THE ECONOMICS OF PROSUMAGE Business opportunities in Germany, - - PowerPoint PPT Presentation

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THE ECONOMICS OF PROSUMAGE Business opportunities in Germany, - - PowerPoint PPT Presentation

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15 th IAEE European Conference Vienna 5. Sept. 2017 THE ECONOMICS OF PROSUMAGE Business opportunities in Germany, California, India, South Africa and Australia Maximilian Eiler, Charlotte Rochell and Philipp Zorn Berlin Institute of

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

THE ECONOMICS OF PROSUMAGE

Business opportunities in Germany, California, India, South Africa and Australia

15th IAEE European Conference Vienna

  • 5. Sept. 2017

Maximilian Eißler, Charlotte Rochell and Philipp Zorn Berlin Institute of Technology, Workgroup for Economic- and Infrastructure Policy (WIP)

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Agenda

1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios

Agenda

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

The problem with PV

The by now infamous „Duck Curve“ Rooftop solar PV is getting cheaper: LCOEs have dropped below 10 €ct and towards 5 €ct PV feed-in could become problematic for grid stability! Regulators may disincentivize solar investments when the pressure on the grid grows.

Source: InsideEnergy.org

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

The problem with PV

There seems to be a solution: But does it make sense on a consumer level?

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

The problem with calculating Levelized cost of storage (LCOS)

While LCOE is really straightforward to calculate... ... LCOS is not.

LCOE = PCI + t=1

N

AO 1 + DR t t=1

N

GP 1 + DR t LCOS = PCI + t=1

N

AO + OC 1 + DR t t=1

N

SU 1 + DR t

This is hard to estimate

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Agenda

1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Modelling Prosumage System Profitability

Measuring battery use with a model

  • Model household with random consumption function
  • Matching consumption data with insolation-based production data
  • Computing the model for every possible system configuration

(1.5-10 kWp PV and 0-20 kWh storage) Model year metering data for a lot of configurations Economic Evaluation

  • Calculation of a number of economic indicators
  • Mapping Internal Rate of Return (IRR) on a surface plot
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios

Agenda

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Model Structure

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios

Agenda

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Results on LCOE for rooftop PV

LCOEs are quite low already, depending on the system‘s size and local subsidies.

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Results: Comparing LCOEs with national retail prices

There is grid parity in nearly every scenario and country.

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Storage Profitability Conditions

Two conditions are necessary for storage to be economic: 1. 2.

(𝑀𝐷𝑃𝐹 + 𝑀𝐷𝑃𝑇) < 𝐹𝑚𝑓𝑑𝑢𝑠𝑗𝑑𝑢𝑧 𝑆𝑓𝑢𝑏𝑗𝑚 𝑄𝑠𝑗𝑑𝑓 𝑀𝐷𝑃𝑇 < (𝐹𝑚𝑓𝑑𝑢𝑠𝑗𝑑𝑗𝑢𝑧 𝑆𝑓𝑢𝑏𝑗𝑚 𝑄𝑠𝑗𝑑𝑓 − 𝐺𝐽𝑈)

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Storage Profitability Condition 1 is only fulfilled for Germany

Two conditions are necessary for storage to be economic:

(𝑀𝐷𝑃𝐹 + 𝑀𝐷𝑃𝑇) < 𝐹𝑚𝑓𝑑𝑢𝑠𝑗𝑑𝑢𝑧 𝑆𝑓𝑢𝑏𝑗𝑚 𝑄𝑠𝑗𝑑𝑓

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Storage Profitability Condition 2 is not fulfilled anywhere

Two conditions are necessary for storage to be economic:

𝑀𝐷𝑃𝑇 < (𝐹𝑚𝑓𝑑𝑢𝑠𝑗𝑑𝑗𝑢𝑧 𝑆𝑓𝑢𝑏𝑗𝑚 𝑄𝑠𝑗𝑑𝑓 − 𝐺𝐽𝑈)

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Storage Profitability Condition 2 is not fulfilled anywhere Yet.

