What drives the profitability of household PV investments, self-consumption and self-sufficiency?

Bertsch, Valentin and Geldermann, Jutta and Lühn, Tobias (2017): What drives the profitability of household PV investments, self-consumption and self-sufficiency?

Abstract

Many countries introduced subsidy schemes that were successful in incentivising investments into residential solar PV. The resulting growth of the global PV market was accompanied by cost reductions for PV systems, reductions of PV subsidies and, often, increasing electricity retail prices. Along with decreasing costs for battery storages, these developments made self-consumption and self-sufficiency continuously more attractive. However, the profitability of PV-storage systems depends on many factors, including technological, political and geographical aspects. We present a simulation model to identify the most profitable sizes of PV and storage systems from a household perspective and explore what drives the profitability of self-consumption and self-sufficiency. We compare and contrast Germany and Ireland to account for regulatory and geographical differences. Our results show that PV-storage systems are generally profitable in Germany and that, after minor technology cost reductions, this result holds even in the absence of subsidies. In Ireland, such systems are not yet profitable but this may change soon with expected technology costs reductions. The share of electricity demand that will be required from the grid may be reduced to 25-35%. Implications for the electricity retail business and policy makers are discussed including distributional concerns and system efficiency considerations.

• Item Type: MPRA Paper
• Language: English
• Keywords: Solar PV, self-consumption, self-sufficiency, battery storage
• Subjects: C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C63 - Computational Techniques ; Simulation Modeling; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q41 - Demand and Supply ; Prices; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q42 - Alternative Energy Sources; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q48 - Government Policy

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