Where do the benefits of distributed
solar PV exceed the costs?
34th USAEE / IAEE North American Conference
October 25, 2016
Parth Vaishnav
Nathaniel Horner
Inês Azevedo
2
Motivation
• Are subsidies for rooftop PV paying for
themselves?
• Will currently installed PV systems pay for
themselves?
• How are system capacity and subsidies
distributed?
3
Evolution of benefits over time
AP2
NREL
TMY3 data
1kW
Electricity
generated
x(
EASIUR
CEMS
Marginal benefits based
on Siler-Evans et al.
Environmental
benefits
)
4
Evolution of benefits over time - EASIUR
5
Evolution of benefits over time – AP2
6
Benefits
NREL
TMY3 data
AP2
LBNL dataset of installed
systems (560k systems)
Electricity
generated
Consumption
displaced
x(
Electricity
price
Electricity sold
back to grid
Commercial and Residential
Hourly Load Data (NREL)
+
EASIUR
CEMS
Marginal benefits based
on Siler-Evans et al.
Environmental
benefits
LMP
)
Retail
price
Summed for
each year of
a system’s
20-year life
7
Costs
Total installed
price
Rebate
System Size
System Size
x
Deflator
Customer
cost
x
Current cost per kW by state
and by customer type
x
Deflator
x
Current cost per kW equal to
SunShot target
x
Deflator
8
Based on mixed electricity prices and historical system costs – EASIUR
System costs will exceed benefits by $4 billion.
Air quality and CO2 benefits exceed rebates
$1.3 billion
$2 billion
$3.1 billion
Air damage
reduction
CO2 damage
reduction
Electricity
sales
Customer rebate
System cost
for customers
9
Based on retail electricity prices and historical system costs – EASIUR
Benefits would exceed costs by $3.4 billion
$2.8 billion
Air damage
reduction
CO2 damage
reduction
Electricity
sales
Customer rebate
System cost
for customers
10
Based on mixed electricity prices and current system costs – EASIUR
At current system costs, costs would exceed
benefits by $2.6 billion
$1.2 billion
Air damage
reduction
CO2 damage
reduction
Electricity
sales
System cost
stagnated through 2009, while surging global demand strained PV supply chains. Starting in 2009,
installed prices resumed their descent and have fallen steeply and steadily since, with average
annual electricity
declines of 13%prices
to 18% per
yearcurrent
across the three
customer
segments.
As discussed in a later
Based on mixed
and
system
costs
– EASIUR
section, these recent price declines are the result of reductions in global PV module prices, as well
as declines in other hardware costs and “soft” costs. Within the last year of the analysis period, from
2013 to 2014, median installed prices fell by $0.4/W (9%) for residential systems, by $0.4/W (10%)
for non-residential systems ≤50
0k
W,
a
ndby$
0
.
7
/W (21%) for non-residential systems >500 kW.
11
At current prices, installed base would have cost
$1b less
$12
2014$/WDC
$10
$8
$6
Median Installed Price
$4
Residential
Non-R es iden tial ≤ 5 00 kW
$2
Non-Residential >500 kW
$0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Installation Year
Notes:10000
See Table 1 for sample sizes by installation year. Median installed prices are shown only if 20 or more
observations are available for a given year and customer segment.
Figure 7. Median I nstalled Price Trends over Time
8000
Estimated Distributed
Preliminary data for the first half of 2015 (see Figure 8) indicate
that
installed prices
Solar
Photovoltaic
(EIA)have
continued to decline beyond 2014. The figure is based on data from a subset of PV incentive
programs
and states covered elsewhere in this report (including most of the larger state markets).
6000
15
Cumulative installec capacity (MW)
Barbose, G.,
Darghouth, N.,
2015. Tracking the
Sun VIII: The
Installed Price of
Residential and
Non-Residential
Photovoltaic
Systems in the
United States.
Lawrence Berkley
National Lab.
