Is a Prosumer Revolution Imminent? Residential PV-Prosumers – Drivers and Policy Options (RE-PROSUMERS) Kristian Petrick IEA-RETD Operating Agent IRED 2014, Kyoto, Japan, 20 November 2014
Background IEA-RETD The mission of IEA-RETD is to accelerate the large-scale deployment of renewable energies RETD stands for “Renewable Energy Technology Deployment”. IEA-RETD is a policy-focused, technology cross-cutting platform (“Implementing Agreement”) under the legal framework of the International Energy Agency Created in 2005, currently 8 member countries : Canada, Denmark, France, Germany, Ireland, Japan, Norway, UK. IEA-RETD commissions annually 5-7 studies bringing together the experience of some of the world’s leading countries in RE with the expertise of renowned consulting firms and academia. Reports and handbooks are freely available at www.iea-retd.org. IEA-RETD organizes workshops and presents at international events. www.iea-retd.org 2
RE-PROSUMERS Study on the effects of large uptake of non-incentized residential PV by ‘prosumers’ PSG Georgina Grenon (FR, chair), Michael Paunescu (CA), Lisa Dignard (CA), Otto Bernsen (PVPS , NL), Gaëtan Masson (PVPS, OA), Axel Strang (FR), Simon Müller & Cédric Philibert (IEA), Kristian Petrick (IEA-RETD) IB Meister Consultants Group Published http://iea-retd.org/archives/publications/e- prosumers-report Timeframe January to June 2014 Motivation Are prosumers just a hype? Or are they a valuable policy option? Objective Empower policy makers to make informed decisions with regards to the legal and regulatory policy options of large scale decentralised production of non-incentivised PV. www.iea-retd.org 4
RE-PROSUMERS Agenda Is a PV Prosumer Revolution Imminent? No – Not Yet (Without Incentives and Enabling Policies) But Policy Makers Need to Watch Key Drivers... ... and Lay Out Potential Strategies Going Forward www.iea-retd.org 5
Is a PV Prosumer Revolution Imminent? The cost to install PV has fallen dramatically, and is likely to continue to do so Source: IEA 2014) Energy Technology Perspectives www.iea-retd.org 6
Is a PV Prosumer Revolution Imminent? PV market growth has exceeded early expectations Global Cumulative Installed PV Capacity (MW) 160.000 140.000 120.000 100.000 80.000 60.000 40.000 Est. 25-35% 20.000 residential 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Cumulative Capacity IEA WEO 2006 projection Source: IEA-PVPS (2013); MCG Research www.iea-retd.org 7
Is the PV Prosumer Revolution Imminent? Solar cost curves are close to the retail price in many countries (i.e. “socket” parity) … Socket price Bubble size = Size of electricity market If a bubble is above the curve for a particular year, the cost of solar is below residential electricity in that country at that time Note of caution: Available analyses appear to be “static” rather than “dynamic” as they compare PV LCOEs to the current retail price, rather than the NPV of projected consumer expenditures on electricity over time Source: Citi (2013) www.iea-retd.org 8
Is a PV Prosumer Revolution Imminent? The PV residential sector is a significant driver for decentralised power generation in various countries 35000 Some regions now have a very high share of “solar voters” 30000 25000 MW (2012) 20000 Non-Residential Residential 15000 10000 5000 ~25% ~20% ~85% ~70% 0 Germany US Japan Australia www.iea-retd.org Source: IEA-PVPS (2013); SEIA (2014); PV Magazine (2013; 2014 ) 9
RE-PROSUMERS Agenda Is a PV Prosumer Revolution Imminent? No – Not Yet (Without Incentives and Enabling Policies) But Policy Makers Need to Watch Key Drivers... ... and Lay Out Potential Strategies Going Forward www.iea-retd.org 10
No Prosumer Revolution – Yet PV costs must fall significantly below socket parity in order for non-incentivized growth to occur • To reach this phase it can Socket Parity still take a number of years • Regulatory conditions are crucial PV LCOE ≤ retail PV LCOE < retail PV LCOE > price, but price; investment investment not Retail price is compelling attractive PV LCOE Retail electricity rate www.iea-retd.org 11
