Grid parity analysis of distributed PV generation considering tariff policies in Argentina
Graphical abstract
Introduction
In the last years, electric power generation systems have undergone a deep change due to the need to reduce environmental pollution. This same need led several countries to increase the use of renewable energy sources (RESs) following the new energy policies. Among these RESs, photovoltaic (PV) generation is one of the safest and widely used technologies in the world, mainly in European countries, USA, China, and Japan, just to mention some.
Despite the high levels of solar radiation present in provinces like San Juan, (see Fig. 1), the PV market in Argentina has not yet expanded as in developed countries. This is mainly caused by the high costs of PV systems in relation to retail electricity prices (in fact, electricity tariffs for some economic sectors are below their real costs). Therefore, in order to accelerate the penetration of this type of systems, and based on the experience in other countries, it is necessary to introduce incentive mechanisms such as the Feed-in Tariff (FiT), Net Billing (NBi) and Net Metering (NMe). In this sense, in December 2017 the Argentine government approved the Law 27.424 (Senado y Cámara de Diputados de la Nación Argentina, 2017) that proposes a program to promote for distributed generation (DG) through RESs, based on a “Net Billing” scheme and some economic and tax incentives. Although this is the first law related to this theme at national level in Argentina, before it, several provinces (states) had regulations encouraging DG-PV systems installation.
Within this context, in this work, the DG-PV cost competitiveness in Argentina is analyzed through a grid parity analysis from the perspective of residential users under current costs and tariffs conditions. The province of San Juan-Argentina is used as a case study for this analysis due to its high solar irradiance levels. The power generated by PV systems is estimated through a stochastic model that considers uncertainties from temperature and irradiance. Parameters used in this model are adjusted based on measurements obtained from three PV systems installed in the province. Additionally, the influence of the FiT, NBi and NMe schemes on the residential user tariff are compared in this work. In the methodology, it was also considered a detailed analysis of the tariff structure that this type of user pays for the electricity. Thus, the methodology highlights the advantages of the different schemes in countries where electricity tax rates are high.
Based on results obtained, and due to the costs of these systems and the tariffs for this sector of the population, it can be concluded that the grid parity has not been reached in Argentina yet. Accordingly, the economic impact of DG-PV installation is studied for a typical residential user, taking into account the NBi incentive mechanism proposed by the Law 27.424 as well as the FiT and NMe mechanisms. In this way, the mechanism which best adapts to the particular conditions of the province of San Juan is specified so that PV electricity generation resulted economically competitive. Finally, some incentive policies that could be implemented by the government are presented, with the aim of encouraging the investment in this type of technology and of achieving the grid parity in the short term.
The rest of this article is organized as follows. The theoretical background and the literary review that support this work is included in Section 2. The methodology to determine the gird parity for a DG-PV system is presented in Section 3. Furthermore, the case study of the province of San Juan-Argentina is described in Subsection 3.5. Results obtained from the different analysis are shown in Section 4. Finally, conclusions as well as political implications derived from this analysis are exposed in Section 5.
Section snippets
State of the art
In this section, a brief description of the grid parity concept is included, as well as the most widely used remuneration mechanisms such as FiT, NMe and NBi, which, although they are well-known, will help understand the methodology and the studies carried out in this work. The current state of the art of those concepts mentioned above is also presented here.
Methodology applied to analyze the case of study
From the literature review, it can be observed that the LCOE is widely used to evaluate the grid parity for PV systems, and additionally, that the remuneration mechanisms most commonly used worldwide are FiT, NMe and NBi. Therefore, in this work, it is presented a grid parity analysis based on the LCOE under the current conditions of costs and rates in the province of San Juan-Argentina. In addition, the impact of the FiT and NMe mechanisms on the profitability of residential users is analyzed,
Grid parity of DG-PV
The average, maximum and minimum values for both the LCOE and the electricity price at the residential user level with taxes included, throughout the nine years of study (2012–2020) are shown in Fig. 6.
