The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

Addressing PV Grid-Access Barriers Across Europe

Despite the significant declines in installed PV system pricing over the past 12-18 months, most European markets are actually seeing declining investment returns due to the reductions in PV incentives now available.

However, consumer savings associated with avoiding retail electricity purchase (related to onsite consumption of PV production) can help economic returns on the initial investments, particularly within the residential segment.

Purchase avoidance benefits are typically regulated regionally, as part of net-metering allowances. For example, residential PV operators in the Flanders region of Belgium have recently incurred a retroactive (and negative economic) impact on their net-metering allowance, due to emerging barriers arising from utility companies being successful in lobbying to impose grid-access fees.

Addressing this type of barrier – and turning it into an opportunity that may drive PV adoption going forward – requires that PV operators accept ‘reasonable and fair’ grid-access fees. In addition, the European PV lobby may now need to act with an increasingly unified voice, in order to achieve fair treatment from a variety of parties each with vested interests.

The figures shown here highlight a Flanders-based residential 6 kW c-Si installation benefitting from remuneration on 100% of PV production at the Green Certificate rate minus the new grid-access fee (composite Export Rate). Additional benefits are provided by avoiding purchase at €0.22/kWh (Avoided Rate) on 100% of annual PV electricity production. The 25 year Project IRR excludes taxes, finance charges, and salvage value. (Annual O&M is included).

Source: Adapted from NPD Solarbuzz European PV Markets Quarterly report, Q1’13

The figures show that successive incentive reductions during 2012 (and before) in Flanders have driven down the attractiveness indicators of both the Project IRR and the Profitability Index (PI). However, there is a positive impact: by avoiding retail purchase of increasingly expensive electricity. This can help make the case for PV, with a return to PI figures above 1 and a more viable IRR (albeit, half what it was in 2010). (This analysis assumes a conservative 2.5% per year increase of retail electricity rates.)

The PV LCOE analysis (shown in the figure) is most sensitive to the discount rate applied. In the analysis here, this is set at 6%. Sensitivity to the precise installed system price (ISP) is significant. However, in the more mature European markets, the regional variability of the ISPs has become less significant, as countries converge to more standard pricing levels across Europe.

Coincidentally, the southern Europe markets with higher solar resource also exhibit slightly higher ISP’s, lower retail electricity rates, and lower conversion efficiency. Therefore, the resulting PV LCOE advantage that comes from the higher solar resource diminishes when compared with regional retail electricity rates.

The net impact of the new grid-access fee structure in Flanders provides (on average) a 15% reduction in PV-production-related benefits: a level that appears excessive, considering the actual impact of PV production injected on the grid. Moreover, the imposed average flat-rate of €53/kW-year (on inverter rating) impacts (in a disproportionate manner) on users that installed over-sized inverters to help mitigate local grid characteristics and on installations with performance losses due to less-than-optimal array orientation/shading.

Another new barrier still to be addressed relates to ‘saturated’ local grids. The saturation condition can result especially during midday as power moves ‘upstream’ to (and through) voltage transformer stations. This can incur wire and voltage transformer losses and must share other grid operation costs. Successive transformation incurs incremental losses and is only feasible if the transformers are prepared for bi-directional operation. An undesirable scenario is provided by at least two transformation stages: first staged-up into medium voltage, and later staged-down for low voltage consumption.

A further grid-access related barrier is provided by limited international transport facilities. This can be seen in the case of Spain, where only 1 GW of international transport is available. This can result in over-supply intervals that may cause the disconnection of renewable electricity sources.

The pan-European commercial electricity market environment exhibits a range of demands that arise from a highly competitive sector comprising powerful parties coupled with historic levels of subsidy for traditional energy sources. Additional challenges arise also from regional politics, in particular at a time of fiscal deficit reduction across Europe.

Denmark, Germany, Italy, Netherlands, and United Kingdom each allow some level of onsite consumption benefit for the residential PV operator. Some of these countries – in addition to a few other European end-markets – are currently debating proposed modifications to regulated onsite consumption benefits.

However, hopes for a favorable unity in European PV lobbying efforts must address the challenges of operating within a complex environment of diverse cultures, vested interests, and market control. This is certainly a difficult proposition, and may require increased public-interest participation as a break from the norm.

This article was originally published on NPD Solarbuzz and was republished with permission.

Lead image: Transmission via Shutterstock

Untitled Document

RELATED ARTICLES

Welspun Commissions 52-MW Solar Power Plant in India

Vince Font Leading Indian solar developer Welspun Renewables has commissioned the construction of a massive solar plant in the state of Maharashtra. The planned 52-megawatt (MW) solar plant will be located in the city of Baramati. The...

Regional News from the July/August 2015 Digital Edition of Renewable Energy World

Renewable Energy World Editors EcoFasten Solar announced that it launched a new mounting "Rock-It System" that it would be displaying during Intersolar. Product compliance was determined through testing per UL Subject 2703, which reviews integr...

SkyPower Inks $2.2 Billion Deal for Massive Solar Power Plant in Kenya

Eric Ombok, Bloomberg Kenya’s Energy Ministry and SkyPower Global Ltd. will sign a $2.2 billion agreement on Sunday that paves the way for the Canadian company to develop a 1-gigawatt solar project in East Africa’s biggest economy. The solar pro...

Making a Match: How Solar Companies and Banks Hook Up

Jennifer Runyon The announcements are fairly frequent: SunPower Partners with Admirals Bank for $200 Million Solar Loan Program, Deutsche Bank to Lend $1 Billion for Japanese Solar Projects, Financing Partnerships Drive North Carolina's So...
Tim Murphy has over 20 years of experience delivering PV engineering solutions as distributed power generation in the industrial and built environments. As a Solarbuzz analyst, he specializes in the downstream PV market and nine European countries...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 4
1507REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Presenting at Infocast's Utility Scale Solar Summit 2015

Oct. 21, 2015 4:30-5:15pm Albie Fong, National Director, Solar Frontier ...

Utility Scale Solar Summit 2015

Oct. 21, 2015 4:30-5:15pm Albie Fong, National Director, Solar Frontier ...

5th Annual Hydro Plant Maintenance

Join maintenance professionals to discuss the challenges in maintenance ...

COMPANY BLOGS

Behind Every Good Decision

When something about your business isn’t working, you set out to c...

Clean Energy Patents Maintain High Levels in First Quarter, Solar L...

U.S. patents for Clean Energy technologies from the first quarter of 201...

An Overwhelming Paradox

I’m sure we’re all very familiar with the feeling of being o...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS