Self-consumption: The cornerstone of the PV revolution


The most widespread public opinion holds that the self-consumption of electricity is beneficial for consumers and the electrical system. Thanks to the outreach of organizations such as Spanish solar association UNEF, self-consumption has a good public image. The proposal for a new Royal Decree in Spain to regulate self-consumption – made public a few weeks ago – has been received as positive news and was welcomed by AleaSoft.

Currently, self-consumption also has a central role in the energy sector due to its good growth prospects in the coming years, favored by new regulation. So much so, that this year’s GENERA 2019 fair has it as a central theme – A new scenario for self-consumption – with several fora and technical conferences on the topic. At the fair, which will take place between Tuesday and next Friday in Madrid, UNEF will organize two technical conferences on self-consumption: success cases and technological challenges.

The PV association will also organize, next Friday, a technical conference on financing PV projects in which AleaSoft will participate with the presentation: The price curve in the new reality of solar photovoltaic energy projects.

Self-consumption, at least in its most popular domestic variant, using PV panels, uses renewable energy. The ecological transition towards electricity production that is increasingly free of polluting emissions is not possible, says AleaSoft, without the participation and widespread introduction of self-consumption in industries and households.

At the same time, self-consumption contributes to the decentralization of electricity production and gives more prominence to consumers, who can not only manage electricity demand but also self-produce part of the electricity they need and even sell surplus energy. Currently, the costs of a PV installation for self-consumption have reached values more affordable for some small industries, communities and individuals.

Obviously, costs depend on the size and power of each installation, which in turn will depend on power and energy needs and the fraction of consumption to be self-produced. With a PV self-consumption installation costing less than €1,000, an important part of the consumption of the most common households can be covered. To generate the consumption demand of a typical house – and sell any surplus – the costs go up to at least €3,000. If what is intended is to achieve autonomy from the grid, incorporating a storage system with batteries and increasing the cost to €10,000 can result in autonomy of 80% or more.

Industries can afford larger investments and usually have more surfaces for the installation of panels, so the cost per kWp will be lower and the investment more efficient. In such cases, being able to sell surplus energy and become a producer will be an option to amortize an installation more quickly.

Self-consumption, when properly organized collectively, makes the idea of self-sufficient islands realistic, whether in residential complexes or small cities that would, in most cases be power exporters to the grid.

For domestic and industrial self-consumers the electricity consumed – whether from the grid or self-generated – will have a lower cost per kWh, and will tend to replace other electricity fuels, such as gas in homes and industries, or gasoline in transportation.

Another aspect that will significantly favour the expansion of self-consumption is the reduction in cost of energy storage systems. The storage of electricity with batteries is the perfect complement for a self-consumption installation that enables generators to match the production curve – centered on the central hours of the day – with the demand curve, which is normally displaced towards the evening.

For larger self-consumption installations in industrial facilities, or even for PV production plants, other storage systems are more suitable. This is the case with hydrogen, which can store a large amount of energy for long periods, and can be reconverted into energy without waste.

Self-production and self-consumption of electricity bring several benefits to grids too. If self-production is mainly from renewables, it boosts decarbonisation of electricity and is a key element of achieving the climate change goals of renewable production set for 2030 and 2050. Those goals imply a share of renewable energy use of 32% by 2030 that, according to AleaSoft, will be unachievable without self-generation, mainly from PV.

Self-consumption reduces the demand on the grid and the wholesale electricity market, reduces energy imports and increases a country’s energy independence. That contributes to a lower amount of energy circulating through the transmission network, which decreases energy losses.

In addition, a reduction in energy demand leads to a decrease in the marginal market price. The paradox of self-consumption is that as the amount of self-consumed energy increases, the market price tends to decrease, making self-consumption less profitable than consumption from the grid.

When self-consumption reaches a significant volume, management of the electrical system becomes more complex because it is necessary to correctly predict in real time both the amount of energy that is not going to be consumed from the grid, and the surplus from self-consumption that is going to be fed back into the network.

Poor energy management at the level of low voltage networks has greater consequences in terms of losses than is the case for high voltage grids. Something that, in principle, could mean greater efficiency due to lower losses, may end up causing the opposite. The increase in self-consumption will lead to new ways of managing the network and surplus energy in a more dynamic and intelligent way and technologies based on blockchain are called to play an important role. With them, the management of distributed demand and production will be carried out in a decentralized, transparent and consensual manner in real-time.

The Iberian peninsula has a robust electricity system that allows it to have a perfectly coupled market between Spain and Portugal for around 95% of the time. This network will be able to absorb the expected increase in self-consumption in the years ahead, but PV self-consumption in Iberia will have a great north-south asymmetry, due to the amount of incident solar radiation and naturally available solar resource.

This asymmetry will compensate the historical asymmetry between the production of electricity – traditionally concentrated in the north with large water reservoirs and gas and coal power plants – and consumption, which is higher in the south, due to its larger population. That causes a flow of electricity from north to south that, when congested, can cause technical restrictions.

With greater PV production from self-consumption and large solar in the south, due to the greater number of hours of sunlight and incident radiation, network congestion will tend to be reduced and, at the same time, more wealth will be created in areas that historically have been less favored by industrialization.

There will come a time when a point of equilibrium is reached where self-consumption means a benefit for the electricity system without increasing too much its management costs. According to AleaSoft, we are still far from that point and there is enough room for self-consumption to expand without problems.

Source: AleaSoft Energy Forecasting.