The Effect of Retail Electricity Price Levels on the Financial Indicators of Smart-Grid Rooftop Solar Power Systems: A Case Study in the Central Highlands of Vietnam

Abstract

<jats:title>Abstract</jats:title> <jats:p><jats:bold>Background: </jats:bold>There are many constraints on the use of fossil fuels and, many countries have, therefore, conducted research relating to alternative energy resources to replace conventional fuels. On 31 January 2019, the Vietnamese Ministry of Finance enacted a preferential policy relating to the installation of under-50kWp rooftop solar projects. The Central Highlands of Vietnam has a high potential for solar power generation due to the duration of sunshine it enjoys, and the development of both rooftops solar and solar farms is appropriate for the region. The study reported investigated the economic efficiency of smart-grid rooftop solar electricity systems (SG rooftop PV) in the Central Highlands of Vietnam in light of the different levels of retail electricity pricing in Vietnam and the implementation of a feed-in-tariff system. The research reported in this paper will be useful for many groups of stakeholders, including electricity consumers who intend to install rooftop solar panels on their houses, companies who supply SG rooftop PV, and policymakers, who can use the findings relating to SG rooftop PV to adjust the retail price of electricity during different periods.<jats:bold>Method: </jats:bold>Financial indicators were calculated based on the net present value<jats:italic>, </jats:italic>payback period, internal rate of return, and the number of hours of sunshine in the Central Highlands of Vietnam<jats:bold>Result: </jats:bold>The study’s results show that the electricity price level affects the economic efficiency of SG rooftop PV. In particular, SG rooftop PV installed to satisfy higher levels of electricity consumption, which attract a higher retail electricity price, result in greater benefits, especially when domestic electricity consumption exceeds 400 kWh, at which level the retail electricity price is at the highest level. In this case, people who install SG rooftop PV and use all the electricity to satisfy domestic consumption will recoup their investment in only 4 years and thereafter will enjoy free electricity. <jats:bold>Conclusion: </jats:bold>All the financial indicators derived from this research show that people in the Central Highlands of Vietnam can derive benefit from installing SG rooftop PV, whether they sell all the electricity output to the grid or use the power output to satisfy their domestic demand.</jats:p>