Profitability landscapes for competitive photovoltaic self-consumption

Abstract

Photovoltaic self-consumption (PVSC) is a central element of the energy transition. However, retail electricity tariffs have not adapted to the emerging phenomenon of demand-side generation. We introduce the concept of profitability landscapes to evaluate the effects of a cost-reflective retail tariff and a competitive PVSC regulation on prosumers’ returns depending on system costs and self-consumption share. The trade-off between these two elements reveals the value of demand flexibility. We find that PVSC would be profitable in most European countries when external costs are internalized, confirm the diminishing marginal returns on demand flexibility and quantify the effects of prices, insolation and profitability on the value of demand flexibility.