Grid abandonment potential of photovoltaic and storage-based system in China

Abstract

Nowadays, owing to the price and technological advantages, photovoltaic (PV) and battery energy storage systems (BESS) have rapidly developed in China. The self-production and consumption of PV and BESS are causing consumers to abandon the power grid. However, this potential of grid abandonment in China's power sector remains unclear. Therefore, this paper deeply investigates the interaction between grid abandonment and the distribution price of utility, namely the utility death spiral to explore the potential in China. A method based on the innovation diffusion theory is proposed to reveal the causal loop of the death spiral. The Bass diffusion model, an approach of innovation diffusion theory, is applied to estimate the installations of rooftop PV systems and hybrid PV-BESS. After that, the distribution price, grid utilization level, and utility recovery cost based on China’s price structure are evaluated. Sensitivity analyses are conducted to investigate several significant inner drivers of the rooftop PV systems and hybrid PV-BESS expansions. Results indicate that the utility death spiral is unlikely to occur in China with low-solar radiation, while it will occur in a high-solar radiation scenario with 57% penetration of rooftop PV systems. Compared with the return rates of the utility requirement, the cost reduction of PV and BESS, and even a 1% growth in the retail price cause the death spiral. When the death spiral occurs, the permeations of PV and BESS in the cost reduction scenario are 51% and 56%, while the permeations are 52% and 51% in the scenario of 1% growth of the retail price. Additionally, several possible solutions to avoid the death spiral are discussed, such as discriminatory prices, business models, price mechanisms, and support mechanisms.