Photovoltaic Investment Research Articles

The Implications of Policy Uncertainty on Solar Photovoltaic Investment

Policy and electricity price uncertainty provide disincentives to investors considering renewable energy investments. While electricity price uncertainty impacts on investment decisions relating to any energy investment, whether renewable or non-renewable, policy uncertainty will affect renewable energy investment decisions to a far greater extent. In this study, we consider the two main sources of uncertainty a solar Photovoltaic (PV) project is exposed to: electricity price uncertainty and policy uncertainty. We focus our analysis on utility-scale solar photovoltaics in the Pennsylvania, Jersey, Maryland Power Pool (PJM) electricity market and the New Jersey Solar Renewable Energy Credit (SREC) market. Using Solar Renewable Energy Credits as a proxy for policy, we find that there is considerable volatility in both electricity prices and policy. In a sample covering eleven years, we implement univariate Generalized Autoregressive Conditional Heteroskedastic (GARCH) and combinations of GARCH models with different weighting schemes and find that combination models provide superior forecasts. In renewable energy markets, policy supports have a significant impact on an investment’s profitability. The implication for policymakers is clear: to foster investment in solar PV, policy stability is critical.

Türkiye’de Fotovoltaik Yatırımlar için Tarife Garantisi Politikasının Optimal Tasarımının Bir Analizi

Feed-in Tariff (FIT) is the long-term agreement between governments and firms investing in solar energy, where governments guarantee to purchase the energy produced by firms. This research aims to reveal the optimal FIT design for Photovoltaic (PV) investments in Turkey. Choice Experiment based questionnaire was conducted on solar energy firms to investigate the investment preferences and monetary worth of each FIT component for investors. We found that FIT design with longer contract duration creates positive value for PV investments, while low payment amount per kWh, tax policy for imported PV panels, and license fee decrease the attractiveness of PV investments.

Comparison of Profitability of PV Electricity Sharing in Renewable Energy Communities in Selected European Countries

The economic value of photovoltaic (PV) systems depends on country-specific conditions. This study investigates the impact of grid fees, solar irradiance and local consumption on the profitability and penetration of PV systems and batteries in renewable energy communities. The linear optimization model calculates the optimal investments into PV and storages applied on a test community, which represents the European housing situation. The comparison of eight countries considers individual heat and cooling demands as well as sector coupling. Results show that renewable energy communities have the potential to reduce electricity costs due to community investments and load aggregation but do not necessarily lead to more distributed PV. Besides full-load hours, the energy component of electricity tariffs has the highest impact on PV distribution. Under current market conditions, battery energy storage systems are rarely profitable for increasing PV self-consumption but there is potential with power pricing. Renewable energy communities enable individuals to be a prosumer without the necessity of owning a PV system. This could lead to more (community) PV investments in the short term. Hence, it hinders investments in a saturated PV market.

Optimization of energy consumptions of oxidation tanks in urban wastewater treatment plants with solar photovoltaic systems

This paper combines solar photovoltaic (PV) to wastewater treatment plants (WWTPs). A new methodology is proposed to design solar PV to reduce energy consumptions of aeration thanks in WWTPs. New analytical equations and parameters, based on the air temperatures, solar irradiations, biological kinetics, dissolved oxygens, mechanical oxygenations, are introduced to obtain the peak power of PV that maximize the auto-consumptions of aeration blowers installed in the oxidation tanks of WWTPs. The method allows a direct preliminary design and a calibrated estimation for energy power. To justify this method, three aspect are mainly discussed: (i) the oxidation tanks consume up to 30% of the energy of a WWTP; (ii) the temperature of wastewater is variable during the year, in the smaller WWTPs; (iii) the dissolved oxygen reduces, increasing temperature of wastewater. This methodology will support the sector in making decision over PV investments, helping wastewater utilities to consider sustainable management practices. Therefore, a further contribute to develop the integration of renewable energy sources combined with wastewater sectors is activated.

