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Photovoltaic self-consumption is now profitable in Spain: Effects of the new regulation on prosumers’ internal rate of return

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  • López Prol, Javier
  • Steininger, Karl W.
Abstract
Whereas Spain used to have one of the most restrictive photovoltaic self-consumption (PVSC) regulations in the world, the new regulation (RD-L 15/2018 & RD 244/2019) improves the economic conditions of PVSC systems, simplifies administrative procedures and allows shared self-consumption. We analyze the impact of the new PVSC regulation on residential, commercial and industrial prosumers’ profitability (internal rate of return). We provide a wide range of results that allow us to explore future profitability depending on the evolution of installation costs, the opportunities of shared self-consumption or storage, and even the potential emergence of new business models. We find that all segments obtain now positive profitability in average conditions. Whereas the residential segment has the lowest profitability level, it has the highest potential by decreasing installation costs and increasing the share of self-consumption, given its higher retail prices. Finally, we identify potential new business models by exploiting the prices and costs differentials across segments and maximizing the share of self-consumed electricity. PVSC systems with industrial costs exploiting residential markets could achieve 35% profitability by reaching 75% self-consumption, and even higher than 40% when self-consumption exceeds 85%.

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  • López Prol, Javier & Steininger, Karl W., 2020. "Photovoltaic self-consumption is now profitable in Spain: Effects of the new regulation on prosumers’ internal rate of return," Energy Policy, Elsevier, vol. 146(C).
    • Handle: RePEc:eee:enepol:v:146:y:2020:i:c:s0301421520305140
    DOI: 10.1016/j.enpol.2020.111793
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    6. Lazzari, Florencia & Mor, Gerard & Cipriano, Jordi & Solsona, Francesc & Chemisana, Daniel & Guericke, Daniela, 2023. "Optimizing planning and operation of renewable energy communities with genetic algorithms," Applied Energy, Elsevier, vol. 338(C).
    7. Pere Mir-Artigues & Pablo del Río, 2021. "Prosumers’ Behavior under a Regulation That Encourages Strict Self-Sufficiency. The Case of Spanish Photovoltaic Micro-Generation," Energies, MDPI, vol. 14(4), pages 1-19, February.
    8. Gómez-Navarro, Tomás & Brazzini, Tommaso & Alfonso-Solar, David & Vargas-Salgado, Carlos, 2021. "Analysis of the potential for PV rooftop prosumer production: Technical, economic and environmental assessment for the city of Valencia (Spain)," Renewable Energy, Elsevier, vol. 174(C), pages 372-381.
    9. Barbara Antonioli Mantegazzini & C?dric Clastres & Laura Wangen, 2022. "Energy communities in Europe: An overview of issues and regulatory and economic solutions," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2022(2), pages 5-23.
    10. Finke, Jonas & Bertsch, Valentin & Di Cosmo, Valeria, 2023. "Exploring the feasibility of Europe’s renewable expansion plans based on their profitability in the market," Energy Policy, Elsevier, vol. 177(C).
    11. Codina, Eloi & Domenech, Bruno & Juanpera, Marc & Palomo-Avellaneda, Leopold & Pastor, Rafael, 2023. "Is switching to solar energy a feasible investment? A techno-economic analysis of domestic consumers in Spain," Energy Policy, Elsevier, vol. 183(C).
    12. Adam X. Hearn & Raul Castaño-Rosa, 2021. "Towards a Just Energy Transition, Barriers and Opportunities for Positive Energy District Creation in Spain," Sustainability, MDPI, vol. 13(16), pages 1-18, August.
    13. Xiaocheng Zhu & Yanru Zhang & Zhenzhong Wang & Xunzhang Pan, 2022. "Comparison of China’s Biomass Combustion Power Generation with Different Installed Capacities," Energies, MDPI, vol. 15(4), pages 1-8, February.
    14. Dasí-Crespo, Daniel & Roldán-Blay, Carlos & Escrivá-Escrivá, Guillermo & Roldán-Porta, Carlos, 2023. "Evaluation of the Spanish regulation on self-consumption photovoltaic installations. A case study based on a rural municipality in Spain," Renewable Energy, Elsevier, vol. 204(C), pages 788-802.
    15. Simona Barbaro & Grazia Napoli, 2023. "Energy Communities in Urban Areas: Comparison of Energy Strategy and Economic Feasibility in Italy and Spain," Land, MDPI, vol. 12(7), pages 1-24, June.
    16. Javier L'opez Prol & Wolf-Peter Schill, 2020. "The Economics of Variable Renewables and Electricity Storage," Papers 2012.15371, arXiv.org.
    17. Gunkel, Philipp Andreas & Kachirayil, Febin & Bergaentzlé, Claire-Marie & McKenna, Russell & Keles, Dogan & Jacobsen, Henrik Klinge, 2023. "Uniform taxation of electricity: incentives for flexibility and cost redistribution among household categories," Energy Economics, Elsevier, vol. 127(PB).
    18. López Prol, Javier & Paul, Arijit, 2024. "Profitability landscapes for competitive photovoltaic self-consumption," Energy Policy, Elsevier, vol. 188(C).
    19. Ángel José Ordóñez Mendieta & Esteban Sánchez Hernández, 2021. "Analysis of PV Self-Consumption in Educational and Office Buildings in Spain," Sustainability, MDPI, vol. 13(4), pages 1-16, February.
    20. Shahid Ali & Qingyou Yan & Muhammad Sajjad Hussain & Muhammad Irfan & Munir Ahmad & Asif Razzaq & Vishal Dagar & Cem Işık, 2021. "Evaluating Green Technology Strategies for the Sustainable Development of Solar Power Projects: Evidence from Pakistan," Sustainability, MDPI, vol. 13(23), pages 1-29, November.
    21. Juan Pedrero & Patxi Hernández & Álvaro Martínez, 2021. "Economic Evaluation of PV Installations for Self-Consumption in Industrial Parks," Energies, MDPI, vol. 14(3), pages 1-12, January.
    22. Gallego-Castillo, Cristobal & Heleno, Miguel & Victoria, Marta, 2021. "Self-consumption for energy communities in Spain: A regional analysis under the new legal framework," Energy Policy, Elsevier, vol. 150(C).
    23. Kerscher, Selina & Koirala, Arpan & Arboleya, Pablo, 2024. "Grid-optimal energy community planning from a systems perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 199(C).

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    More about this item

    Keywords

    PV; Profitability; Renewable electricity; Energy transition; net billing;
    All these keywords.

    JEL classification:

    • N74 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: 1913-
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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