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Can photovoltaic systems be profitable in urban areas? Analysis of regulation scenarios for four cases in Valencia city (Spain)

Abstract:

Costs of photovoltaic systems have fallen over the last decade, while the energy prices have risen. As a result, PV system is being proposed as a cost-effective option for power generation in the built environment. However, some authors consider that better regulatory support is still needed to deploy the PV potential in cities. In this research, four illustrative cases, analyzed under five scenarios, show that the latter could be the case in a Mediterranean city with high annual solar radiation, such as Valencia. Unlike most previous research based on statistics, this research uses real data and real market equipment information to develop the analysis. The Software HOMER is used to simulate the performance of the study cases. The findings show how the regulation's change would improve the viability of these urban renewable systems. However, although the four cases are technically sound, further changes in the regulation are found necessary to be economically viable. The results show one of the main limitations to reducing the LCOE is the impossibility of selling energy when revenues are greater than purchases (Current regulation in Spain). Without such limitation, the LCOE would be reduced (cases 1 and 3 reduces LCOE from 17.5 to 15.2 c€/kWh and from 18.5 to 17.3 c€/kWh, respectively). With a net metering system not yet permitted in Spain, the payback of the investments would be reduced by one-third. Finally, recommendations for regulatory development are proposed to meet the expectations for the deployment of PV generation potential.