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Literature Review Page for "PV Economics: When to get off the grid"
Selected Papers and Lit
Global Parity on Grid-Parity Event DynamicsC. Breyer, and A. Gerlach,"Global Parity on Grid-Parity Event Dynamics", Q-Cells SE, Sonnenallee 17-21, 06766 Bitterfield-Wolfen OT Thalheim, Germany.
Abstract:
Grid-parity is a very important milestone for further photovoltaic (PV) diffusion. A grid-parity model is presented, which is based on levelized cost of electricity (LCOE) coupled with the experience curve approach. Relevant assumptions for the model are given and its key driving forces are discussed in detail. Results of the analysis are shown for more than 150 countries and a total of 305 market segments all over the world. High PV industry growth rates enable a fast reduction of LCOE. Depletion of fossil fuel resources and climate change mitigation forces societies to internalize these effects and pave the way for sustainable energy technologies. First grid-parity events occur right now. The 2010s are characterized by ongoing grid-parity events throughout the most regions in the world, reaching an addressable market of about 75% up to 90% of total global electricity market. In consequence, new political frameworks for maximizing social benefits will be required. In parallel, PV industry tackle its next milestone, fuel-parity. In conclusion, PV is on the pathway to become a highly competitive energy technology.
Summary:
A grid-parity model is shown using LCOE methodology for over 150 countries and 305 market segments.
Reasonable assumptions are made for achieving cost/kWhr compatible with conventional fossil fuel based grid technology.
A dynamic model is presented based on time and geography.
Experience-curve approach is used to project how the labor productivity and maanufacturing costs would change.
PV power plants have emerged in recent years as a viable means of large-scale renewable energy power generation. A critical question facing these PV plants at the utility-scale is the competitiveness of their energy generation cost with that of other sources. A common means of comparing the relative cost of electricity from a generating source is through a levelized cost of energy (LCOE) calculation. The LCOE equation allows alternative technologies to be compared when different scales of operation, investment or operating time periods exist. This paper reviews the LCOE drivers for a PV power plant and the impact of a plant's capacity factor on the system LCOE. The impact of solar tracking to a plant's capacity factor is reviewed as well as well as the economic tradeoffs between fixed and tracking systems.
Summary:
This paper proposes a way of reducing the LCOE of a PV power plant.
A detailed math-analysis is shown for LCOE calculations.
The use of high-capacity factor configurations has been analyzed in detail and it has been shown that this will reduce the cost of LCOE over a period of time.
The effect of high-capacity factor is shown on the size of land required, cost of LCOE, Environmental conditions, and operations and maintenance cost.
Grid parity in the context of solar energy implies that photovoltaic resources become competitive with more conventional electrical resources. The paper explores various concepts of grid parity, with emphasis on power electronics aspects. The published Department of Energy goal of grid parity by 2015 implies large-scale shifts to solar energy by 2030. It IS shown that the power electronics subsystems of solar energy systems require substantial cost and reliability improvements to support grid parity. Inverters need to match the typical 25-year life of solar panels, support major simplifications to installation, and achieve lower manufacturing costs.
Summary:
Different views of estimating grid parity are explained.
Most life-cycle analysis have ignored the cost of Power Electronics to achieve grid-parity.
Average life span of conventional inverters is is about 10 years because electrolytic capacitors required for energy storage in inverters are not very reliable; while the estimated life span of a PV system is 25 years.
Simplified installation of PV system is also proposed to bring down the system cost. This improves system reliability since failure of individual components will not affect the performance and reliability of the system.
This paper reviews the methodology of properly calculating the LCOE for solar PV, correcting the misconceptions made in the assumptions found throughout the literature. Then a template is provided for better reporting of LCOE results for PV needed to influence policy mandates or make invest decisions.
Summary:
LCOE calculations are made for PV system to achieve grid parity.
Some researchers have questioned the idea of achieving grid parity in near future based on assumptions of the total installation costs that ignored the retail cost.
This paper refutes the above idea by applying the Camstar's Advanced Product Quality Model that would reduce the cost/kWh of the PV system.
An example PV system for Ontario, Canada is simulated based on the proposed LCOE methodology.
Based on the proposed methodology, PV has already achieved grid parity in several locations across US and will achieve grid parity in several locations in a near period.
