Solar is becoming a "game changer" for utilities, due to its decentralized model says Roland Berger in its report, "Solar PV could be similar to the shale gas disruption for the utilities industry." "The utilities role of centralized production will evolve from delivering volumes to providing access to electricity capacity," state the strategy consultants.
Predictions are that by 2030, solar could account for 12%, or 147 GW of Europes total electricity production. "In Germany, Greece and Italy, solar PV capacity will already exceed baseload demand by 2025. It could even exceed 50% of peak-load demand, making export and storage necessary to deal with the market situation," continues the report.
Opportunities
While there are challenges for utilities in terms of preparing for both lower energy transition volumes and peak loads, new opportunities will be available for them, in the form of energy delivery and services.
"New solutions will have to be developed that can deliver consistent electricity to meet demand. Utilities, in redefining their business models to match this new state of affairs, can position themselves to play an important role in matching energy supply and demand in the decades to come," says Roland Berger.
Specifically, power plants must become more adaptive to supply and demand variation; plan for decentralized production; base pricing models on capacity, not production; and match power demand needs to supply.
Grid operators, meanwhile, will have to adapt their networks to accommodate the decentralized power supply. "Installation of smart meters and other network measuring systems will become crucial to efficient grid operations and the delivery of security of supply," continues the report.
Decreased costs = increased uptake
Decreasing costs have seen solars uptake increase, with PV module prices falling from around US$100/Wp in 1975, to under $0.60/Wp in 2014. Coupled with this are falling PV system prices which, says Roland Berger, have decreased between 15 and 23% between 2010 and 2013. Deutsche Bank estimated that total system costs could fall another 40% by 2017.
"Depending on the application and region, a solar PV system at the end of 2013 cost between USD 1.29/Wp for a utility ground-mounted system and USD 2.00/Wp for a residential rooftop system in Europe," explains the report.
The levelized costs of electricity (LCOE) have also continued to fall, with costs said to be at $119 to $318/MWh for utility-scale systems and $135 to 539/MWh for residential applications.
Meanwhile, in Germany, say Roland Berger, the retail price of solar energy is 17 cents/kWh higher than the feed-in tariff, thus rendering the purchase of a solar PV system "a viable alternative."
Overall, continued falling prices will mean that solar PV will become profitable, even without subsidies, which will help to stabilize the market.
Regulation
To encourage large-scale uptake, further cost reductions are needed. "The price of decentralized solar PV electricity injected into the grid greatly determines the profitability of the household system," says the report, adding that feed-in tariffs lower than LCOE reduce system profitability. Taxes and capacity fees for grid access also impact costs. "If solar PV is taxed or fixed elements are introduced, lower LCOEs will be required to ensure solar PVs attractiveness," it further explains.
As consumers generally do not need all of the solar energy they produce around 20 to 30% excess energy fed into the grid and grid connection will need to be regulated. Regulation is expected to "temporarily discourage" solar uptake; however, this will negativity is expected to disappear once wholesale grid parity is reached.
Roland Berger believes three forms of regulation will arise: feed-in prices for households; access to grid capacity; and taxes and levies on self consumption.
Storage technology
To increase the self-consumption ratio, and thus solars attractiveness for households, such solutions as energy storage and demand-side management need to be widely employed.
Currently, most battery systems cost around $800/kWh (although Tesla has said its Powerwall system will be more like $500/kWh after inverter costs and installation). By 2025, says Roland Berger, costs could fall to $200/kWh.
"Currently, battery storage would add another USD 0.14/kWh to the LCOE, but this is expected to drop to only USD 0.02/kWh within five years. In Germany, in fact, household solar PV and battery storage will reach grid parity by 2016," says the report.
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