Comparative customer economics on different financial options in support the adoption of residential rooftop photovoltaic in Thailand

Abstract

The Thai Government has supported the use of solar photovoltaic systems for green electricity production toward the self-consumption policy since 2016. A photovoltaic support program with an installed capacity target of 100 Megawatt was announced in December 2018 to promote self-consumption and compensate for any excess photovoltaic generation at 1.68 Thai Baht/kilowatt-hour. However, the target was not achieved as a result of high upfront investment costs that are one of the main barriers in household application. To make solar photovoltaic systems more accessible to a larger group of users, financial mechanisms are required. The economic feasibility of financial options (cash, solar power purchasing agreement, solar leasing, solar loan) was analyzed for photovoltaic systems under the current Thai household solar rooftop scheme. The System Advisor Model, an open source techno-economic analysis tool, was employed to simulate photovoltaic production and cash flows to calculate the economic feasibility including the levelized cost of electricity, net present value, internal rate of return and payback period. Results showed that investment in a 3-kilowatt photovoltaic system with debt fraction of 50% and 100% cash was profitable, while investment in a 3-kilowatt photovoltaic system through a solar power purchasing agreement and leasing was not economically viable.

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“…The low adoption rate can be partly attributed to the unbalanced concentration of solar adoption in large projects (Junlakarn and Kokchang, 2020). While Solar PVs have the potential to be a major factor in addressing the climate change, solar PV investment has thus far been concentrated in large projects.…”

“…The investment concentration is caused by the high cost and the low liquidity of solar PV investment. Solar PV investment is typically done by large institution investors (Alafita and Pearce, 2014;Junlakarn and Kokchang, 2020) because of its high cost. To improve their return on equity, large institution investors prefer to invest in large projects to leverage economies of scale.…”