Abstract
The profitability of investments in photovoltaics (PVs) and batteries in private households depends on the market price of electricity, which in turn is affected by the investments made in and the usage of PVs and batteries. This creates a feedback mechanism between the centralised electricity generation system, and household investments in PVs and batteries. To investigate this feedback effect, we connect a local optimisation model for household investments with a European power generation dispatch model. The local optimisation is based on the consumption profiles measured for 2104 Swedish households. The modelling compares three different scenarios for the centralised electricity supply system in Year 2032, as well as several sensitivity cases. Our results show total investment levels of 5–20 GWp of PV and 0.01–10 GWh of battery storage capacity in Swedish households in the investigated cases. These levels are up to 33% lower than before market feedback is taken into account. The profitability of PV investments is affected most by the price of electricity and the assumptions made regarding grid tariffs and taxes. The value of investments in batteries depends on both the benefits of increased self-consumption of PV electricity and market arbitrage.
Highlights
Distributed generation in the form of solar photovoltaics (PVs) in combination with battery storage has the potential to be an important part of a future sustainable electricity system
High usage of PVs and batteries at the residential level could be crucial for the transition to a sustainable electricity system, it could have a disruptive effect on the functioning of the electricity system and the market through, e.g., an increased need for fast-ramping generation capacity and restructuring of distribution grid tariffs [3,4]
The modelling is performed for Year 2032 and the capacity mix used in the dispatch model is derived using the ELectricity INvestment (ELIN) model
Summary
Distributed generation in the form of solar photovoltaics (PVs) in combination with battery storage has the potential to be an important part of a future sustainable electricity system. Koskela et al [11] investigate the economic incentives for investing in PV-battery systems for both apartment buildings and detached houses in Finland given different PV costs, battery costs and electricity tariff structures They use an hourly market-price-based tariff based on day-ahead area prices for Finland in the Nordic electricity market and different tariffs for the distribution grid costs, but do not account for any feedback between decisions of households and the market. The modelling is performed for Year 2032 and the capacity mix used in the dispatch model is derived using the ELectricity INvestment (ELIN) model Using this approach, we study how the profitability of PV and battery investments in households is affected by the feed-back mechanism in conjunction with the electricity market, and how household PV and battery systems will affect the dispatch of centralised power plants and the marginal cost of electricity. We use a large number of measured household electricity consumption profiles with hourly resolution
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