Regulation of photovoltaic prosumer plants: an analysis through a dynamic expression of the avoided cost

Driven by technical advances and favorable regulatory measures (albeit only in some countries), the deployment of electricity generation at very small scales, or micro-generation, is shaping a new segment of the electricity system which has been called “Residential Energy Sector” or “Micro-Generatio...

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Autores: Mir, Pere, Río, Pablo del, Gil-Estallo, Ángel
Tipo de recurso: artículo
Estado:Versión publicada
Fecha de publicación:2023
País:España
Institución:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
Repositorio:Recercat. Dipósit de la Recerca de Catalunya
OAI Identifier:oai:recercat.cat:10230/57410
Acceso en línea:http://hdl.handle.net/10230/57410
http://dx.doi.org/10.1016/j.egyr.2022.12.078
Access Level:acceso abierto
Palabra clave:Prosumers
Avoided cost
Photovoltaic regulation
Residential energy sector
Micro-generation
Self-production
Self-consumption
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spelling Regulation of photovoltaic prosumer plants: an analysis through a dynamic expression of the avoided costMir, PereRío, Pablo delGil-Estallo, ÁngelProsumersAvoided costPhotovoltaic regulationResidential energy sectorMicro-generationSelf-productionSelf-consumptionDriven by technical advances and favorable regulatory measures (albeit only in some countries), the deployment of electricity generation at very small scales, or micro-generation, is shaping a new segment of the electricity system which has been called “Residential Energy Sector” or “Micro-Generation Sector”. Known as “self-production” or “self-consumption” years ago, the main objective of on-site, or demand-side, microgeneration is to provide electricity services to homes and businesses from their own plants. While the concept of avoided cost has been used in the past, a dynamic model which takes into account the different influencing factors has not been previously developed. This paper closes this gap in the literature. It proposes a dynamic, easily replicable model which contains the main factors which influence the avoided costs and facilitates the analysis of the investment decisions taken by residential prosumers. The results show that, compared to other variables, the evolution of retail prices is the most relevant factor affecting the avoided cost, suggesting that their gradual increase could lead to the substitution of plants before the end of their useful life. However, the importance of retail prices and their unknown evolution gives investment decisions on residential plants an inherent uncertain character. Therefore, a higher retail price can encourage the investment by reducing the recovery period. If the accumulated avoided cost equals the initial investment earlier, this reduces both the uncertainty (the period is shorter) and the psychological impact of a strong initial expense. Although regulatory factors (e.g., the existence of subsidies and the conditions of grid exchange) do not have a large economic impact, those factors contribute to the change in the psychological framework which future prosumers will face. In particular, they partly offset the detrimental impact of the initial upfront costs on the decision to invest, even if the revenues and other advantages offset such initial amount of investment.Elsevier202320232023info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionapplication/pdfapplication/pdfhttp://hdl.handle.net/10230/57410http://dx.doi.org/10.1016/j.egyr.2022.12.078reponame:Recercat. Dipósit de la Recerca de Catalunyainstname:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)InglésEnergy Reports. 2023;9:2002-15.© 2023 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).http://creativecommons.org/licenses/by/4.0/info:eu-repo/semantics/openAccessoai:recercat.cat:10230/574102026-05-29T05:05:01Z
dc.title.none.fl_str_mv Regulation of photovoltaic prosumer plants: an analysis through a dynamic expression of the avoided cost
title Regulation of photovoltaic prosumer plants: an analysis through a dynamic expression of the avoided cost
spellingShingle Regulation of photovoltaic prosumer plants: an analysis through a dynamic expression of the avoided cost
Mir, Pere
Prosumers
Avoided cost
Photovoltaic regulation
Residential energy sector
Micro-generation
Self-production
Self-consumption
title_short Regulation of photovoltaic prosumer plants: an analysis through a dynamic expression of the avoided cost
title_full Regulation of photovoltaic prosumer plants: an analysis through a dynamic expression of the avoided cost
title_fullStr Regulation of photovoltaic prosumer plants: an analysis through a dynamic expression of the avoided cost
title_full_unstemmed Regulation of photovoltaic prosumer plants: an analysis through a dynamic expression of the avoided cost
title_sort Regulation of photovoltaic prosumer plants: an analysis through a dynamic expression of the avoided cost
dc.creator.none.fl_str_mv Mir, Pere
Río, Pablo del
Gil-Estallo, Ángel
author Mir, Pere
author_facet Mir, Pere
Río, Pablo del
Gil-Estallo, Ángel
author_role author
author2 Río, Pablo del
Gil-Estallo, Ángel
author2_role author
author
dc.subject.none.fl_str_mv Prosumers
Avoided cost
Photovoltaic regulation
Residential energy sector
Micro-generation
Self-production
Self-consumption
topic Prosumers
Avoided cost
Photovoltaic regulation
Residential energy sector
Micro-generation
Self-production
Self-consumption
description Driven by technical advances and favorable regulatory measures (albeit only in some countries), the deployment of electricity generation at very small scales, or micro-generation, is shaping a new segment of the electricity system which has been called “Residential Energy Sector” or “Micro-Generation Sector”. Known as “self-production” or “self-consumption” years ago, the main objective of on-site, or demand-side, microgeneration is to provide electricity services to homes and businesses from their own plants. While the concept of avoided cost has been used in the past, a dynamic model which takes into account the different influencing factors has not been previously developed. This paper closes this gap in the literature. It proposes a dynamic, easily replicable model which contains the main factors which influence the avoided costs and facilitates the analysis of the investment decisions taken by residential prosumers. The results show that, compared to other variables, the evolution of retail prices is the most relevant factor affecting the avoided cost, suggesting that their gradual increase could lead to the substitution of plants before the end of their useful life. However, the importance of retail prices and their unknown evolution gives investment decisions on residential plants an inherent uncertain character. Therefore, a higher retail price can encourage the investment by reducing the recovery period. If the accumulated avoided cost equals the initial investment earlier, this reduces both the uncertainty (the period is shorter) and the psychological impact of a strong initial expense. Although regulatory factors (e.g., the existence of subsidies and the conditions of grid exchange) do not have a large economic impact, those factors contribute to the change in the psychological framework which future prosumers will face. In particular, they partly offset the detrimental impact of the initial upfront costs on the decision to invest, even if the revenues and other advantages offset such initial amount of investment.
publishDate 2023
dc.date.none.fl_str_mv 2023
2023
2023
dc.type.none.fl_str_mv info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
format article
status_str publishedVersion
dc.identifier.none.fl_str_mv http://hdl.handle.net/10230/57410
http://dx.doi.org/10.1016/j.egyr.2022.12.078
url http://hdl.handle.net/10230/57410
http://dx.doi.org/10.1016/j.egyr.2022.12.078
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv Energy Reports. 2023;9:2002-15.
dc.rights.none.fl_str_mv http://creativecommons.org/licenses/by/4.0/
info:eu-repo/semantics/openAccess
rights_invalid_str_mv http://creativecommons.org/licenses/by/4.0/
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Recercat. Dipósit de la Recerca de Catalunya
instname:Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
instname_str Varias* (Consorci de Biblioteques Universitáries de Catalunya, Centre de Serveis Científics i Acadèmics de Catalunya)
reponame_str Recercat. Dipósit de la Recerca de Catalunya
collection Recercat. Dipósit de la Recerca de Catalunya
repository.name.fl_str_mv
repository.mail.fl_str_mv
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