Business models for decentralized renewable energy

Transcription

1 Business models for decentralized renewable energy Sarah Rieseberg, Arepo Consult, Berlin Melbourne, June 5th

2 Background Sarah Rieseberg Project arepo consult Meet Arepo Consult We specialize in policy advice and analysis in renewable energy, energy efficiency, climate change policies. Design and evaluation of projects, programs and policies. National and international scope Clients: Governments, international organizations, NGOs, and foundations.

3 A face of the German energy transition

4 A face of the German energy transition... electricity heating mobility Solar Power Wood chip heating system and dreaming of an electric car...

5 Effects of feed-in tariffs: Ownership of RE in Germany Source: ownership of renewables in 2012 (AEE in energytransition.de)

6 A consequence of consistent policy support: Cost reduction of PV systems in Germany 1300 /kwp ~ 2005 A$ Average end customer price (net system price) for installed rooftop systems with rated nominal power from kwp, data from BSW, plotted by PSE AG.

7 Looking at the global PV markets...

8 Solar installations around the World (cumulative) Evolution of global solar PV cumulative installed capacity GW From SolarPower Europe (2015): Solar Photovoltaics Global Market Outlook

9 Solar electricity generation cost in europe in comparison to other sources WACC-Weighted average cost of capital From SolarPower Europe (2015): Solar Photovoltaics Global Market Outlook

10 Recent announced long-term contract prices for new renewable power From IEA 2015 Medium-Term Renewable Energy Market Report 2015

11 What are the drivers of solar market expansion?

12 Drivers of business models for RE-projects Regulation Grid parity Generation Parity

13 I. Business Models based on Regulation Regulation Grid parity Generation parity Possible business models feed-in tariffs/ premiums Net billing /- metering RE-obligations fiscal incentives loans/ grants What favors competitiveness? Low PV systems prices

14 Business Model: Trends Regulation Feed-in tariffs: The EU Commission is enforcing increased market compliance : Germany and the UK, for instance, have introduced feed-in premiums with a variable premium Increased introduction of competitive tenders Countries that had implemented competitive RE tenders by early 2015 (in blue) Source: IRENA (2015) based on data from REN21, 2015

15 Risks of competitive tender systems a German perspective Design of auction mechanisms is highly complex and often intransparent Carving-out problem need for technological and geograhically carved auctions, Lack of project realization Higher /MWh prices due to market concentration and risk premiums Concentration of actor groups and exclusion of coops, citizens and smaller companies

16 Grid parity and Self-consumption Grid parity How much can you make of self-consumption? Grid/socket parity depends heavily on The level of electricity subsidies The definition of tariffs, e.g. regarding peak periods How charges and taxes are applied to prosumers self-consumption direct PPA..and the rest? a) + selling excess generation at below avoided cost tariff/ wholesale market price/ PPA/ feed-in tariff b) + banking excess generation at grid-tariff grid feed-in

17 Drivers of Grid Parity Regulation Grid parity Generation Parity Possible business models self-consumption net-metering/ net-billing direct PPA building codes What favors competitiveness? Low PV system prices High grid prices/ levies, taxes etc. High peak prices

18 Self consumption models Grid parity In 2013, more than 50% of distributed PV installations were achieved due to measures allowing or supporting self-consumption. 7% of electricity from solar =105 TWh general European Solar PV Production and self-consumption (2014) Souce: SolarPower Europe (2015): Solar Photovoltaics Global Market Outlook

19 Self-consumption models: Trends Grid parity Net metering or net billing policies were in force in 48 countries as of early Adaptation of policies: reducing reumneration of excess generation Financing problems of grids, back-up and reserve occur in several markets US-states introduced caps Germany expanded RE levy to self-consumption share Spain introduced grid fees on self consumption share Building codes: 21 countries have mandates to promote renewable heating and cooling, often included in building codes

20 Drivers of Generation Parity Regulation Grid parity Generation Parity Possible business models unreliable/off-grid energy as a by-product eco-conscious customer Power Purchasing Agreement Low PV systems prices What favors competitiveness? High alternative, secure fuel price, e.g. diesel High alternative generation price, e.g. CO 2 pricing Unreliable grid/ fuel bottlenecks Fluctuating fuel prices

21 Examples of generation parity Generation Parity PPA competitive with fossil fuel highly unreliable grid supply picture source: PVTech.org (2016)

22 Generation Parity: Trends Growing call for RE to Integrate into the market! o Marginal power prices at the exchanges too low to cover the cost of any significant new generation. adequacy of such markets? o Markets with high RE shares are witnessing wholesale market price reductions, as wind and solar bit with near-zero incremental costs. omany markets have o changed to finance new capacities with capacity markets /feed-in tariffs / power purchase agreements/ tenders/ premiums o Introduced new products, e.g. capacity payments or pay-forperformance mechanisms

23 Elements of business models for RE-projects Regulation Grid parity Generation Parity feed-in tariffs/ premiums energy as a byproduct selfconsump tion REobligations unreliable/offgrid fiscal incentiv es loans/ grants direct PPA Net billing /- metering building codes ecoconscious customer PPA

24 Elements of business models for RE-projects Regulation Grid parity Generation Parity feed-in tariffs energy as a byproduct selfconsump tion REobligations unreliable/offgrid fiscal incentiv es loans/ grants direct PPA Net billing /- metering building codes ecoconscious customer PPA

25 A few examples...

26 Example PV Leasing from your local municipality PV-self-consumption-sets offered by municipal utilities either as buy or leasing options Custumer receives allinclusive package utility`s customer relation strategy Grid parity self-consumption feed-in tariff picture source: KfW

27 Tenants tariff PV on multi tenant housing Yelllow District Berlin Owner: Stadt & Land 50 roofs PV production: 1.6 GWh/a Teaming of with an utility the tenants tariff is composed of PV self-consumption and grid electricity in one package Grid parity direct PPA picture source: Lichtblick

28 No suitable roof? Examples community shared net metering Clean Energy Collective, Colorado Grid parity Virtual net metering. are solar-electric systems that provide power and/or financial benefit to multiple community members The Clean Energy Collective (CEC) provides a member-owned model that enables individuals to directly own panels in a community shared solar farm. picture source:

29 Summary and Outlook

30 Summing up Solar PV business models are becoming (more) competitive, and the first projects have reached generation paritiy in the wholesale market Business models are driven by: Regulations for PV grid feed-in, decrease in system prices, high + fluctuating alternative fuel prices, CO 2 taxes and regulation, unreliable grid supply Rooftop PV sees new business models, including share PV models but building codes will be an important expansion driver The increased competiveness is posing new questions: Integration into a broken system? How to finance new generation capacity in an environment of zero-increamental costs? How to finance grid/ back-up infrastructure with increasing shares of selfconsumption?

31 Thank you for your attention. More info: