Solar PV where the sun doesn’t shine: Estimating the economic impacts of support schemes for residential PV with detailed net demand profiling

Sarah La Monaca and Lisa Ryan

No 201619, Working Papers from School of Economics, University College Dublin

Abstract: Countries with low irradiation and solar PV adoption rates are increasingly considering policy support for solar PV, though consumer electricity demand and solar generation profiles are often mismatched. This paper presents a methodology for policy makers in countries with such conditions to examine more precisely the financial performance of residential solar PV from the consumer perspective as part of an ex-ante policy assessment. We model a range of prospective policy scenarios and compare policy mechanisms that compensate homeowners for generation, those that reduce their upfront costs, and those that assist with financing, using Ireland as a case study. The results confirm the intuitive notion that more generous financial remuneration schemes provide quicker payback, however, we observe that upfront grants do little to accelerate payback timeframes. We also show the importance of retail tariff structure in consumer payback for a solar PV system, with one-part tariffs generating shorter paybacks than two-part tariff structures, although the latter is more likely to secure revenue for electricity infrastructure investment. Drawing from this analysis, the paper proposes some options for the design of policy supports and tariff structures to deliver a sustainable residential renewable electricity system.

Keywords: Residential solar PV; Energy policy; Energy economics; Electricity rate structure; Financial performance; Distributed generation (search for similar items in EconPapers)
JEL-codes: H23 Q41 Q42 Q48 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2016-12
New Economics Papers: this item is included in nep-ene and nep-reg
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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http://hdl.handle.net/10197/8245 First version, 2016 (application/pdf)

Related works:
Journal Article: Solar PV where the sun doesn’t shine: Estimating the economic impacts of support schemes for residential PV with detailed net demand profiling (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:wpaper:201619

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