Impact of electricity market feedback on investments in solar photovoltaic and battery systems in Swedish single-family dwellings

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.

A Real Options Approach to Valuate Solar Energy Investment with Public Authority Incentives: The Italian Case

Solar energy investment represents currently a valid reason to support sustainable economic development. In fact, over the last few years, governments have applied different measures to incentivize private consumers and firms to use renewable energies. Photovoltaic (PV) projects are characterized by uncertainty due to meteorological conditions, the unpredictable behavior of government, and managerial flexibility. Since the Net Present Value (NPV) approach is not able to capture these uncertain factors, it was replaced with the Real Options Approach (ROA). The latter method manages to embed flexibility in PV investment using binomial trees. This paper valuates PV investment in all regional areas in Italy using an integrated approach between the discounted cash flows method and real option value, called Expanded Net Present Value (ENPV). We fit the probability of tax benefits into a binomial lattice model after analyzing the geographical position and weather conditions of all regional capitals of Italy. The results show that the cities with high irradiance/temperature have positive NPV and high investment values. On the other hand, while most cities have negative NPV, the inclusion of the flexibility in investment decisions gives additional value to the project, making the ENPV positive and implying an attractive investment opportunity with the possibility of delaying the project. We also propose a sensitivity analysis that shows how the real option value changes when incentive policies of the government become more attractive. This paper contributes to the existing literature in the way of considering financial, meteorological/geographical, and political factors to valuate PV investment.

Profitability of commercial and industrial photovoltaics and battery projects in South-East-Asia

Solar photovoltaics and batteries are key technologies to enable a rapid decarbonization of electricity systems. Commercial & industrial consumers are an important market for these technologies due to their fast growing electricity demand, particularly in emerging economies. However, it remains unclear if photovoltaics and battery installations are profitable for commercial & industrial applications in an emerging country context. Assessing the profitability of investments in photovoltaics and battery projects, however, is much more complex than for standalone photovoltaics projects, and strongly depends on the regulatory regime. These regimes are often complex and can be inconsistent. Hitherto decision makers lack models which are suitable for detailed assessments and which can serve as basis to adjust the regime. Here, we develop a techno-economic optimization model for commercial & industrial photovoltaics and battery projects, which returns a profit-maximizing storage dispatch and system design. We investigate three South-East Asian countries (Vietnam, Thailand, and Malaysia) and three different industries (Textile, Consumer Goods, and Electronics). The results show that profitable investment opportunities in photovoltaics and battery projects exist already today, even though a battery typically reduces profitability vis-à-vis standalone photovoltaics projects. We discuss how reducing investment risks, building local industries, and shifting existing support schemes towards batteries could support battery deployment in South-East Asia and thereby contribute to the decarbonization of electricity systems in the region.

Solar photovoltaic interventions have reduced rural poverty in China

Since 2013, China has implemented a large-scale initiative to systematically deploy solar photovoltaic (PV) projects to alleviate poverty in rural areas. To provide new understanding of China’s targeted poverty alleviation strategy, we use a panel dataset of 211 pilot counties that received targeted PV investments from 2013 to 2016, and find that the PV poverty alleviation pilot policy increases per-capita disposable income in a county by approximately 7%-8%. The effect of PV investment is positive and significant in the year of policy implementation and the effect is more than twice as high in the subsequent two to three years. The PV poverty alleviation effect is stronger in poorer regions, particularly in Eastern China. Our results are robust to alternative specifications and variable definitions. We propose several policy recommendations to sustain progress in China’s efforts to deploy PV for poverty alleviation.

