Peer-to-peer trade and the economy of distributed PV in China

Abstract

With the deepening of power market reform, distributed power generation is gaining momentum. This paper tests the distributed photovoltaic (DPV) economy under different business models by taking three provinces to stand for typical resource zones. The Internal return rate (IRR) is used to measure the economy, while the improved levelized cost of electricity (LCOE) is used to model the generation cost. Three business modes, namely pure producer (all generation sold to the grid), prosumer (self-use and the rest sold to the grid), and peer-to-peer trade (P2P, all generation traded via the grid) are studied. Results show that peer-to-peer trade is more profitable and is a win-win solution to both DPV owner and electricity consumers. However, peer-to-peer trade is possible only when power grid’s role is properly defined in China’s power sector reform. Electricity trading mechanism should be improved to facilitate peer-to-peer trade.