An economic assessment of distributed solar PV generation in Sweden from a consumer perspective – The impact of demand response

Abstract

We present an economic assessment of the impacts of Demand Response (DR) and pricing schemes on the conditions for distributed solar photovoltaics, with the focus on individual households. An optimization model has been developed that minimizes the electricity cost for individual households with the option of dispatching DR loads. DR of appliances and hydronic heating (electrical water heating for both space heating and hot water) are investigated, as well as the effects of applying a monthly, hourly or net metering pricing scheme for selling excess generated electricity and a tax reduction scheme for electricity sold to the grid.We show that for Swedish conditions a monthly net metering pricing scheme would result in the largest PV installations per household (median rated capacity of 4.2 kWp/household). The use of the tax reduction scheme reduces the installation per household (2.1 kWp/household), but with an installation being profitable for a larger fraction of the households. Furthermore, the tax reduction scheme retains an incentive for engaging in DR. The use of hydronic DR can support the same installations sizes as the tax reduction scheme, whilst Appliance DR is shown to have only a low impact on the profitability of a PV installation.