Locational marginal pricing (LMP) data available from PJM makes an in-depth analysis of the true worth of photovoltaic electricity generation possible. This paper provides a comparison of commonly used average retail electricity prices and average prices of electricity determined by the combination of empirically collected energy generation created by two photovoltaic systems and the available PJM LMP costs for two regions. The authors have found that while average supply-side generation costs range in the 5-6 centes per kilowatt-hour, generation costs during times in which two PV systems operated were as high as 9-12 cents per kilowatt-hour. Weighted average electricity prices that take the times into consideration at which the electric energy is generated, as well as a recent drop in prices for installed systems, has pushed photovoltaics across the threshold to be well on their way to becoming an inexpensive means of generating electricity.
Summary:
Locational Marginal Pricing (LMP) of the interconnected grid of Pennsylvania, New Jersey, and Maryland is analyzed for grid-parity predictions.
The grid supplies energy from five different sources namely; petroleum, natural gas, coal, nuclear, and PV.
The LMP is compared with the pricing at times when grid supplies power from two local PV systems to show the benefits of PV systems in terms of cost-effectiveness.
This paper examines the break-even cost for residential rooftop photovoltaic (PV) technology, defined as the point where the cost of PV-generated electricity equals the
cost of electricity purchased from the grid. We examine the break-even cost for the largest 1000 utilities in the United States as of late 2008 and early 2009. Currently, the break-even cost of PV in the United States varies by more than a factor of 10 (from less than $1/Watt to over $10/Watt) despite a much smaller variation in solar resource. We also consider how the break-costs may change over time, examining a 2015 scenario and the key drivers behind break-even costs. Overall, the key drivers of the break-even cost of PV are non-technical factors, including the cost of electricity, the rate structure, and the availability of system financing, as opposed to technical parameters such as solar resource or orientation.
Summary:
Break-even costs of PV systems for residential customers is compared with utilities across several places in US.
Current prices for PV show that they are higher by a factor of 10 compared to Utilities across most places.
However, a life-cycle analysis is carried out based on the trends in the prices of grid-supplied electricity and the PV systems based on several non-technical factors.
The study finds a plausible scenario in near future wherein PV costs would be at parity with the Grid costs at several locations in US.
However, the analysis does not take into consideration the demand-curve analysis for the PV systems.
Fuel-Parity: Impact of Photovoltaics on Global Fossil Fuel Fired Power Plant Business
Abstract:
Over the last 15 years global photovoltaic (PV) installations have shown an average annual growth rate of 45%. Combined with a constant learning rate of about 20% this
leads to an ongoing and fast reduction of PV installation costs. While PV has been highly competitive for decades in powering space satellites and off-grid applications
for rural electrification, commercial on-grid PV markets for end-users are currently about to establish as reflected by first grid-parity events. In parallel, the fast decrease in levelized cost of electricity (LCOE) of PV power plants creates an additional and sustainable large-scale market segment for PV, which is best described by the fuel-parity concept. LCOE of oil and natural gas fired power plants are converging with those of PV in sunny regions, but in contrast to PV are mainly driven by fuel cost. As a consequence of cost trends this analysis estimates an enormous worldwide market potential for PV power plants by end of this decade in the order of at least 900 GWp installed capacity without any electricity grid constraints. PV electricity is very likely to become the least electricity cost option for most regions in the world.
Summary:
LCOE for PV systems is compared with the conventional fossil fuel powered utilities.
Benefits ov PV systems are shown for utility companies and the end users.
The effect of PV on the businesses of utility companies is also shown.
It is suggested here that utilities can make a gradual shift towards the PV based power plant technology to increase their profits while the consumers will also benefit from lower electricity bills compared to the costs from fossil-fuel based utilities.
The cost-effective sizing and evaluation of residential stand-alone photovoltaic systems at various European and Mediterranean locations is the subject of this paper. The stand-alone photovoltaic system is serving the energy needs of a medium-sized household inhabited by a typical four member family. A typical energy consumption daily profile is assumed, and the solar array, battery and back-up generator – if necessary – are optimally sized to minimise the system life-cycle cost (LCC). The calculations have been done assuming economic parameters and PV technology costs applicable to years 1998 and 2005.
Summary:
This paper analyzes the future of stand-alone PV systems.
Life-cycle analysis for PV system is carried out and it is suggested that stand-alone PV systems will become economically feasible for remote areas with ample insolation.
For areas with lesser insolation, fuel-constrained hybrid systems will be economically feasible compared to the current prices of PV hardware.
It is projected that PV hardware will become more and more cheaper while the cost of fossil fuels will continue to rise in future which is essential for achieving grid parity.