Production of silicon nanoparticles from selected agricultural wastes

Silicon production by conventional processes are complex and occur at very high temperatures. Some agricultural wastes have been utilised for silicon production in a very simple method. Agricultural wastes are produced and indiscriminately disposed into our environment constituting environmental challenges. Burning them off uncensored will definitely generate gases that could affect the climate. The United Nations has called on all governments to participate in climatic changes mitigation. Moreover, electricity generation and distributions are below the minimum expectation that can sustain Nigerian. Hence, citizens are now devising alternative energy sources that could mitigate climate changes. Solar energy potential of Nigeria encourages investment in photovoltaics (PV) technology of which silicon is required. The aim of this research is to develop an alternative utilization for some agricultural wastes as potential sources of silicon that could be deployed for PV cells. This research investigates utilization of cassava periderm, maize stalk and cob as novel sources of silicon nanoparticles. Agro-based silica nanoparticles were produced using modified sol–gel method and was then reduced using magnesium to synthesize silicon nanoparticles. The products were characterized using XRD, EDS, FT-IR, Raman and TEM. The results showed that silicon nanoparticles with particle sizes less than and purity of 33.98 nm and 98.89%, 31.20 nm and 99.89%, and 32.88 and 99.95% for CP, MS and MC, respectively were successfully produced.

A technical and economic analysis of solar PV with local tariff policy in Indonesia

Indonesia is still struggling to attract investors in developing the solar photovoltaic (PV) project. The government issued the first regulation on solar PV, announced in 2016. A revision on the local tariff regulation is conducted to reduce the rapid development of the solar PV investment. The major revision is made to change the contract scheme from a build-operate-own (BOO) to a build-operate-own-transfer (BOOT) scheme. This paper investigates how the new local tariff will drive investors and developers to invest in solar PV. This analysis is conducted to know the effectiveness of the policy and the risk of PV investment in Indonesia. Local tariff policy regulation targets PV developers to invest in the solar PV system areas. In the local tariff policy, each area has its PV energy tariff determined by the government. This research proposes a method for deciding demand by considering population data in selected regions to calculate the maximum PV demand of each area. The Levelized Cost of Energy LCOE is used to calculate the economic viability of the PV projects in selected areas in Indonesia. The results show that more than half of the selected areas are profitable for the PV project. The average profit of the projects of the selected areas is 3.21 cent USD per kWh. Most of the areas that have high PV demand have lower local tariffs. Therefore, these areas may not be profitable for developers. The new regulation also cuts the revenue significantly due to the new scheme contract.

Socioeconomic evaluation of green energy investments

PurposeThe purpose of this paper is to explore citizens’ willingness to invest in photovoltaics.Design/methodology/approachTo meet the aim of the research, a questionnaire survey was conducted in the island of Evia in Greece using the method of random stratified sampling. A total of 366 responses were analyzed using both descriptive and inductive statistics methods, such as principal components analysis, K-means cluster analysis, discriminant analysis and binary logistic regression.FindingsThe research results indicate that 73per cent of the respondents would invest in renewable energy sources, whereas 55per cent of them would specifically invest in photovoltaics. Regarding their views on photovoltaics, three components were extracted; photovoltaics positive effects, facilitations for investments in photovoltaics and photovoltaics’ performance. Area of residence, annual income and the above-mentioned three components of views on photovoltaics were found to be statistically significant for the dichotomous variable of willingness to invest in photovoltaics. Among the examined variables, photovoltaics performance found to contribute the most in increasing respondents’ willingness to invest in photovoltaics.Originality/valueThe study filled the literature gap concerning citizens’ willingness to invest in photovoltaics in Greece. Furthermore, the research results made feasible to understand the factors that can lead in an investment decision for photovoltaics.

Solar Power Profitability with Demand Response and Carbon-Corrected Electricity Prices

We study the economic profitability of small-scale photovoltaic (PV) systems in the insolation conditions close to the Arctic Circle. We show moderate rate of returns (1.0 % in the Northern and 1.4 % in the Southern Finland) for the PV system investments with time-of-use hot water heating. Optimized hot water heating increases the rate of return by 0.6 percentage points. We internalize the negative externalities of greenhouse gas emissions from electricity generation by presenting the hourly electricity prices as a function of emission permit costs. A 10 €/tCO2 increase in carbon price improves the PV investment rate of return by 0.3 percentage points.

