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WHAT IS PV GRID PARITY?

WHAT IS PV GRID PARITY? A CONTRIBUTION TO THE DISCUSSION ABOUT A FREQUENTLY USED BUT RARELY UNDERSTOOD TERM Institutions , Efficiency and Evolving Energy Technologies 34st IAEE International Conference Stockholm 22.06.2011. Lars Dittmar | TU Berlin | lars.dittmar@tu-berlin.de

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WHAT IS PV GRID PARITY?

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  1. WHAT IS PV GRID PARITY? A CONTRIBUTION TO THE DISCUSSION ABOUT A FREQUENTLY USED BUT RARELY UNDERSTOOD TERM Institutions, Efficiency and Evolving Energy Technologies 34st IAEE International Conference Stockholm 22.06.2011 Lars Dittmar | TU Berlin | lars.dittmar@tu-berlin.de Johannes Henkel | TU Berlin | johannes.henkel@tu-berlin.de Niels Ehlers | 50 Hertz| niels.ehlers@50hertz-transmission.net www.ensys.tu-berlin.de

  2. Outline • Past and present of the German PV Market • Grid Parity: a definition by the PV industry • Proposed definitions for Grid Parity • Simulations for solar PV in German Households • Conclusions

  3. Development of the German PV market Main Facts: • Renewable Energy Sources Act (“EEG”, 2000, 2004, 2009) • By end 2010: ~850 thousand PV-installations and 17,3 GWp installed capacity ≈ 44% of worldwide installed capacity • Average solar yield 900 kWh/kWp • PV share of electricity generation in 2010 ≈2% Sources: Tennet, Amprion, ENBW and 50Hertz 2011

  4. Feed-in Tarrif versus electricity generating costs of roof-mounted PV systems up to 100 kWp[800-1000 kWh/kWp | FiT<30kWp | Lifetime=20a | interest=5-8%] • Sources: Solar Price Index, German Solar Industry Association 2011; own calculations

  5. Annual PV capacity additions between 2000 and 2010 vs. internal rate of return for <30kWp roof-mounted PV system [ 900 kWh/kWp| FiT <30kWp | Lifetime=20a] • Sources: Solar Price Index, German Solar Industry Association 2011; own calculations

  6. Grid Parity definition by the PV industry • European Photovoltaic Industry Association (EPIA, 2011): • “Grid parity means that, for consumers, photovoltaic electricity will be cheaper than the retail electricity price. […] • Grid parity (competitiveness with retail electricity prices) will be reached progressively from 2010 onwards in several European markets” (European Photovoltaic Industry, 2011) • However this definition implicitly assumes, that the design of the PV system is such that a 100% own consumption is realized. Source: German Solar Industry Association

  7. Proposed definitions / levels of Grid Parity

  8. (1) Simple grid parity:Household electricity prices versus electricity generating costs of roof-mounted PV systems up to 100 kWp[800-1000 kWh/kWp | Lifetime=20a | interest=5-8%] • Sources: Solar Price Index, German Solar Industry Association 2011; BDEW 2011; own calculations

  9. Simulation of household PV supply and electricty demand • „Standard Household“ with: • Electricity demand of 3500 kWh • Synthetic load profile with a resolution of 15 minutes (VDEW H0) • PV System: • PV generation profile with a resolution of 15 minutes • System capacities: 1 kWp to 19,4 kWp (25-500% of demand) • Storage: • Lead Acid Battery • Storage volumes: 1-20 kWh

  10. Core Assumptions

  11. (2) +(3) a) Advanced grid parity:Cost of PV electricity depending on size of storage for different sizes of PV installation

  12. (2) +(3) b) Advanced grid parity:Cost of PV electricity depending on size of storage for different sizes of PV installation

  13. PV own consumption and storage size

  14. Solar PV fraction and and storage size

  15. Storage Operation Storage Cycles Storage Costs

  16. Conclusions • Simple Grid Parity will probably be reached quite soon. However, this doesn’t mean that the feed-in tariff law can be abolished nor that PV from this moment on contributes to lower overall electricity generation cost. • Only if advanced Grid Parity conditions are met, PV will become competitive. However, it is firstly uncertain if pure cost parity is enough for self-sustained market growth and secondly also other framework parameters may change (e.g. loan conditions without FiT, grid fees based on max. load demand). • Without countermeasures, self-sustained market growth in an advanced Grid Parity situation will lead to tremendous changes in the electricity system. Households with PV systems will more or less only demand grid electricity in winter days. • What is the feedback of the system and the regulators in such a situation?

  17. Thank You!

  18. Backup

  19. Core Assumptions

  20. Annual PV capacity additions between 2000 and 2010 vs. Simple Payback of roof-mounted PV systems up to 100 kWp[900 kWh/kWp]* • Sources: Solar Price Index, German Solar Industry Association 2011; own calculations

  21. German PV Market Segmentation Sources: German TSO’S in accordance with § 52 EEG

  22. Retail (end-user) energy prices for households in Germany

  23. Retail (end-user) energy prices for households in Germany 2011 Generation & Retail Grid fees concession Taxes EEG levy taxes and other levies 46% Generation & End - User Price Distribution in 2011: 25 € ct/kWh 54%

  24. Prices and Feed-in Tarrifs for roof-mounted PV systems up to 100 kWp • Sources: Solar Price Index, German Solar Industry Association 2011

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