Abstract
This paper presents a study that analyses the effect of financing costs on grid parity in photovoltaic (PV) installations by applying a probabilistic methodology. Three different case studies, located in Spain, have been considered, with 500 kW, 50 kW and 5 kW grid-connected PV generators. The technical and economic calculations were performed, considering the interest rate, yield across the Spanish geography, and PV module cost as parameters. The Monte Carlo method was applied to consider the full probabilistic range of values given to the different variables. The goal of this study was to determine, for the studied cases, the levelised cost of energy (LCOE) and the internal rate of return by considering realistic values of the variables. A success rate parameter was calculated, which determined the likelihood of the number of times that the LCOE was below the retail cost of electricity. All the cases were evaluated by applying 10,000 iterations, considering the standard deviations and means defined.
Highlights
When grid parity for photovoltaic (PV) installations is achieved, all the generated electrical energy can be sold at the same cost at which it is purchased from the grid [1]
To study properly how grid parity can be achieved, several aspects need to be taken into account, such as the possible subsidies or special economic regimes of the PV generators and the financing costs of this type of installation
With regard to possible special economic subsidies or economic regimes of PV plants, as part of the ongoing challenge to achieve targeted carbon emission reductions set by European countries, governments in Europe introduced in some cases a mechanism for incentivising renewable energy production via the use of the feed-in tariff (FiT) [2]
Summary
When grid parity for photovoltaic (PV) installations is achieved, all the generated electrical energy can be sold at the same cost at which it is purchased from the grid [1]. To study properly how grid parity can be achieved, several aspects need to be taken into account, such as the possible subsidies or special economic regimes of the PV generators and the financing costs of this type of installation. It is important to note that PV is placed firmly as one the most encouraged sources of energy generation [5], where profitability ratios, financial conditions, and the quantification of risks are all clearly defined [6]. This is most advantageous compared to the current fluctuating economy [7].
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