Analysis of latent impeding factors to solar photovoltaic investments in Ghana

PurposeGhana has recently reviewed its renewable energy Act 835 with an objective of providing 10% of its energy from renewables by 2020 (Ackah and Asomani, 2015). Meanwhile, solar Photovoltaic (PV) accounts for less than 2% of the energy mix (Energy Commission, 2018). In combating environmental issues such as climate change and meeting these policy targets, there is the urgent need to increase investment into the renewable sector. Therefore, the purpose of this paper is to critically examine the impeding constraints to photovoltaic investment in Ghana.Design/methodology/approachThe Literature evaluation was carried out of critical constraints surrounding PV investments. Questionnaire was developed and administered online using Google form. Descriptive statistics was used to describe the features of each constraint. In addition, inferential analysis using relative importance index was used to rank these indicators. Again, one sample t-test was used to test the significance of the indicator. Multiple indicators were used to measure the latent constructs. Finally, independent test of mean equity was used to test relationship between the working experiences of despondence who have worked with solar PV below five years and those who worked from five years to ten years.FindingsThe research has highlights high installation and maintenance costs, lack of access to long-term capital finance, access to affordable consumer finance and lack of support to research and development as the major investment obstacles to solar PV investment in Ghana.Research limitations/implicationsIt is recommended that the Government of Ghana should provide incentives such as tax waivers, which will encourage entrepreneurs, invest into PV. In addition, it is recommended that solar PV companies must collaborate with financial institutions to provide low interest and flexible consumer financing schemed that can enable home users to purchase the technology. Future research should complement this work by focusing on the impact of domestic currency volatility on PV investment. The scope of this study is constrained to the PV industry in Ghana.Practical implicationsThis study will serve as a guide to the private sector business owners to help make critical PV investment decisions. It has also brought to the forefront the reason why solar PV account for a small fraction of Ghana’s energy mix.Originality/valueThis paper seeks to espouse the prevailing constraints to PV investment in Ghana and seeks to contribute to already existing literature that will make profound changes in state policy around PV investment. By understanding these difficulties, driving pointers can be recognized to encourage effective future venture inside the sustainable power source area. In this way, the research leads to a better understanding of the impeding factors that hinders PV investment in Ghana. Again, the paper has achieved new discovery with regards to variations between years of experience with PV use. The variation being less than five years with over five years of PV use. By understanding these difficulties, driving pointers can be recognized to invigorate effective future ventures.

Financial Modelling of Feed-In Tariff for Increasing Solar Photovoltaic Energy Portfolio in Malawi

The Feed-In Tariff (FIT) policy has contributed significantly in driving renewable energy investment around the world. Despite the lessons of FIT’s contribution in attracting private investment in renewable energy development around the world, Malawi’s FIT policy of 2012 has not attracted any private investor. This paper examined the financial modelling of feed-in tariff rates, using Kamazu International Airport solar farm in Malawi as a case study. The paper also analysed the major challenges encountered in implementing the FIT policy in Malawi and funding options for the policy. This paper presents policymakers and planners an analysis on why FIT policy in Malawi has not increased renewable electricity generation capacity. The paper outlines a financial modelling of the FIT using RETScreen Expert. The analysis shows that the FIT for solar in Malawi is significantly lower than a minimum rate that would make a solar PV investment financially viable. The Malawi FIT policy stipulate US$0.10 and US$0.20 for non-firm power (without storage) and firm power (with storage) respectively. The results of the financial modelling presented herein show that for a ten years payback period; the minimum FIT required is US$0.34 with an annual escalation rate of 5%. It is also shown that at US$0.22, to achieve a payback period of 10 years; an annual escalation rate of 10% would be required. Given the financial modelling results, the Solar Photovoltaic (PV) FIT in Malawi requires review for enhancement of solar investment in the country.

