Webinar - Photovoltaic Grid Parity Monitor for residential consumers
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Webinar - Photovoltaic Grid Parity Monitor for residential consumers

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The Photovoltaic Grid Parity Monitor analyses PV competitiveness with retail electricity prices for residential consumers and assesses local regulation for self-consumption of nineteen cities in ten ...

The Photovoltaic Grid Parity Monitor analyses PV competitiveness with retail electricity prices for residential consumers and assesses local regulation for self-consumption of nineteen cities in ten countries (Australia, Brazil, Chile, France, Germany, Italy, Mexico, Spain, UK, USA).

It is based on a rigorous and transparent methodology and has used real and updated data provided by local PV installers, local PV associations and other reliable players from the PV industry. A specific and in-depth analysis of retail electricity rates for each of the 19 cities is included.

Given that PV Grid Parity represents a unique opportunity to develop a local and sustainable power generation technology in a cost-effective way, this Monitor aims at giving benchmark elements and good practice models to foster the development of this technology.

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Webinar - Photovoltaic Grid Parity Monitor for residential consumers Webinar - Photovoltaic Grid Parity Monitor for residential consumers Presentation Transcript

  • PV Grid Parity Monitor for residentialconsumersFinancial AdvisoryStrategy Consulting Market IntelligencePolicy ConsultingLeonardo ENERGY Webinar Series/ Madrid (Spain)25 June, 2013David Pérez, Partnerdpn@eclareon.comMaría Jesús Baez, Associatemjb@eclareon.comGPM 2nd Issue Residential Segment
  • Platinum sponsors• ECLAREON• Grid Parity Monitor (GPM)- Introduction- Definitions and Methodology- Results- ConclusionsAgenda2
  • Platinum sponsors3• Entry strategies(newgeographies &technologies)• Commercial &businessstrategy• New ventures &businessplanning• EBITDAimprovement• Restructuring• Corporatestrategy• Marketinformation toolsand publicationsfor the RE sector:- PV pricenavigator- Solar Atlas- Trend Report• Organization oftradedelegations andsectorconferences• Commercial duediligence• M&A advisory,coordination &negotiations• Companyvaluation• Target screening& partner search• Equity and debtcapital raising• Investmentopportunities• Expert’s reports• Legal frameworkanalysis• Support in policymaking• Internationalknowledgesharing• Projectmanagement inthe EuropeanUnionStrategyconsultingMarket intelligenceFinancialadvisory / M&APolicy consultingBusinesspromotionRenewableEnergySmartGridsEnergyEfficiencyCOMPANY OVERVIEWINDUSTRY FOCUSECLAREON’s service portfolio includes strategy and policy consulting aswell as financial advisory
  • Platinum sponsors4ECLAREON mainly covers the European, Latin American and US marketsand has permanent offices in Berlin and Madrid (>40 employees) andpartner offices in Bogota, Milan, New Delhi, São Paulo, Santiago andWashington D.C.ECLAREON’s global presencePermanent office Partner office* ECLAREON activityNote: * Partner offices represent partnership agreements with local consultantsCOMPANY OVERVIEWGEOGRAPHIC REACH
  • Platinum sponsors• ECLAREON• Grid Parity Monitor (GPM)- Introduction- Definitions and Methodology- Results- ConclusionsAgenda5
