Investing in Photovoltaics: Timing, Plant Sizing and Smart Grids Flexibility

Abstract

In Italy and in many EU countries, the last decade was characterized by a large development of distributed generation power plants. Their presence determined new critical issues for the design and management of the overall energy system and the electric grid due to the presence of discontinuous production sources. It is commonly agreed that contingent problems that a¤ect local grids (e.g. ine¢ ciency, congestion rents, power outages, etc.) may be solved by the implementation of a "smarter" electric grid.The main feature of smarts grid is the great increase in production and consumption ‡exi-bility. Smart grids give producers and consumers, the opportunity to be active in the market and strategically decide their optimal production/consumption scheme. The paper provides a theoretical framework to model the prosumer's decision to invest in a photovoltaic power plant, assuming it is integrated in a smart grid. To capture the value of managerial ‡exibility, a real option approach is implemented. We calibrate and test the model by using data from the Italian energy market. JEL: Q42; C61; D81

Optimisation of photovoltaic and battery systems from the prosumer-oriented total cost of ownership perspective

“…According to Tables 1 and 2, in the existing literature there are various investigations in the fields of PV and BES and their financial aspects. However, some work is limited to the consideration of PV systems only [31,33,37]. Other research which also considers PV and BES models focusses on countries and markets outside Germany, such as Australia [30], Italy [32,34], Sweden [44] and UK [42].…”