Real options valuation of photovoltaic power investments in existing buildings

Renewable power generation based on solar energy is deemed to be a key instrument to reduce the carbon footprint of modern economies. Collectively, buildings are an energy-intensive consumption sector. Therefore, existing building rooftops are seen as a target for massively deploying photovoltaic (PV) distributed generation. Nevertheless, estimating the benefits and risks of investing in rooftop PV systems is indeed a challenging task due to the large uncertainties that affect tariffs, technology costs, and regulatory policy. After reviewing the literature and identifying the current gaps, this article develops a method based on Real Options theory for appraising investments in PV generation systems to be installed on the rooftop of existing buildings. The option value of differing the investment decision and the problem of the optimal time to invest in irreversible PV assets are addressed by an advanced valuation method based on stochastic simulation, linear regression, and backward dynamic programming. In this work, returns of self-generation PV investments are subjected to uncertainties upon declining investment costs and fluctuating electricity tariffs, which are represented by appropriate exogenous stochastic processes. In order to test the practicability of the proposed decision-making framework, the valuation of an exemplary rooftop PV-system in a government building is considered. Results show that while standard appraisal methods wrongly reject the rooftop PV project now and in the future, the option valuation method finds optimal to hold the opportunity open in order to reconsider to invest later. In addition, the method provides an objective value of the opportunity cost of using the building rooftop for another purpose. The proposed valuation approach would result in better investment allocation and faster development of distributed PV power capacity contributing thereby to enhance the sustainability of current energy systems.

Solar PV adoption in wastewater treatment plants: A review of practice in California

This is the first study to assess the current status of solar photovoltaic (PV) adoption across a range of wastewater treatment plant sizes, and to identify the opportunities for solar PV in the wastewater sector. It quantifies solar PV contributions to the energy demand of the wastewater treatment plants and improves knowledge of sector-specific factors influencing PV uptake. California was used as a case study due to its high commitment to solar power and the high data availability. The study compiled and examined data on multiple wastewater treatment plant attributes from 105 Californian plants, representing 78% of total state flows. The analysis focused on the effect of three sector-specific influencing factors: size of wastewater treatment plant, presence/absence of anaerobic digestion and geographical location (urban vs rural). Solar PV adoption was observed to vary significantly with the size of the wastewater treatment plants. Of the 105 plants analysed, 41 installed a solar PV system. Of these 41, 39 were installed in wastewater treatment plants with a flow rate below 50 mega gallons day−1 (MGD). Only two plants with flow above 50 MGD had solar PV installed. In wastewater treatment plants with a flow rate above 5 MGD, solar PV was primarily installed in hybrid configurations with anaerobic digestion. In these plants, biogas contributed 25–65% to the overall energy demand, while solar provided 8–30%. In wastewater treatment plants with a flow rates below 5 MGD, solar PV often represented the only source of renewable energy, producing 30–100% of the energy demand of these plants. Across all the plants analysed, 1 MW was the most adopted solar installation size and solar PV installations were mostly found in wastewater treatment plants in rural settings. While acknowledging multiple other factors of potential influence, these results demonstrate the role of solar PV in wastewater treatment plants under three sector-specific influencing factors. The results will support the sector in making informed decisions over solar PV investments, helping wastewater utilities to transition towards sustainable management practices.

Optimizing the setup of a photovoltaic pumping system for irrigation considering different crop water requirements

In Egypt’s remote areas, photovoltaic (PV) systems appear to be a promising technology to substitute diesel generators for water pumping in irrigation systems. We aim to minimize the installed PV capacity and investment costs by optimizing azimuth and tilt angles of the PV panels and to assess the complicity with pressure and water requirements. For this purpose, a numerical algorithm has been developed for a PV-driven drip irrigation system without a water storage tank in the Bahariya Oasis, Egypt. Crop water demand is considered by 7.8 ha plots planted with potato, tomato, and date palm. Nominal water flow rate is 86, 102, and 128 m3 h − 1. For 128 m3 h − 1, the optimization results in tilt angles for south orientation in the range of 40 deg to 50 deg, 10 deg to 20 deg, and 0 deg to 5 deg for potato, tomato, and date palm plots, respectively. In addition, for tomato and date palm plots with 86 and 86 / 102 m3 h − 1, respectively, an east–west orientation with tilt angles of 55 deg to 60 deg is optimal. In this case, the system operates mainly in the self-compensated pressure range of the drip lines, which is assumed to guarantee proper water distribution across the field. However, the required PV peak power is large compared to the system settings with larger nominal water flow rates.