Technology roadmaps are an important tool for all technology arenas and there is increasing activity to develop an ITRS equivalent for PV. This paper makes the following key points: (1) the PV industry has 2 essential differences from the semiconductor industry which must be reflected in the roadmap (2) there are several types of PV roadmaps which provide different perspectives, and (3) this paper suggests that for PV, production volume instead of time is the preferred variable and may lead to better technology forecasts. The example of PV wafer thickness is used to illustrate these points. For the first point, the PV industry differs from semiconductor industry in two fundamental aspects: (1) it is based on market incentives, and is sensitive to policy, and (2) it has a wider spectrum of business models and levels of vertical integration. Both of these aspects necessitate the need to fold in market analysis into any PV roadmap endeavors. For the second point, we propose that there are three types of PV Roadmaps: (1) the "Top's-Down" (TD) based on high level trajectories such as LCOE reduction for "grid-parity" (2) a Capability roadmap provided by e.g. equipment vendors, and (3) a "Consensus" roadmap based on market surveying, and technical evaluation of the aspects. A further refinement is to have the Consensus roadmap based on production volume instead of time. We develop and discuss the latter in this paper. The methodology is described as well as the comparisons between the other types of roadmaps. The results include a Consensus roadmap for wafer thickness which reflects the various considerations for PV. The production volume trend line is compared and assessed against the other roadmaps. The data support the combined use of both a market sensitive time-based and a production-volume-based roadmap for more accurate projections.
Summary:
This paper gives an alternative view towards the roadmap for PV technology, while most researchers have mainly focused their future predictions with time as the most important variable.
This paper focuses on a top-down approach and emphasizes on production volume as an important explanatory variable compared to time which has been the mostly preferred variable for making future predictions and projecting trends in the PV technology.
For solar industry to be competitive with fossil fuel technology, manufacturability at lower costs is a vital factor.
c-Si wafer thickness could be an important parameter that can affect the supply-demand chain and the roadmap for PV technology.
Learning curve approach based on annual production and not the time-based analysis could be an important parameter determining the future trends in PV technology.
Technological innovations in wafer thickness could lead to large productions that can meet the demand of the growing PV technology.
Of course, time is an important variable to analyze, but production volume can affect the PV technology in near future.
Global power plant capacity largely depends on burning fossil fuels. Increasing global demand and degrading and diminishing fossil fuel resources are fundamental drivers for constant fossil price escalations. Price trend for solar PV electricity is vice versa. Fuel-parity concept, i.e. PV systems lower in cost per energy than fuel-only cost of fossil fired generators and power plants, well describes the fast growing economic benefit of PV systems. Fuel-parity is already reached in first markets and first applications and will establish very large markets in the 2010s. Solar PV electricity will become a very competitive energy option for most regions in the world.
Summary:
This paper compares the LCOE for PV systems with the fossil fuel prices over a period of time to make future predictions for achieving fuel-parity.
A price trend for fossil fuels is projected for the future.
Based on the conservative as well as optimistic approches, it is suggested that PV systems will be at fuel parity with fossil fuels by the year 2020.
As the debate over the future of energy grows, often nuclear energy production is pitted against solar photovoltaic energy conversion. There is a widespread belief that solar cannot compete with nuclear energy economically without government subsidies. The continued and widespread belief in the economic viability of nuclear energy, however, is predicated in part on government-mandated limitation on the liability of the nuclear industry. To demonstrate the magnitude of this nuclear energy insurance subsidy, this paper considers a shift in policy to reinvest only the premiums of the nuclear energy insurance subsidy into large scale solar photovoltaic production. The current insurance subsidy for a single nuclear power plant in the U.S. is reviewed along with the investment requirements for a one GigaWatt thin film amorphous silicon solar photovoltaic manufacturing plant. The available power and energy are then compared for an ensemble of nuclear power plants and solar photovoltaic arrays produced by the manufacturing plants over a nuclear plant life cycle. The startling results show that only the premiums for nuclear energy insurance would result in both more installed power and energy produced by mid-century if these funds were invested in large scale photovoltaic manufacturing. This study clearly shows that policies to transfer the nuclear energy insurance subsidy to large-scale manufacturing would increase the PV velocity to push the PV industry over 1 TW in under fifty years.
Summary:
This paper focuses on the analysis of government subsidy policy towards alternative sources of energy.
Right now, nuclear power plants are more competetive because of the insurance subsidy that they receive from the government.
If the money invested for nuclear insurance subsidy is invested in PV fabrication facilities, then the facilities would be able to manufacture large volumes of PV cells.
With this proposed energy policy, generation from PV systems would be at par with Nuclear generation by around 2035 and by the year 2060, generation from PV systems would be around 3 times more than that from Nuclear plants.
