Grid parity monitor

Grid parity for commercial PV self-consumption

Graphic: Solarpraxis AG/Harald Schütt

Grid parity for commercial PV self-consumption

Grid parity: Grid parity is an economic reality for the commercial segment in major European markets such as Germany and Italy, says David Pérez, Managing Partner of the Eclareon Madrid and Milan office.

Eclareon has released a new issue of its Grid Parity Monitor (GPM) series that is exclusively focused on the commercial sector (30 kW PV systems) in seven different countries: Brazil, Chile, France, Germany, Italy, Mexico, and Spain. This latest issue of the GPM analyzes the cost-competitiveness of photovoltaic technology with retail electricity prices in the commercial segment and assesses local regulations for self-consumption in each country. With this aim, the GPM makes some simplifying assumptions, as follows:

  • The commercial electricity consumer achieves a good match between electricity consumption and PV generation, enabling 100% on-site (instantaneous) self-consumption. This is the case with commercial consumers with peak electricity demand during the day.
  • The savings on the electricity bill by PV self-consumption only consider the avoided costs for the grid electricity replaced by PV, excluding capacity cost reductions or other such savings.

According to the study, the cost of PV generation as expressed by the LCOE (Levelized Cost of Electricity) in the commercial segment decreased in all of the cities analyzed in the second half of 2013: from a 24% annual decline in Marseille (France) to 11% in Munich (Germany) thanks to declining installation costs (see Figure 2).

Despite the general improvement of PV economics, in most Latin American countries high installation prices still prevent PV technology from being competitive against grid electricity. Moreover, the majority of these countries have been facing electricity price decreases.

In contrast, most European countries have reached grid parity, with France as the only exception of the analyzed countries, as high irradiation levels and relatively low installation prices are offset by low electricity rates in the country. Figure 1 illustrates the situation in Marseille.

The GPM adds that the overall results for the commercial sector are not as positive as those achieved for the residential segment. In essence, lower system prices 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.

Regulatory support is vital for the development of the market. In countries such as Germany and Brazil, policies encourage self-consumption. On the other side of the spectrum, poor regulation can hinder the self-consumption market, as is the case of Spain, where the latest policy proposal (still to be passed) includes a tax on on-site self-consumption and no compensation is allowed for the excess PV generation fed into the grid.

Figure 1 shows the positioning of each country in terms of grid parity proximity and regulatory support. In countries such as Italy and Germany, with proper regulation and at grid parity in the commercial sector, PV systems for self-consumption represent a viable, cost-effective, and sustainable power generation alternative.

The GPM is an independent analysis, which is updated regularly and uses a rigorous and transparent methodology. The full version of the monitor, which is sponsored by SunEdison, BayWa and Gesternova, can be ordered online free of charge:

Author: David Perez, Eclareon

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