Grid parity analysis of photovoltaic systems considering feed-in tariff and renewable energy certificate schemes in Hong Kong

Abstract

The Hong Kong government has actively promoted the development of renewable energy with two local utility companies to achieve its renewable energy target. Accordingly, two crucial initiatives, the feed-in tariff (FiT) and renewable energy certificate (REC) schemes, have been launched to boost the installation of renewable energy systems, particularly photovoltaic (PV) systems. However, the efficiency and effectiveness of these schemes on grid parity achievement have not been investigated from the perspectives of different stakeholders. To fill this research gap, this study adopts the levelized cost of electricity (LCOE) models to evaluate the role of FiT and REC schemes on realising the grid parity from the residential PV installers' and utility companies’ perspectives, respectively. As a supplementary indicator, the levelized profit of electricity (LPOE) is applied to investigate the economic profitability. The superiority of this study is to expand a general LCOE model into context-specific LCOE and LPOE models considering different grid parity judgement standards from the two sectors. Through a comprehensive analysis, it is indicated that for residential PV installers, the achievement of grid parity is affected by the government electricity subsidy scheme, the trend of PV system capital cost as well as which utility companies they subscribe. For utility companies, the REC price is found sufficient to compensate the lifetime expenditures on large-scale PV systems. Sensitivity analysis indicates that unit capital cost and annual solar power generation are the most critical factors to reduce LCOE in order to achieve earlier grid parity years.