Evaluating consumer investments in distributed energy technologies

Giorgio Castagneto Gissey*, Behnam Zakeri, Paul E. Dodds, Dina Subkhankulova

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

4 Citations (Scopus)
14 Downloads (Pure)

Abstract

The adoption of solar photovoltaic and electrical energy storage by end users depends on their economic attractiveness, which is typically assessed with metrics of future cash flow such as Net Present Value (NPV). Yet analyses using NPV typically do not account for the evolution towards low-carbon electricity systems in the short and long term. We show this to be of critical importance for accurately calculating the profitability of these technologies. By linking an energy system model with a power system model, we observe substantial differences between NPV estimates calculated with and without representing potential evolutions of the electricity system. Our results suggest that not accounting for short- and long-run changes in the electricity system could underestimate the NPV of an investment in photovoltaic and storage by around 20%, especially in scenarios with high levels of renewables, moderate flexibility, and high electrification in the energy system. Using system-dependent cash flow metrics can have a major impact on end-users' energy technology profitability.

Original languageEnglish
Article number112008
Number of pages12
JournalEnergy Policy
Volume149
DOIs
Publication statusPublished - Feb 2021
MoE publication typeA1 Journal article-refereed

Keywords

  • Energy storage
  • Feasibility study
  • Private investment
  • Prosumer
  • Renewable energy integration
  • Solar PV
  • System value

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