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

15 th IAEE European Conference Vienna 5. Sept. 2017 THE ECONOMICS OF PROSUMAGE Business opportunities in Germany, California, India, South Africa and Australia Maximilian Eißler, Charlotte Rochell and Philipp Zorn Berlin Institute of Technology, Workgroup for Economic- and Infrastructure Policy (WIP) Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 0 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Agenda 1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 1 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Agenda 1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 2 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 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 Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 3 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

The problem with PV There seems to be a solution: But does it make sense on a consumer level? Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 4 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

The problem with calculating Levelized cost of storage (LCOS) While LCOE is really straightforward to calculate... ... LCOS is not. AO AO + OC N N PCI + t=1 PCI + t=1 1 + DR t 1 + DR t LCOE = LCOS = GP SU N N t=1 t=1 1 + DR t 1 + DR t This is hard to estimate Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 5 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Agenda 1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 6 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 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 Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 7 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Agenda 1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 8 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Model Structure Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 9 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Agenda 1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 10 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Results on LCOE for rooftop PV LCOEs are quite low already, depending on the system‘s size and local subsidies. Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 11 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Results: Comparing LCOEs with national retail prices There is grid parity in nearly every scenario and country. Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 12 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Storage Profitability Conditions Two conditions are necessary for storage to be economic: (𝑀𝐷𝑃𝐹 + 𝑀𝐷𝑃𝑇) < 𝐹𝑚𝑓𝑑𝑢𝑠𝑗𝑑𝑢𝑧 𝑆𝑓𝑢𝑏𝑗𝑚 𝑄𝑠𝑗𝑑𝑓 1. 𝑀𝐷𝑃𝑇 < (𝐹𝑚𝑓𝑑𝑢𝑠𝑗𝑑𝑗𝑢𝑧 𝑆𝑓𝑢𝑏𝑗𝑚 𝑄𝑠𝑗𝑑𝑓 − 𝐺𝐽𝑈) 2. Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 13 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 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 Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 14 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 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) Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 15 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Storage Profitability Condition 2 is not fulfilled anywhere Yet. Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 16 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

Agenda 1. Problem 2. Approach 3. Model 4. General Findings 5. Scenarios Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 17 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 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 30% tax break No further No further Immediate sale • Interest Rates on Net Metering for assumptions assumptions of certificates • 8 € ct FIT for 5 solar projects the first 5 years, 5 € ct FIT after years, 5 € ct after Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 18 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

BASIC SCENARIO: Germany In General + very low interest rates - low insolation For Storage high electricity retail + prices - high FIT Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 19 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

BASIC SCENARIO: California In General low interest rates, great + insolation - high initial price For Storage + - - Net Metering Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 20 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 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 Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 21 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 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 Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 22 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017

BASIC SCENARIO: Australia In General Immediate cashback for + large part of investment - - For Storage high electricity retail + prices - high FIT Maximilian Eißler, Charlotte Rochell, Philipp Zorn Economics of Prosumage - 23 - Berlin Institute of Technology – Workgroup for Economic- and Infrastructure Policy (WIP) 3rd of Sept 2017