The latest issue of the GPM, sponsored by BayWa, evaluates the cost-competitiveness of photovoltaic technology with retail electricity prices in the commercial segment and assesses local regulations for self-consumption in each country.
As opposed to residential electricity consumers, commercial consumers can attain a good match between electricity consumption and PV generation (i.e. consumers with peak electricity demand during the day). Therefore, 100% on-site (instantaneous) self-consumption is possible, reducing the need for solutions to manage PV excess generation (such as storage systems or net metering mechanisms).
Although the relevant savings resulting from PV self-consumption can include not only variable costs (avoided costs from grid electricity) but also fixed costs (such as capacity cost reductions), the GPM considers only the former savings. As such, it may offer a conservative stance on grid parity, so the authors of the report stress that a case-by-case analysis is needed to assess the economics of each specific situation.
According to the preliminary results of the study, in the first semester of 2017, there has been a further improvement of PV economics:
- The decrease in grid electricity prices experienced in the past by several LatAm countries has reversed again in 2016-2017, especially in Chile, Germany and Mexico. This has positively impacted the competitive position of PV in those countries.
- In the other analyzed countries the grid electricity prices have stayed stable or decreased in 2016-2017. The LCOE of PV installations has not changed significantly.
Even if a high self-consumption ratio can be attained in the commercial segment, the regulatory support is still vital for the development of the market. In countries such as Chile 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 law has introduced a fee on on-site self-consumption and no compensation for the excess PV generation fed into the grid, if the excess electricity is not sold to the market through an electricity trader.
The matrix below shows the positioning of each country in terms of grid parity proximity in the commercial segment and regulatory support:
Figure 2: Positioning Matrix of the countries analysed (preliminary results)
In countries such as Germany, Italy, and Chile all at grid parity and with a proper regulation, PV systems for self-consumption represent a viable, cost-effective, and sustainable power generation alternative.