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios

Agenda

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

BASIC SCENARIO: The present day

Germany California India South Africa Australia

  • Current Electricity Retail Prices (Fixed plus Variable)
  • Current FITs if applicable
  • Current Panel Prices plus local tax rates
  • Current local Labour/Installation costs etc.
  • Current Battery and Inverter prices
  • Cheap KfW

Interest Rates on solar projects

  • No further

assumptions

  • 30% tax break
  • Net Metering for

the first 5 years, 5€ct FIT after

  • No further

assumptions

  • Immediate sale
  • f certificates
  • 8€ct FIT for 5

years, 5€ct after

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

BASIC SCENARIO: Germany

In General

+

very low interest rates

  • low insolation

For Storage

+

high electricity retail prices

  • high FIT
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

BASIC SCENARIO: California

In General

+

low interest rates, great insolation

  • high initial price

For Storage

+

  • Net Metering
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

BASIC SCENARIO: India

In General

+

high insolation, low initial costs

  • very high interest rates,

very cheap power with high flat fee

For Storage

+

no FIT, (power cuts and blackouts)

  • very low variable

electricity price

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

BASIC SCENARIO: South Africa

In General

+

high insolation, low initial costs

  • very high interest rates,

very cheap power with high flat fee

For Storage

+

low FIT

  • low variable electricity

price

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

BASIC SCENARIO: Australia

In General

+

Immediate cashback for large part of investment

  • For Storage

+

high electricity retail prices

  • high FIT
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE SCENARIO: in Two to Ten Years

Germany California Australia Variant 1 Variant 3 Variant 2 Variant 4

  • 50% Battery

Costs

  • 25% Inverter

Costs

  • 50% Battery

Costs

  • 25% Inverter

Costs

  • 50% FIT
  • 75% Battery

Costs

  • 50% Inverter

Costs

  • 75% Battery Costs
  • 50% Inverter Costs
  • 50% FIT

same, but 4€ct FIT same, but 4€ct FIT

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

BASIC: Germany

  • Current Battery Prices
  • Current Inverter Prices
  • Current FIT
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 1: Germany

  • Battery Prices -50%
  • Inverter Prices -25%
  • Current FIT
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 3: Germany

  • Battery Prices -75%
  • Inverter Prices -50%
  • Current FIT
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 3: Germany

  • Battery Prices -75%
  • Inverter Prices -50%
  • Current FIT
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 2: Germany

  • Battery Prices -50%
  • Inverter Prices -25%
  • FIT -50%
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

BASIC: Australia

  • Current Battery Prices
  • Current Inverter Prices
  • Current FIT
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 1: Australia

  • Battery Prices -50%
  • Inverter Prices -25%
  • Current FIT
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 2: Australia

  • Battery Prices -50%
  • Inverter Prices -25%
  • FIT -50%
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 3: Australia

  • Battery Prices -75%
  • Inverter Prices -50%
  • Current FIT
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 4: Australia

  • Battery Prices -75%
  • Inverter Prices -50%
  • FIT -50%
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

BASE : California

  • Current Battery Prices
  • Current Inverter Prices
  • Current FIT
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 2 : California

  • Battery Prices -50%
  • Inverter Prices -25%
  • FIT 4€ct
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 4 : California

  • Battery Prices -75%
  • Inverter Prices -50%
  • FIT 4€ct
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

CHEAPER STORAGE VAR 4 : California

  • Battery Prices -75%
  • Inverter Prices -50%
  • FIT 4€ct
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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Conclusion

  • For developed countries with a rising share of PV generation batteries could become

profitable sooner than previously expected.

  • The profitability of solar PV in India and South Africa is currently not sufficient to expect an

adoption of storage (mainly due to capital costs and cheap electricity).

  • We might see a large scale adoption of storage on household level in developed countries

sooner than expected with current policies.

  • This might effect costumer behavior but also has implications for transmission system

planning in systems with high renewables penetration.

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Maximilian Eißler, Charlotte Rochell, Philipp Zorn Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) Economics of Prosumage 3rd of Sept 2017

Thank you for your attention!

Contact Data Philipp Zorn: pz@wip.tu-berlin.de, phone: +49 172 7630510