profitability analysis
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
0 5 10 15
IRR
(%
)
Price of exported electricity (€c/kWh)
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Results industrial
3. Profitability analysis
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
0 5 10 15
IRR
(%
)
Price of exported electricity (€c/kWh)
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Lower PV System Price (€/kWp), higher profitability
2.1 €/Wp (current*)1.9 €/Wp (-10%)
1.5 €/Wp (-30%)
1 €/Wp (-50%)
Declining PV system costs
3. Profitability analysis
-5%
0%
5%
10%
15%
20%
0 5 10 15
IRR
(%
)
Price of exported electricity (c€/kWh)
Base case: own capital without backup charge. *May 2015
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3. Profitability analysis
Sensitivity analysis
Installation costs (system price)
Base case: 80% externally financed with backup charge for C and I
-5%
0%
5%
10%
15%
20%
25%
1 0,9 0,8 0,7 0,6 0,5 0,4 0,3
IRR
(%
)
Installation cost wrt. base case
Residential
Commercial
Industrial
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3. Profitability analysis
Sensitivity analysis
Share of electricity self-consumed
Base case: 80% externally financed with backup charge for C and I
-15%
-10%
-5%
0%
5%
10%
15%
0% 20% 40% 60% 80% 100%
IRR
(%
)
% of electricity self-consumed
Residential
Commercial
Industrial
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3. Profitability analysis
Sensitivity analysis
Retail electricity price (variable part)
Base case: 80% externally financed with backup charge for C and I
-10%
-5%
0%
5%
10%
15%
20%
1 1,5 2 2,5 3
IRR
(%
)
Retail electricity price wrt. base case
Residential
Commercial
Industrial
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4. Economic impacts of self-consumption
On government revenues
At 5% discount rate. € per kWp of installed capacity during the lifetime of the system (25 years)
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4. Economic impacts of self-consumption
On the electricity system*
*comprising generators, suppliers, TSO, DSO, regulators and consumers. € cents per kWh generated by the system.
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Conclusions
5. Conclusions
- This regulation will hinder the difussion of PVSC applications by making them economically infeasible
- It sets inefficient incentives
- Recommended Dynamic Net Billing without backupcharge
- With the current regulation, residential PV self-consumption has a positive impact on both governmentand ´electricity system´ revenues
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Thank you for your attention
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