  • Platinum sponsorsPV “grid parity” is the moment when the cost of generating PVelectricity is equal to the price paid for grid electricityFor the sake of simplicitythis report compares PVLCOE with retail electricitypricesIn reality, depending on thelocal auto-consumptionregulation, a part of the PVgeneration might be lost orvalued at a lower rateNote: * Levelized Cost of ElectricitySource: ECLAREON analysisINTRODUCTIONGrid electricity pricePV electricity cost (LCOE*)EUR ct /kWhGrid ParityYearsSimplistic Illustration of PV Grid Parity• Grid electricity is cheaper thanPV-generated electricity- PV needs supportmechanisms (FiT, tax credit,etc.)• PV-generated electricity ischeaper than grid electricity- It is more convenient to auto-consume PV electricity thanto buy electricity from theutility6
  • Platinum sponsorsThe PV Grid Parity Monitor may well be one of the mostcomprehensive analyses of PV grid parity to dateINTRODUCTIONOverview of PV Grid Parity MonitorObjective• To analyze the proximity of grid parity from the viewpoint of a residential consumer- Total final costs of generating PV electricity with a 3kWn/3.3kWp PV system are comparedwith residential retail electricity pricesMethodology• It is based on a rigorous and transparent methodology- This presentation includes a summary of the main assumptions and considerationsGeographicalFocus• Potential markets in Europe: France, Germany, Italy, UK, and Spain• Promising markets outside Europe: Australia, Brazil, California, Chile, and Mexico- This presentation includes a summary of results for LATAM marketsFrequency • It is recurrent: it will be updated every year to show the evolution of PV grid parity proximityInputs• It uses real and up-dated data as inputs, not estimates- Includes turnkey quotations of local PV installers from each of the countries under study• It includes specific and detailed information per country (and city, when applicable)- For example, the discount rate, retail electricity prices, and inflationSource: ECLAREON7
  • Platinum sponsorsThe PV Grid Parity Monitor is sponsored by renowned internationalcompaniesPlatinum SponsorsGold SponsorINTRODUCTIONSPONSORS8
  • Platinum sponsorsThe PV Grid Parity Monitor is supported by relevant partnersPartner AssociationsTechnical PartnersSupported byINTRODUCTIONPARTNERS9
  • Platinum sponsorsLCOE of a PV system refers to the constant and theoreticalcost of generating PV electricity over the PV system lifetimeDEFINITIONS & METHODOLOGY02004006008001.0000 2 4 6 8 10 12 14 16 18 20 22 24 26 28 3001020304050600 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30EUR ct /kWhEUR8,8009,000Indicative Total Cost of a Small-Scale PV SystemPV LCOE of the PV SystemSource: ECLAREON analysis• PV Levelized Cost of Energy (LCOE)accounts for all costs associated with a PVsystem over its life- These may include initial investment, O&M,taxes, debt service, among others• It assumes a constant value per year and isexpressed as cost per kWh- It incorporates total PV electricity generatedover the system’s lifespan• It considers the return required from theinvestment, to discount future costs (andproduction) to presentInitial InvestmentOperating ExpensesKey:10
  • Platinum sponsorsFor a specific PV system, PV LCOE is fixed as soon as the PVsystem is built, but grid electricity prices are likely to increaseLCOE of PV Technology vs. Grid Electricity Price0510152025302009S1 2009S2 2010S1 2010S2 2011S1 2011S2 2012S1YearsEUR ct/kWhLCOE of PV technologyGrid electricity price0102030405060701 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30EUR ct/kWhYears of operation of the PV systemGrid electricity priceLCOE of a specific PV systeminstalled in S1 2012LCOE of A SPECIFIC PV System Installed S1 2012 vs. Grid Electricity PriceSource: ECLAREON analysisDEFINITIONS & METHODOLOGY11
  • Platinum sponsors120,00,20,30,50,60,8- +Regulatory support to PV self-consumption-+GridParityProximityAustraliaBrazilChileFranceGermanyItalyMexicoSpainUKCaliforniaNote: * Data of January/February 2013Source: ECLAREON analysisRESULTSGrid Parity proximity and regulatory support (mainly via netmetering or net billing) vary significantly from country to countryPositioning Matrix of the countries analyzed
