Future PV grid integration at modest cost possible, report finds

01. October 2013 | Global PV markets, Markets & Trends | By:  Edgar Meza

A new PV Parity report examines the impact of PV on European electricity systems and assesses the actual costs of grid integration in 11 key EU countries.

Greece solar park

Capacity costs are lower in Southern Europe, where there is a strong correlation between PV output and peak demands.

Large-scale PV penetration in Europe in the next decade at modest costs is possible, according to a report published on Monday by the Imperial College London as part of the European PV Parity project.

The PV Parity project, which is backed by partners from the research and academic sectors, industry and the energy production sector, aims at defining grid parity -- the stage of development of PV technology at which it is competitive with conventional electricity sources in the European Union.

The project focuses on 11 EU countries, Austria, Belgium, Czech Republic, France, Germany, Greece, Italy, the Netherlands, Portugal, Spain and the United Kingdom. The new report analyzes and quantifies PV grid integration costs in the 11 key EU markets with the aim of checking the feasibility of installing up to 480 GW PV by 2030, which would cover about 15% of European electricity demand.

The authors of the report found that large penetration of PV in Europe between 2020 and 2030 can be accommodated at modest costs and not only that it is technically feasible, but also that the costs of implementing the necessary system integration measures are relatively modest.

One of the major findings is that the back-up capacity cost can be an important component of PV integration costs, especially in Northern Europe (approximately €14.50 per megawatt hour). This reflects the lower ability of PV to displace conventional generation capacity compared with Southern Europe where this cost is lower and may be even negative when there is a strong correlation between PV output and peak demands, the report found.

"The grid integration cost varies from country to country. At 2% penetration of PV, the cost varies between - € 50/MWh (in Greece) and €13/MWh. At 18% penetration, the cost increases up to €26/MWh. It can be observed that in general the cost in Southern Europe is lower than the cost in Northern Europe."

Another major cost component of PV integration is the distribution network cost of PV. Reinforcing distribution networks to accommodate PV would cost about €9 per megawatt hour by 2030, according to the report. The cost usually reduces when peak consumption coincides with peak PV production, as it would be the case in Southern Europe.

Additionally, the authors found that the transmission cost linked to the integration of 480 GW PV by 2030 remains modest. In 2020 the cost is estimated circa €0.50 per megawatt hour, increasing to €2.89 per megawatt MWh by 2030.

Balancing costs, which reflect the fact that more generators run part-loaded to provide additional balancing services and reserves due to the uncertainty in PV generation production, will remain modest, at some €1 per megawatt hour by 2030, assuming full integration of an EU balancing market, according to the report.

The study concludes that total system integration cost of PV is relatively modest and will increase to around €26 per megawatt hour by 2030. The report also argues that the applications of Demand Response (DR) or storage solutions can be effective in reducing the integration cost of PV, which could decrease by 20% thanks to DR.


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