Abstract:
The paper starts with experience curve analysis in order to find out the future prices of solar photovoltaic (PV) modules. Experience curves for 7590% progress ratio are extrapolated with the help of estimated future growth rate for PV installation worldwide and cur- rent module price data until year 2060. A kWh PV electricity generation cost has been calculated for coming decades with the help of local market parameters and module prices data from extrapolated experience curve. Two different prices for grid electricity wholesale electricity price and end user electricity price are separately analyzed. Household electricity consumption profile and PV electricity gen- eration profile for Cologne, Germany, have been analyzed to find out the possibility for PV electricity consumption at the time of its generation. This result is used to calculate the real grid parity year which lies somewhere between grid parity years calculated for whole- sale electricity price and end user electricity price.
Summary:
This paper makes future predictions for PV technology based on Experience Learning Curves.
Predictions are made for grid-parity calculations in Cologne, Germany.
Experience learning curves for PV modules are extrapolated it is found that grid parity will be achieved somewhere around 2023.
Some of the important variables chosen are progress ratio, annual growth rate of cumulative installation, price growth rate, bank interest rate, etc.
Grid parity is carried out based on a conservative life-span of 25 years and an optimistic life-span of 40 years for the PV modules.
Alternative energy technologies (AETs) have emerged as a solution to the challenge of simultaneously meeting rising electricity demand while reducing carbon emissions. However, as all AETs are responsible for some greenhouse gas (GHG) emissions during their construction, carbon emission "Ponzi Schemes" are currently possible, wherein an AET industry expands so quickly that the GHG emissions prevented by a given technology are negated to fabricate the next wave of AET deployment. In an era where there are physical constraints to the GHG emissions the climate can sustain in the short term this may be unacceptable. To provide quantitative solutions to this problem, this paper introduces the concept of dynamic carbon life-cycle analyses, which generate carbon-neutral growth rates. These conceptual tools become increasingly important as the world transitions to a low-carbon economy by reducing fossil fuel combustion. In choosing this method of evaluation it was possible to focus uniquely on reducing carbon emissions to the recommended levels by outlining the most carbon-effective approach to climate change mitigation. The results of using dynamic life-cycle analysis provide policy makers with standardized information that will drive the optimization of electricity generation for effective climate change mitigation.
So far, solar energy has been viewed as only a minor contributor in the energy mixture of the US due to cost and intermittency constraints. However, recent drastic cost reductions in the production of photovoltaics (PV) pave the way for enabling this technology to become cost competitive with fossil fuel energy generation. We show that with the right incentives, cost competitiveness with grid prices in the US (e.g., 6–10 US¢/kWh) can be attained by 2020. The intermittency problem is solved by integrating PV with compressed air energy storage (CAES) and by extending the thermal storage capability in concentrated solar power (CSP). We used hourly load data for the entire US and 45-year solar irradiation data from the southwest region of the US, to simulate the CAES storage requirements, under worst weather conditions. Based on expected improvements of established, commercially available PV, CSP, and CAES technologies, we show that solar energy has the technical, geographical, and economic potential to supply 69% of the total electricity needs and 35% of the total (electricity and fuel) energy needs of the US by 2050. When we extend our scenario to 2100, solar energy supplies over 90%, and together with other renewables, 100% of the total US energy demand with a corresponding 92% reduction in energy-related carbon dioxide emissions compared to the 2005 levels.
Electricity demand in MENA region increases fast and is highly dependent on diminishing fossil fuel resources. The grid-parity concept for end-users and the fuel-parity concept on power plant level well describes fast growing economic benefit of PV systems. By end of the 2010s most oil and natural gas fired power plants in MENA region are beyond fuel-parity, i.e. PV power plants are lower in cost than fuel-only cost of oil and gas fired power plants. Solar PV electricity will become a very competitive energy option for entire MENA region.
The idea of solar generated electricity dates to discovery of the photovoltaic (PV) effect in 1839 through to the first practical silicon solar cell in 1954. But even with concerns about oil and the environment, PV currently generates less than 0.1% of the worldpsilas electricity. We present here the case that PV is on the verge of becoming a major source of electrical power through a principle similar to that which underlies VLSI - the reduction of unit cost through nanomanufacturing.
This paper describes the installation, technical characteristics, operation and economic evaluation of a grid-connected building-integrated photovoltaic system (BIPV) installed in Northern Greece, and in particular in the city of Kastoria. The technical and economical factors are examined using a computerized renewable energy technologies (RETs) assessment tool. A number of different economic and financial feasibility indices are calculated for different financing scenarios in order to assess the gross return of the investment. Useful conclusions were drawn regarding the feasibility of BIPV systems and their potential for increased energy market penetration.
References
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