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

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

RELATED ARTICLES

The Rapid Rise of Residential Energy Storage

Markus Elsässer, Solar Promotion International (Intersolar) Energy storage is heralded as the critical technology that will make widespread adoption of renewable energy possible. Storage bottles sunlight, addressing a key drawback to solar energy — that it can’t provide electricity ...

Testing Heats Up at Sandia's Solar Tower

Rebecca Brock, Sandia National Lab Researchers at Sandia National Laboratories are working to lower the cost of solar energy systems and improve efficiencies in a big way, thanks to a system of small particles. This month, engineers lifted Sandia’s continuou...

Advanced Energy Retreats from Solar Inverter Market

Cormac Gilligan, IHS Technology US inverter supplier Advanced Energy yesterday announced it would wind down its solar inverter business having failed to attract a buyer for this part of its business. This follows intense competition and price pressure due...

Behavioral Economics and the Solar PV Industry

Paula Mints Behavioral economic theory holds that human interactions are complex and that economic motivations include nuance beyond that of maximizing utility. This is certainly true of the global solar industry as throughout its hist...
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 3
1505REW_C11

STAY CONNECTED

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

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Green Sports Alliance Summit

The annual Green Sports Alliance Summit is the world’s largest and...

NFMT Orlando

NFMT Orlando is a trade show and educational conference for facility pro...

SAP for Utilities

The SAP for Utilities conference is the most comprehensive SAP for Utili...

COMPANY BLOGS

Everything You Need to Know About Intersolar 2015

The Intersolar North America exhibition and conference are just two week...

Renewables make huge strides globally in 2014

Renewable sources of energy are making an increasing impact on the globa...

LSX welcomes companies to the next generation of office space

Silicon Valley sports a brand new LEED Platinum standards...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS