NewEnergyNews: TODAY’S STUDY: SOLAR IS NOW COST-COMPETITIVE

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The challenge now: To make every day Earth Day.

YESTERDAY

THINGS-TO-THINK-ABOUT THURSDAY, December 8:

  • TTTA Thursday- The Record Of The New EPA Head
  • TTTA Thursday-The Undeveloped New Energy
  • TTTA Thursday-Walking On New Energy
  • TTTA Thursday-Electric Tractor For Emissions-Free.Farming
  • THE DAY BEFORE

  • ORIGINAL REPORTING: Turning Distributed Energy From Threat To Opportunity
  • ORIGINAL REPORTING: Solar Policy Action Heats Up
  • ORIGINAL REPORTING: Maine’s Almost Solar Policy Breakthrough
  • THE DAY BEFORE THE DAY BEFORE

  • TODAY’S STUDY: How To Balance Competing Solar Interests
  • QUICK NEWS, December 6: Sliver Of Hope? Al Gore In Climate Change Meet With Donald Trump; The Opportunity In New Energy; Google Seizing New Energy Opportunity
  • THE DAY BEFORE THAT

  • TODAY’S STUDY: A Way For New Energy To Meet Peak Demand
  • QUICK NEWS, December 5: Trial Of The Century Coming On Climate; The Wind-Solar Synergy; The Still Rising Sales Of Cars With Plugs
  • AND THE DAY BEFORE THAT

  • Weekend Video: Trump Truth And Climate Change
  • Weekend Video: The Daily Show Talks Pipeline Politics
  • Weekend Video: Beyond Polar Bears – The Real Science Of Climate Change
  • THE LAST DAY UP HERE

  • FRIDAY WORLD HEADLINE-Aussie Farmers Worrying About Climate Change
  • FRIDAY WORLD HEADLINE-The Climate Change Solution At Hand, Part 1
  • FRIDAY WORLD HEADLINE-The Climate Change Solution At Hand, Part 2
  • FRIDAY WORLD HEADLINE-New Energy And Historic Buildings In Europe
  • --------------------------

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    Anne B. Butterfield of Daily Camera and Huffington Post, f is an occasional contributor to NewEnergyNews

    -------------------

    Some of Anne's contributions:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.

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    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

  • ---------------
  • WEEKEND VIDEOS, December 10-11:

  • A Climate Change Denier’s Lies Exposed
  • The Good News Numbers On The EV Boom
  • “This Is Just The Beginning”

    Tuesday, May 27, 2014

    TODAY’S STUDY: SOLAR IS NOW COST-COMPETITIVE

    PV Grid Parity Monitor; Commercial Sector

    March 2014 (International Renewable Energy Agency)

    Executive Summary

    This is the third issue of the Grid Parity Monitor, and it focuses exclusively on the commercial segment (30 kW PV systems). As such, it analyzes PV competitiveness with electricity prices for commercial consumers and assesses local regulation for self-consumption in seven different countries (Brazil, Chile, France, Germany, Italy, Mexico and Spain).

    Retail electricity prices for a commercial electricity consumer can be complex, combining diverse charges such as energy and capacity costs. The GPM only considers the energy charge to compare against the LCOE, but the reader must bear in mind that if self- consumption results in a change on the consumption pattern of the user, the additional avoided costs (e.g. capacity costs) should also be accounted for.

    The results of the analysis show that the main driver of PV grid parity is the decrease in PV system prices, one of the main parameters that determine LCOE:

    However, retail electricity prices for the commercial sector show a decreasing trend in most of LatAm countries and Spain, while in the rest of the European countries and Mexico electricity prices have been increasing:

    Some countries with a competitive LCOE and relatively high electricity rates are already at grid parity for the commercial segment. However, grid parity by itself is no guarantee of market creation. PV self-consumption will only be fostered if grid parity is combined with governmental support. The Figure below illustrates the positioning of each country in terms of these two variables (“Grid Parity Proximity” and “Regulatory support”).

    The following conclusions referred to the commercial segment (30 kW systems) can be drawn from the above Figure:

    • In Brazil, high installation prices and a high discount rate prevent PV from being competitive against grid electricity, but the regulatory support (an attractive net metering system) is a good example of an effective incentive for market creation.

    • Chile remains far from grid parity, mainly due to high installation prices, a high discount rate, and low electricity prices.

    • In France, high irradiation levels (in the South) and relatively low installation prices do not compensate for low electricity rates in the commercial sector.

    • In Germany and Italy, low PV installation prices, a low discount rate, and high retail electricity prices compensate for low irradiation levels to reach Grid Parity.

    • In Mexico, for certain commercial electricity consumers (“Tarifa 2”), partial grid parity has been reached. For other consumers, low electricity tariffs still represent a barrier.

    • In Spain, grid parity has been reached, owing to high irradiation and competitive system prices, but poor regulatory support1 is a barrier for market creation.

    It is important to note that the grid parity situation of some of the above countries has worsened with respect to that of the residential segment2 . In essence, this is because lower system costs in the commercial segment and the benefit of the tax shield do not compensate for the much lower retail electricity rates available for commercial consumers.

    Finally, it is worth mentioning that as a result of the rising penetration of distributed generation, new trends are posing challenges on grid parity:

    • To cover the fixed costs of DSO, some countries have imposed (or are discussing the introduction of) specific fees per kW of installed PV or per kWh of self-consumption.

    • To compensate for the reduction in tax revenues earned by the government, some countries have imposed a tax on electricity generation.

    Introduction

    The Grid Parity Monitor (GPM) Series was conceived to analyze PV competitiveness in order to increase awareness of PV electricity self-consumption possibilities. On-site PV self- consumption is a means of reducing the increasingly expensive electricity bill in an environmentally friendly way.

    To assess the competitiveness of PV systems against grid electricity prices, this Study calculates PV grid parity proximity. Grid parity is defined as the moment when PV Levelized Cost of Electricity (LCOE) becomes competitive with grid electricity prices. Once PV grid parity is reached, electricity consumers would be better off by self-consuming PV-generated electricity instead of purchasing electricity from the grid.

    While past GPM issues were exclusively focused on residential PV systems for self- consumption (3kW), this one is the first to address the commercial sector (30 kW systems).

    Caveat for a fair grid parity analysis

    When analyzing cost-competitiveness of PV technology against grid electricity, the reader should bear in mind that what is really being compared is the cost of electricity generated during the entire lifetime of a PV system against today’s retail price for electricity. However, one should note that while by definition PV LCOE is fixed as soon as the PV system is bought, future grid electricity prices are likely to change.

    Distinctive features of commercial consumers This issue analyzes grid parity proximity for the commercial segment, which differs from the residential segment in several ways:

    • For a commercial electricity consumer (private corporation), income taxes are relevant costs, as they affect cash flows.

    -This analysis calculates after-tax costs and includes the impact of depreciation for tax purposes: the PV Levelized “After-Tax” Cost of Electricity (simply, LCOE) is compared to the after-tax cost of grid electricity.

    • Retail electricity prices for a commercial electricity consumer can be complex.

    - The structure of the utility rate can combine diverse charges: energy costs, capacity costs, costs that vary with the time of the year (TOU rates), or with the amount of electricity purchased (tiered rates), among others.

    - In this Study, only the energy charge is compared to LCOE (capacity charges are excluded), because for a commercial consumer it is not easy to save on capacity costs on a given month (although it is possible).

    Recently, PV cost-competitiveness has improved considerably —mainly due to dramatic cost reductions— causing PV systems to be profitable per se in certain markets. This economic reality, when combined with governmental support (i.e. net metering/net billing or equivalent mechanisms), has encouraged the introduction of subsidy-free distributed generation in many countries.

    As seen recently in several countries, the rising penetration of distributed generation is beginning to pose new challenges with an impact on grid parity:

    • To cover the fixed costs of DSO, countries such as Belgium (in the region of Flanders) imposed a specific fee per kW of installed solar, as did States such as Arizona and Idaho in the US.

    • To compensate for the reduction in tax revenues5 earned by the government, countries such as Spain have imposed a tax on electricity generation.

    Even if Grid Parity (defined as the moment when PV LCOE equals retail electricity prices) becomes a reality, regulatory cover6 is still necessary to foster the PV self-consumption market.

    Simplifying assumptions

    To simplify the analysis, it is assumed that 100% of the electricity is self-consumed on-site, which is technically feasible when a good match between electricity consumption and PV generation is achieved. This case is illustrated in the following Figure:

    In order to assess the magnitude of self-consumption possibilities worldwide, the current issue of the GPM analyzes some of the main current and potential markets. The Study includes only one city per country (located in a relatively sunny and populated area):

    The PV Grid Parity Monitor consists of two main sections:

    • Results Section, where PV LCOE is quantified for each of the locations under study and PV grid parity proximity is analyzed.

    • Methodology Section, which includes a thorough explanation of the LCOE concept, and the main assumptions and inputs considered in our analysis.

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