With environmental concerns and energy needs increasing, many regions in the world are promoting renewable energy technologies making use of various policy instruments. Although today the PV systems price is decreasing, which gives it a competitive edge; we see the technology still being dependent on policy instruments for its dissemination.
The aim of this study is to research on whether or not a solar PV system is economically viable under certain circumstances. The study analyzes this by performing a cost beneficial analysis for the lifetime of the solar PV system making use of a discounted savings model.
The systems being considered in this study are from California and Germany as these regions are leading in solar PV dissemination in their respective regions. The policies that are aiding the deployment of solar PV technologies are varied and thus this study compares benefits from different policy instrument for a residential customer investing in a solar PV system.
The research objectives in this study are pursued making use of major concepts such as Grid Parity, Levelized Cost of Electricity and financial methods such as discounting. Further, to understand how the different independent variables such as retail electricity prices, PV system pricing, WACC, self-consumption rate and storage availability are having an impact and how the results change with variation in these variables, a sensitivity analysis is conducted.
The results obtained in this study show that a solar PV system installed in California and Germany both make net benefits over their lifetime. When compared, the Californian solar PV system under the Net Energy Metering policy is making more net economic benefits in the range of $ 40,351 in Eureka and $53,510 in San Francisco; when compared to the German solar PV systems under the Feed in Tariff ranging $4,465 in Berlin and $11,769 in Munich.
Furthermore the Californian solar PV systems still prove to be more beneficial even when compared to the German solar PV systems under the self-consumption law of the Feed in Tariff ranging $ 6,443 in Berlin and $ 13,141 in Munich. But when the self-consumption rate is increased in the German case, it is noted that the associated benefits increase.
The study at hand thus results in the California Net Energy Meter policy instrument proving to be more beneficial to a residential customer than the German Feed in tariff with and without self-consumption. Another important finding made in this study is that despite the German solar PV system making lesser benefits than the Californian ones, they attain Grid Parity before the ones in California.
Author: Ravi Kumar, Swetha