Photovoltaic energy competitiveness and risk assessment for the South African residential sector

Abstract

Abstract:The establishment of new photovoltaic (PV) markets in emerging economies represents a business development opportunity for expansion outside traditional energy markets. Appropriate assessment of PV market competitiveness is thus necessary in order to inform policy and regulatory development, and in order to manage risks related to investment. This paper presents an evaluation of PV energy competitiveness using a case study of the emerging residential PV market in South Africa. Competitiveness is defined in light of the risks associated with the financial performance of domestic grid-connected rooftop PV considering the current market status together with three proposed business models, namely net-metering, net-billing, and an energy savings performance contract framework. Financial performance is evaluated in terms of a socket parity evaluation together with a discounted net cash flow analysis. Investment risk assessment was facilitated using a Monte Carlo simulation. The results indicate the highest potential profitability for the energy savings performance contract model, which includes PV system ownership by an energy services company. It is also shown that appropriate application of risk modelling has the potential to inform decisions by investors and policy makers alike that result in improved policy and business solutions that are able to support increased residential PV energy market competitiveness without the need for explicit subsidy frameworks.

A TODIM-Based Investment Decision Framework for Commercial Distributed PV Projects under the Energy Performance Contracting (EPC) Business Model: A Case in East-Central China

“…In recent years, researches on PV investment have mainly focused on the following aspects: (1) Risk analysis of PV power generation projects: analysis of risk factors and establishment of risk assessment models, application of risk models to provide decision-making information for investment decision-makers (DMs) [4][5][6]. Markov, et al [7] considered that the physical limitations of the transmission network would pose risks for PV investment.…”

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“…For the hybrid system, the tariff has been assumed to be the average value of the two main systems-0.115 $/kWh. In the case of South Africa, discount and inflation rates have been determined to be 9% and 6%, correspondingly [23]. The feed-in tariff for solar and wind electricity is 0.066 $/kWh and 0.052 $/kWh [24], whereas, for the hybrid system, it has been assumed to be 0.059 $/kWh.…”

The Environmental Mitigation Potential of Photovoltaic-Powered Irrigation in the Production of South African Maize

“…However, uptake of solar PV may be limited as the ability to connect such systems to the grid is not yet universal and because regulations concerning connection and the sale of excess electricity are not yet in place in all municipalities [29], which restrict the size of installations to ensure maximum self-consumption [95]. Negative perceptions towards solar PV, i.e., that it is expensive or unreliable, have been identified as further barriers to implementation [29].…”

“…The promotion of renewable energies is one of the South African government's strategic goals [93]. The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), with the objective of increasing electricity supply while reducing dependency on fossil fuels [94], has led to a decrease in average solar PV prices from 2.76 R/kWh in 2011 to 0.79 R/kWh in 2015 [95] and the tariffs projected for 2030 had already been reached by 2014 [96]. The programme was initially criticised due to the competitive advantage of coal-generated electricity at the time and in the first round of bids, the average price of electricity from renewables was around 3.5 times higher than that of coal-based power generation [97].…”