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PV reaching socket parity Policy implications for distributed generation
Cédric Philibert, Simon Müller, Hoël WiesnerRenewable Energy Division
“Self-consumption business models”
EPIA & PVPS Workshop – 22 September 2014, Amsterdam
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Socket parity emerging as potential deployment driver for distributed PV
Economic attractiveness from offsetting electricity bill requires self-using most of the PV electricity Currently limits potential, in particular for households
Reaching socket parity is a driver for private actors But PV may still have significant impact on total system costs, in
particular depending on allocation of fixed network costs
0
200
400
600
800
1 000
1 200
2010 2013 2010 2013 2010 2013 2010 2013 2010 2013 2010 2013 2010 2013 2010 2013
Australia France Germany Italy Korea Mexico Netherlands United Kingdom
USD/
MWh
LCOE
Variable
Portion of
Residential
Rate
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Possible self-consumption (SC) varies
Source: ETP 2014, EDF
Match of PV supply and power demand for a residential/commercial customer in France
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
kW
Day of peak injection (Residential)
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
kW
Day of peak production (Residential)
Consumption PV Injection-Withdrawal
-100.0-80.0-60.0-40.0-20.00.0
20.040.060.080.0
100.0120.0
kW
Week of high production (Office building)
-0.5
0.0
0.5
1.0
1.5
2.0
2.5kW
Day of peak injection (Residential)
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
kW
Day of peak production (Residential)
Consumption PV Injection-Withdrawal
-100.0-80.0-60.0-40.0-20.00.0
20.040.060.080.0
100.0120.0
kW
Week of high production (Office building) Self-consumption higher for:
Some office and commerce buildings with high daily consumption, and relatively small systems on multi-storey dwellings
Self-consumption potentiallyincreased with DSI, storage
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Self-use and self-sufficiency
0 500 1 000 1 500 2 000 2 500 3 000 3 500
Consumption
Generation
Consumption
Generation
3 kW
Residen
tial
.13
kW R
esiden
tial
0 100 000 200 000 300 000 400 000 500 000 600 000
Consumption
Generation
120
kW C
ommercia
l
Annual kWh
Consumption from the grid Generation surplus Prosumed
94% self-use
29% self-sufficiency
100% self-use
4% self-sufficiency
37% self-use
35% self-sufficiency
Comparison of self-use and self-sufficiency shares by system size and customer
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Grid cost concerns T&D costs 30-50% of retail costs, but only 0-15% recovered through fixed
payments for efficiency/equity reasons
Self-consumers pay less but still benefit from the grid; cross-subsidy!
Self-consumption may call for some network tariff changesPreferably toward some time-based grid pricing structure, e.g. California bill adopted in September 2013: small fixed fee introduced, and time-of-use pricing forthcoming
Integration concerns Self-consumption and surplus in-feed may increase imbalance of supplier
without prosumers paying for this
Depending on correlation with system demand:
Serving residual demand more/less costly to meet per kWh than average
Excess generation more/less valuable than average
Tariff-design for injections should reflect value of electricity
Concerns: grid costs and integration
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Socket-parity economically relevant, but based on private costs
Attractiveness varies with possible share of self consumption (SC)
Remuneration of excess power (EP) can be important for economics
Reaching socket-parity is not indicator of the point when net avoided system costs (system value of PV) exceeds LCOE
This might happen before or after
Consumer tariffs reflecting value of electricity in time and location critical for efficiency of self-consumption and net-metering
Skewed tariffs can lead to artificially high/low levels of self-consumption
Buy-all – sell-all is equivalent to a classical FiT
Only difference: based on system value, not costs+x
Separate network-tariffs based on load-profile of prosumer may be needed Existing frameworks can be adjusted, result is higher fixed charge but variable charge for
fixed cost recovery retained for efficiency reasons
Conclusions
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Buy-all sell-all and the value of solar
VOS: a credit associated to all generation
A complex methodology elaborated by the departmentof commerce of the State of Minnesota for the PUC
A theoretical example
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Minnesota: a lively debate
Other values
should be
taken in
account:
voltage control,
market price
reduction, etc.
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The value of PV may evolve over time
Compared values of variable PV and on-demand STE in California
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Example: California and teaching ducks to fly
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* SOURCE: Trade and Invest, Germany. Model calculation for rooftop systems, based on 802 kWh/kWp (Frankfurt/Main), 100% financing, 6% interest rate, 20 year term, 2% p.a. O&M costs. Sources: FiTs: BMU 2013; System Prices: BSW 2013; Model Calculation: Deutsche Bank 2010; Electricity Prices 2007-2013: Eurostat 2013.
Prognosis
0,70
0,90
1,10
1,30
1,50
1,70
1,90
2,10
2,30
2,50
2,70
2,90
3,10
3,30
3,50
3,70
3,90
4,10
4,30
4,50
4,70
4,90
0,05
0,10
0,15
0,20
0,25
0,30
0,35
0,40
0,45
0,50
0,55
2007 2008 2009 2010 2011 2014 2015 2016 2017 20182012 2013
EUR/kWh
Electricity price for households [2.5-5 MWh/a] Electricity costs for PV + BatteryElectricity costs for PV
PV+battery socket parity might be aroundthe corner in Germany
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Forgone tax revenue concerns Less energy sold, less taxes raised
Taxation of self-consumption problematic
Evaluate taxation framework, avoid double taxationE.g. charging VAT on systems and on excess electricity
Forgone renewable energy surcharge concerns Tariffs often contain surcharge for RE
A RE surcharge on RE self-consumption?
Contributing to learning investment that has lead to socket-parity
Forgone cross-subsidy concerns Customers with highest prices have biggest incentive
May be due to cross-subsidies to other consumer groups
Anticipate impact on overall revenues
Concerns: taxes, surcharges, subsidies
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