  • Platinum sponsorsRESULTSAUSTRALIAIn Australia, full grid parity has been reached in the residentialsegmentNote: * Compound Annual Growth RateSource: ECLAREON analysisAUD ct/kWhGrid tariffsPV LCOE (avg.)CAGR*S109-J/F´13-25.8%Past evolution of grid electricity price and PV LCOE(SYDNEY)• In Australia, full grid parity hasbeen reached mainly as a resultof the following trends- The important decreaseexperienced by PV LCOE inthe last few years- A significant increase in retailelectricity prices• The net-metering system in NSWfosters the self-consumptionmarket in an effective way, as thetariff received for the excessgeneration is lower than the gridelectricity priceAssessment of Australian regulatoryframework for PV auto-consumption130204060801001202009S12009S22010S12010S22011S12011S22012S12013J/FStandard TariffPeak TariffOff-Peak Tariff17.1%18.5%21.2%
  • Platinum sponsorsRESULTSBRAZILIn some parts of Brazil, PV technology is close to competitivenesswith retail electricity prices in the residential segmentNote: * Compound Annual Growth RateSource: ECLAREON analysisBRL ct/kWhStandard TariffGrid tariffsPV LCOE (avg.) -26.1%1.4%BRL ct/kWhStandard TariffGrid tariffsPV LCOE (avg.) -26.2%-4.4%Past evolution of grid electricity price and PV LCOE(SAO PAULO)Past evolution of grid electricity price and PV LCOE(ITACARAMBI)• PV is close to competitivenesswith retail electricity prices insome parts of the country suchas Itacarambi- A reduction of customs dutiesapplicable to imports of PVequipment would accelerategrid parity arrival in Brazil• The recently approved net-metering regulation seems, atfirst glance, an excellentinstrument to foster the PV auto-consumption marketAssessment of Brazilian regulatory frameworkfor PV auto-consumption140501001502002503003502009S1 2010S1 2011S1 2012S1CAGR*S109-J/F´13CAGR*S109-J/F´130501001502002502009S1 2010S1 2011S1 2012S1
  • Platinum sponsorsRESULTSCHILEIn Chile, a potential PV auto-consumption market could arise insome locations such as Copiapó, where PV is already competitiveCLP/kWhStandard TariffSurcharge tariff (Winter)Grid tariffsPV LCOE (avg.) -22.8%-11.9%-10.4%CLP/kWhStandard TariffSurcharge tariff (Winter)Grid tariffsPV LCOE (avg.) -22.8%-8.0%-5.8%Past evolution of grid electricity price and PV LCOE(SANTIAGO)Past evolution of grid electricity price and PV LCOE(COPIAPÓ)• Grid Parity has been reached inNorthern Chile, whilst in otherlocations with lower irradiationonly partial grid parity has beenreached• The net billing regulation, whenimplemented, is likely to generatea PV auto-consumption market inlocations such as Copiapó region- Further analysis once thetechnical code is published isnecessary to determine if thenet billing regulation willsuffice to foster the marketAssessment of Chilean regulatory frameworkfor PV auto-consumptionNote: * Compound Annual Growth RateSource: ECLAREON analysis15CAGR*S109-J/F´13CAGR*S109-J/F´130501001502002503003502009S1 2010S1 2011S1 2012S101002003004002009S1 2010S1 2011S1 2012S1
  • Platinum sponsorsRESULTSMEXICOIn Mexico, while for DAC consumers PV is already competitive, forstandard consumers it is still far from competing with grid pricesMXN/kWhStandard TariffDAC TariffGrid tariffsPV LCOE (avg.) -17.5%7.5%-6.9%MXN/kWhStandard TariffDAC TariffGrid tariffsPV LCOE (avg.) -17.5%7.5%2.9%Past evolution of grid electricity price and PV LCOE(MEXICO CITY)Past evolution of grid electricity price and PV LCOE(HERMOSILLO)• An excellent opportunity exists forPV technology among DACconsumers- DAC consumers arehouseholds with high electricityconsumption (about 500,000potential clients in Mexico)• The Medición Neta regulationalready allows PV auto-consumersto feed part of their production intothe grid to obtain credits (in kWh)used to offset their electricity billAssessment of Mexican regulatory frameworkfor PV auto-consumptionNote: * Compound Annual Growth RateSource: ECLAREON analysis16CAGR*S109-J/F´13CAGR*S109-J/F´1302468102009S1 2010S1 2011S1 2012S1012345672009S1 2010S1 2011S1 2012S1