Optimal Conductor Size Selection in Distribution Networks with High Penetration of Distributed Generation Using Adaptive Genetic Algorithm

The widespread deployment of distributed generation (DG) has significantly impacted the planning and operation of current distribution networks. The environmental benefits and the reduced installation cost have been the primary drivers for the investment in large-scale wind farms and photovoltaics (PVs). However, the distribution network operators (DNOs) face the challenge of conductor upgrade and selection problems due to the increasing capacity of DG. In this paper, a hybrid optimization approach is introduced to solve the optimal conductor size selection (CSS) problem in the distribution network with high penetration of DGs. An adaptive genetic algorithm (AGA) is employed as the primary optimization strategy to find the optimal conductor sizes for distribution networks. The aim of the proposed approach is to minimize the sum of life-cycle cost (LCC) of the selected conductor and the total energy procurement cost during the expected operation periods. Alternating current optimal power flow (AC-OPF) analysis is applied as the secondary optimization strategy to capture the economic dispatch (ED) and return the results to the primary optimization process when a certain conductor arrangement is assigned by AGA. The effectiveness of the proposed algorithm for optimal CSS is validated through simulations on modified IEEE 33-bus and IEEE 69-bus distribution systems.

Solar PV-diesel hybrid systems for the Nigerian private sector: An impact assessment

This research examines the impact of Nigerian private sector investment in captive power generation from solar photovoltaic (PV) and diesel generator (DG) hybrid energy systems. The study assesses the economic viability of solar PV-DG hybrid systems among Nigerian private companies using levelized cost of energy (LCOE) and analyzes policies that can facilitate solar PV investment as a bottom-up approach to Nigeria's energy development. Forty (40) private companies across Nigeria were surveyed to examine potential the fuel savings that hybrid of PV and DG can achieve. Out of the surveyed companies, three cases representing different load factors were selected and modelled in HOMER Pro to obtain LCOE for each case study. The research findings indicate that electricity generation deficiencies for Nigerian business consumers can be addressed with available renewable energy solar resources. A savings between € 0.002 and 0.009/kWh was achieved from the three-case study. Adequate policy to support investment is both necessary and possible for achieving increased solar PV adoption for highly willing Nigerian private sector.

Evaluation Model for Investment in Solar Photovoltaic Power Generation Using Fuzzy Analytic Hierarchy Process

Owing to rapid growth in the Asian solar photovoltaic (PV) power market, decision-making models are required to develop efficient investment strategies. Previous studies have largely focused on technological conditions and macroeconomic indicators, but not on the increasing needs of the financial sector. In this study, we developed an evaluation model of solar PV investment and financial factors at the project level. The model applies the fuzzy analytic hierarchy process and selects appropriate evaluation indicators for investment by emphasizing financial factors such as access to finance and exit strategies after the initial investment. Furthermore, we derived the relative importance of the indicators for each stakeholder. Stakeholder analysis enables comparison by quantifying the risks of each market participant. Economic factors (71.57%) were selected as the most important evaluation factors, followed by policy factors (16.26%), and technical factors (12.17%). Higher weights were assigned to indicators that directly affect profitability. Stakeholders showed significant differences in policy factors. Power generation companies showed higher weight values in policy factors than other groups. Quantification of differences in perceptions provides basic data for establishing effective investment strategies and developing policies. Therefore, the proposed model will contribute to more efficient solar PV project development.