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Impact of fixed charges on the viability of self-consumption photovoltaics

Abstract:

Due to its zero-marginal-cost, the high penetration of renewable energy sources in the electricity markets threatens incumbents’ business models who are gradually shifting towards fixed power charges instead of the traditional energy charges. The purpose of this study is to assess the impacts of these fixed power charges on the economics of PV systems under self-consumption schemes. Using real demand and generation data, simulations include detailed computation of annual billing savings, payback-time, self-consumption and self-sufficiency of a dwelling coupled with PV-battery system. A range of PV array and battery sizes are explored for different storage control strategies. Billing scenarios include a) only energy charges, b) Portuguese case (high energy charges and low fixed charges), c) Spanish case (low energy charges and high fixed charges), and d) only fixed charges. Results show that fixed charges require adding storage to residential PV systems. In spite of battery relative high costs, results also show that photovoltaics can be profitable with payback times below 10 years in all scenarios, as long as appropriately sized and with the suitable storage control strategy.