LCOE distribution of PV for single-family dwellings in Sweden

Abstract

In Sweden, the installations of solar photovoltaic systems are growing rapidly, and especially the market segment of small-scale distributed systems is experiencing positive growth. The current installation volumes exceed the expectations of the Swedish authorities. This study presents an up-to-date assessment of the levelized cost of electricity to be used for both agencies in their long-term scenario work of PV development and for private investors for estimating the upfront and future costs and risks associated with photovoltaic systems. The analysis is based on the turnkey system cost of 6,098 single-family dwelling photovoltaic systems commissioned in Sweden between the 1st of January 2019 and 1st of July 2020. The statistics of system investments costs are complemented by literature studies and by interviews of relevant stakeholders for the other input parameters needed to calculate the Levelized Cost of Electricity (LCOE). A Monte Carlo analysis was applied on all the input parameters provides relevant insight into the range of LCOE values. The unsubsidized levelized cost of electricity for most systems ranged from 0.85 SEK/kWh (25th percentile) to 1.15 SEK/kWh (75th percentile), with a mean at 1.02 SEK/kWh at reasonable real discount rate of 2%, but that extreme values can reach 0.30 SEK/kWh at a 0% discount rate and 5.70 SEK/kWh at a 5% discount rate. Taking into account the current (2023) Swedish tax reduction for investment in green technologies that amounts to an effective deduction of 19.4% of the total system investment costs lowers the LCOE to mean at 0.82 SEK/kWh at real discount rate of 2%. The LCOE for single-family dwelling photovoltaic systems are generally lower than the assumed LCOE in long-term scenario studies of the Swedish electricity system. This finding helps to explain to the authorities the unexpected fast deployment of distributed photovoltaic systems in Sweden.