No Prosumer Revolution – Yet For the time being, prosumers still need incentives and favorable regulations -> support schemes remain key Mass non-incentivized prosumers are unlikely to arrive in the near-term Incentives (e.g. FITs) above the retail electricity rate have driven the prosumer revolution to date Mass prosumer expansion will require policies that compensate most/all of PV output (net metering, below-retail FITs, etc.) Without support schemes, storage will be required – which adds cost Non-incentivized mass defection from grids not to be expected soon. US Germany Spain Colombia • Standard and • Guaranteed • Previously utilized FIT • High retail rates streamlined interconnection • PV LCOE below retail • Only onsite CHP interconnection in most • FIT for 90% of rates generation at palm oil states production • Introduced tax on self- plantations can feed into • Net metering in many • 10% of output must be consumption grid states self-consumed or sold at • Introduced fixed charge, • PV cannot feed-in • Retail rates vary widely wholesale which makes onsite PV • Draft law might introduce • Most residential rates • FITs below retail rates less attractive net metering volumetric www.iea-retd.org 12
No Prosumer Revolution – Yet Grid defection and wholesale competition scenarios for residential sector are unlikely in the near-term Grid defection with storage? Estimated 2030-2050 break- even for US and Australia Onsite load management and energy efficiency can accelerate timeline by a few years (but not decades) Wholesale competition for residential PV generators? Uncertainty because of RE impact on wholesale prices Wide range of wholesale competition dates (for Italy and Defection LCOE vs. retail electricity price (Residential base case) [Y-AXIS 2012$/kWh. Source: RMI (2014) Spain range between 2025 and 2040) Even if forward-looking scenarios are conservative and onsite load management and energy efficiency accelerate the case, there is little room for non incentivised mass defection www.iea-retd.org 13
RE-PROSUMERS Agenda Is a PV Prosumer Revolution Imminent? No – Not Yet (Without Incentives and Enabling Policies) But Policy Makers Need to Watch Key Drivers... ... and Lay Out Potential Strategies Going Forward www.iea-retd.org 14
Policy Makers Need to Watch Key Drivers A complex picture of drivers and national specifics influence the different stakeholder groups STAKEHOLDERS Govern- Grid PV Supply Prosumers Generators Consumers ments Operators Chain Economic Drivers DRIVERS Behavioural Drivers Technology Drivers National Conditions www.iea-retd.org 15
Policy Makers Need to Watch Key Drivers Drivers can have enabling or constraining effects on prosumer uptake… Constrain prosumers Enable prosumers High PV system costs Low PV system costs Economic Low electricity prices drivers High electricity prices and volumetric rates and fixed charges High self-consumption ratio Low self-consumption ratio Low insolation High insolation Beha- vior Hassle factor, lack of trust in Environmental awareness, energy technology, policy uncertainty autonomy, “cool” factor Techno- n/a PV technology breakthroughs logy Improved self-consumption ratio Additional storage costs Additional EV costs Improved self-consumption ratio Nat. cond. Decreasing energy demand Available roof space, tenant ownership www.iea-retd.org 16
Policy Makers Need to Watch Key Drivers … and Stakeholder Interest are crucial, too. Constrain prosumers Enable prosumers Decreased revenue for TSOs Prosumers can reduce T&D investments and DSOs, grid investments to accommodate prosumers Prosumers create new business Stakeholders Reduced generator revenues opportunities Increased retail electricity Economic, social, and environmental benefits created for all consumers rates for other consumers Reduced tax income, potential Increased resilience of energy supply; for stranded assets improved energy security www.iea-retd.org 17
Technical Challenges Solutions exist to increase the capability of grids to accommodate more prosumers Categories Examples Grid reinforcement: Advanced voltage control for HV/MW transformers Utility- and On-load tap changer, static volt ampere reactive control, booster transformer System Adopting storage controlled by the distribution grid operator Owner-led Network reconfiguration Solutions Advanced closed-loop operation Improved Data and Forecasting Incentivize prosumer storage Encourage greater self-consumption via price incentives Prosumer-led Curtail solar PV power output solutions PV orientation Adoption of advanced or “smart” PV inverters Demand response via local or market price signals Interactive SCADA-based techniques Solutions Voltage and VAR control technologies www.iea-retd.org 19
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