  • Platinum sponsorsRESULTSSPAINGrid parity has been reached in Spain, but regulative support isstill needed to seize upon the opportunity to develop the marketEUR ct/kWhOff-Peak TariffStandard TariffPeak TariffGrid tariffsPV LCOE (avg.) -18.4%10.4%10.1%3.2%EUR ct/kWhOff-Peak TariffStandard TariffPeak TariffGrid tariffsPV LCOE (avg.) -18.6%9.1%8.8%1.9%Past evolution of grid electricity price and PV LCOE(MADRID)Past evolution of grid electricity price and PV LCOE(LAS PALMAS)• Both in Madrid and in the CanaryIslands, PV is already competitiveagainst the standard (no TOU)retail electricity price• Grid Parity represents an excellentopportunity to develop a cost-effective and sustainable PVmarket based on auto-consumption in Spain- For this to happen, it is essentialthat the Spanish Governmentpublishes the Balance Netoregulation (already drafted)Assessment of Spanish regulatory frameworkfor PV auto-consumptionNote: * Compound Annual Growth RateSource: ECLAREON analysis17CAGR*S109-J/F´13CAGR*S109-J/F´130102030402009S1 2010S1 2011S1 2012S10510152025302009S1 2010S1 2011S1 2012S1
  • Platinum sponsorsRESULTSGERMANYDespite the low irradiation levels in Germany, PV grid parity hasalready been reached in MunichEUR ct/kWhStandard TariffPeak TariffGrid tariffsPV LCOE (avg.) -17%6.3%8.8%EUR ct/kWhOff-Peak TariffStandard TariffPeak TariffGrid tariffsPV LCOE (avg.) -17%2.5%3.8%5.9%Past evolution of grid electricity price and PV LCOE(BERLIN)Past evolution of grid electricity price and PV LCOE(MUNICH)• Low PV installation prices, a lowdiscount rate and high retailelectricity prices compensate lowirradiation levels for Germany toreach Grid Parity in the residentialsegment• The EEG FiT scheme fosters theself-consumption market in anefficient way, as FiTs for small-scale systems are currently lowerthan the retail electricity priceAssessment of German regulatory frameworkfor PV auto-consumptionNote: * Compound Annual Growth RateSource: ECLAREON analysis18CAGR*S109-J/F´13CAGR*S109-J/F´1301020304050602009S1 2010S1 2011S1 2012S1010203040502009S1 2010S1 2011S1 2012S1
  • Platinum sponsorsCONCLUSIONSMain conclusions• Since the first issue of the residential GPM (2nd half 2012), almost every country improved its gridparity situation- This is due mainly to the reduction of the PV LCOE, which has been caused by a reduction in thecost of PV systems, driven by lower equipment prices (across the board) and increased competitionin emerging markets (like Brazil, Chile or Mexico)• Results show that grid parity has been reached in several of the cities analyzed- This is the case of Copiapó in Chile and the segment of DAC consumers in Mexico• Even if Grid Parity (defined as the moment when PV LCOE equals retail electricity prices) has beenreached, regulatory cover is still necessary to foster the PV self-consumption market- The Spanish case illustrates this rule very well: grid parity has been reached but with nogovernmental support the market has failed to develop• As 100% self-consumption is not likely to happen for a residential consumer, a proper valuation ofthe excess of energy has to be performed to properly understand the business case of a specificconsumerSource: ECLAREON19
  • Platinum sponsorsPV GRID PARITY MONITORAvailable @http://www.leonardo-energy.org/http://www.eclareon.eu/en/GPM20