Tracking the Sun VI I I
4000
Cumulative installed
capacity in analysis
2000
0
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
12
If the current installed base had achieved
SunShot targets, the net benefit would be $20b
$11 billion
Air damage
reduction
CO2 damage
reduction
Electricity
sales
System cost
13
More capacity has consistently been installed in
richer counties
2015
2011
14
More rebates have gone to richer counties, but
volume of rebates is falling
2011
2014
15
Rebates go to richer counties. Distribution of
rebates is getting closer to that of population
All systems
Distribution of county incomes
weighted by population
Distribution of county incomes
weighted by rebates in 2013
Distribution of county incomes
weighted by rebates in 2000
County median income ($ per year)
16
Rebates go to richer counties. Distribution of
rebates is getting closer to that of population
Commercial
Installations
Distribution of county incomes
weighted by population
Distribution of county incomes
weighted by rebates in 2013
Distribution of county incomes
weighted by rebates in 2013
County median income ($ per year)
17
Conclusions
• Systems are cheaper now
– But the grid is cleaner also
• System costs exceed benefits, even after accounting for CO2,
air quality improvements
– Not true in many states if all generation valued at the retail rate
– Not true if the SunShot target is met
• Air quality and greenhouse gas benefits exceed rebates
– Value of electricity produced does not exceed the cost to customer of
installation
• Systems and rebates have flowed to richer counties
– Distribution of rebates has started to match distribution of population
more closely
18
Acknowledgement
This work was supported by the center for
Climate and Energy Decision Making (SES0949710), through a cooperative agreement
between the National Science Foundation and
Carnegie Mellon University
19
Back-up
20
Extends two papers that have been
presented at CEIC in the past
UPDATED
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All use subject to JSTOR Terms and Conditions
Hagerman, S., Jaramillo, P., Morgan, M.G., 2016. Is rooftop solar PV
at socket parity without subsidies? Energy Policy 89, 84–94.
doi:10.1016/j.enpol.2015.11.017
Siler-Evans, K., Azevedo, I.L., Morgan, M.G., Apt, J., 2013. Regional
variations in the health, environmental, and climate benefits of wind
and solar generation. PNAS 110, 11768–11773.
doi:10.1073/pnas.1221978110
21
Based on mixed electricity prices and historical system costs – EASIUR
Same conclusions as AP2 about benefits, rebates.
AP2 and EASIUR produce similar results
$1.3 billion
$6 billion
$2.6 billion
Air damage
reduction
CO2 damage
reduction
Electricity
sales
Customer rebate
System cost
for customers
22
Benefits are ~3.2cents/kWh on average; but
there is significant variation between states
State
CA
MA
AZ
NY
NJ
NV
CT
PA
TX
MD
NH
FL
NM
DE
WI
OR
UT
MN
RI
AR
Total
installed
capacity
Air quality
benefits
CO2
reduction
benefits
Electricity
sales
(MW)
($ million)
($ million)
($ million)
3000
700
2000
9000
1000
400
400
2000
700
100
600
2000
500
600
300
1000
200
300
100
400
200
100
100
400
100
60
60
400
100
200
80
300
100
40
70
300
80
100
50
200
40
20
20
100
30
20
20
100
30
10
30
100
30
40
20
100
20
30
20
40
10
4
10
20
5
2
10
10
3
4
3
5
3
1
1
10
1
0.5
1
2
CO2 and air
Δprice to
Δprice to
Carbon price to
quality benefit equate system equate system equate system
per kWh
price with price with total price with total
electricity sales
benefits
benefits
($ per kWh)
($ per kWh)
($ per kWh)
($ per tCO2)
0.022
0.06
0.04
100
0.032
0.05
0.02
60
0.023
0.05
0.03
70
0.059
0.07
0.02
30
0.080
0.15
0.10
200
0.027
0.05
0.02
40
0.035
0.09
0.06
200
0.073
0.13
0.07
100
0.028
0.06
0.03
70
0.069
0.08
0.01
20
0.032
0.05
0.02
50
0.033
0.10
0.07
200
0.023
0.06
0.04
90
0.070
0.09
0.03
50
0.080
0.15
0.08
100
0.040
0.13
0.09
100
0.040
0.07
0.03
40
0.075
0.23
0.17
200
0.032
0.06
0.02
60
0.036
0.13
0.10
200