It can be seen that during the years of study the LCOE decreased and the electricity price increased; however, it is noteworthy that currently, the grid parity has not been reached yet. This is because the LCOE for 2020 is approximately 20% higher than the price of electricity that a typical
Conclusions and policy implications
The high levels of solar radiation present in the province of San Juan-Argentina and the political objectives to increase the RESs penetration by the National Government, encourage investment in DG-PV systems in the province. However, this is impaired by the current high investment costs, monetary, policy and regulatory uncertainties. For this reason, it is necessary to develop efficient mechanisms that promote investment in DG-PV, which implies to carry out a detailed analysis of investments
CRediT authorship contribution statement
M. Samper: Supervision, Methodology, Partial Calculation, Writing – review & editing, Formal analysis. G. Coria: Investigation, Methodology, Writing – original draft, Software. M. Facchini: Conceptualization, Supervision, Formal analysis.
Declaration of competing interest
The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
References (48)
- et al.
A comparative assessment of net metering and net billing policies. Study cases for Spain
Energy
(2015) - et al.
Towards grid parity in insular energy systems: the case of photovoltaics (PV) in Cyprus
Energy Pol.
(2014) - et al.
“Spain's energy outlook: a review of PV potential and energy export
Renew. Energy
(2016) - et al.
Economics of pooling small local electricity prosumers - LCOE & self-consumption
Renew. Sustain. Energy Rev.
(2015) - et al.
The future of the feed-in tariff (FiT) scheme in Europe: the case of photovoltaics
Energy Pol.
(2016) - et al.
Moving beyond LCOE: impact of various financing methods on PV profitability for SIDS
Energy Pol.
(2016) Tipos de Cambio (exchange rate)
- et al.
Distributed photovoltaic generation in Ecuador: economic analysis and incentives mechanisms
IEEE Latin America Transactions
(2020) - et al.
Impact of devaluation on grid parity for residential solar generation in Latin America
IEEE Latin America Transactions
(2017) - et al.
Technical, economical and social assessment of photovoltaics in the frame of the net-metering law for the province of Salta, Argentina
Energies
(2016)
Economic analysis of photovoltaic projects: the argentinian renewable generation policy for residential sectors
Renew. Energy
PV grid parity monitor, Chile
“Emerging shadows in national solar policy? Nevada's net metering transition in context
Electr. J.
Evolution from the renewable portfolio standards to feed-in tariff for the deployment of renewable energy in Japan
Renew. Energy
Mapa de Radiación Solar de La Provincia de San Juan.” San Juan - Argentina
Resolución 063: Reglamentación de Generación Distribuida
Reglamento de Las Condiciones Técnicas de Operación, Mantenimiento, Medición y Facturación Para El Vuelco de Excedentes de Energía a La Red Eléctrica de Distribución
Resolución 1315/14: reglamentación de La ley 7824. Balance neto. Generadores residenciales, industriales y/o productivos
Analysis of the promotion of onshore wind energy in the EU: feed-in tariff or renewable portfolio standard?
Renew. Energy
Social equity issues in the distribution of feed-in tariff policy benefits: a cross sectional analysis from england and wales using spatial census and policy data
Energy Pol.
The effect of switching renewable energy support systems on grid parity for photovoltaics: analysis using a learning curve model
Energy Pol.
Implications of alternative stochastic processes for investment in agricultural technologies
Appl. Econ. Lett.
Solar feed-in tariffs in a post-grid parity world: the role of risk, investor diversity and business models
Energy Pol.
Cited by (22)
Dynamic customer demand management: A reinforcement learning model based on real-time pricing and incentives
2023, Renewable Energy FocusGrid parity analysis of photovoltaic systems considering feed-in tariff and renewable energy certificate schemes in Hong Kong
2023, Renewable and Sustainable Energy ReviewsA review of data-driven smart building-integrated photovoltaic systems: Challenges and objectives
2023, EnergyCitation Excerpt :The flexibility of combining power generation with buildings still lacks regulations and standards to manage the energy system is the next perspective of data-driven optimization in supply-side. Many countries have formulated the goal of using solar PV in construction [168,169], but compared with various application scenarios [170], solar PV policy guiding is still not enough [171]. The performance metrics of the BIPV systems established based on energy policies or industry standards have a profound impact on the construction planning of the building [172,173].
Evaluation of tax incentives on the financial viability of microgrids
2023, Applied Energy