COMMERCIAL PROSUMERS DEVELOPMENTS AND POLICY OPTIONS (RE-COM-PROSUMERS)

Transcription

1 COMMERCIAL PROSUMERS DEVELOPMENTS AND POLICY OPTIONS (RE-COM-PROSUMERS) David de Jager IEA-RETD Operating Agent EU PVSEC 2015 IEA PVPS Side event Hamburg, 14 September 2015

2 RE-COM-PROSUMERS Agenda Revisiting RE-PROSUMERS Commercial PV: Through the PROSUMER lens Commercial decisionmaking is complex Commercial prosumers are not yet emerging in major markets 3

3 Revisiting RE-PROSUMERS The PV Market Continues to Grow Cumulative Capacity Source: REN21 (2015) 4

4 Revisiting RE-PROSUMERS Commerical-scale PV systems are a significant share of European and US markets 7000 New PV Capacity Installed in United States United Kingdom Germany France Residential Commercial ( kw rooftop) Industrial Rooftop (>250 kw) and Ground Mounted/Utility Sources: SEIA 2014 (US); DECC Solar PV Deployment 2015 (UK); Bundesnetzagentur 2015 (DE), Syndicat des Énergies Renouvelables 5

5 Revisiting RE-PROSUMERS PV Installed Costs Continue to Decline Source: IRENA (2015) 6

6 Revisiting RE-PROSUMERS Residential prosumer scale-up will require policies to sustain growth and to enable industry and markets transition A residential prosumer revolution is not here yet Support policies are currently the primary determinant of residential prosumer emergence Major drivers, especially economic ones, are accelerating the case for residential prosumers What trends are evident for commercial-scale prosumers and how are they different from those in the residential sector? Are commercial prosumers emerging on an incentive free basis? 7

7 RE-COM-PROSUMERS Agenda Revisiting RE-PROSUMERS Commercial PV: Through the PROSUMER lens Commercial decisionmaking is complex Commercial prosumers are not yet emerging in major markets 8

8 Commercial PV: Through the PROSUMER lens What is a commercial prosumer? Different countries track and classify PV data in different ways and there is no standard definition Some countries (e.g. US) track commercial systems specifically, where other countries (e.g. France and Germany) primarily track systems based on the feed-in tariff they receive. For the purposes of this study, commercial prosumers: Are interconnected behind the meter 10 kw 250 kw 9

9 Nat. cond. Behavior Technology Economic drivers Commercial PV: Through the PROSUMER lens Drivers and national conditions shape prosumer landscape Constrain prosumers High PV system costs Low electricity prices and fixed charges Low self-consumption ratio Low insolation Enable prosumers Low PV system costs High electricity prices and volumetric rates High self-consumption ratio High insolation Hassle factor, lack of trust in technology, policy uncertainty n/a Additional storage costs Additional EV costs Environmental awareness, energy autonomy, cool factor PV technology breakthroughs Improved self-consumption ratio Improved self-consumption ratio Decreasing energy demand Available roof space, tenant ownership 10

10 Nat. cond. Behavior Technology Economic drivers Commercial PV: Through the PROSUMER lens Commercial and residential drivers are different Constrain prosumers Lower retail rates + fixed charges Enable prosumers Bigger systems = lower installed cost Higher self-consumption ratio Complex decision making Sophisticated staff; benefits for corporate branding Storage can shave peak 11

11 RE-COM-PROSUMERS Agenda Revisiting RE-PROSUMERS Commercial PV: Through the PROSUMER lens Commercial decision making is complex Commercial prosumers are not yet emerging in major markets 12

12 Commercial decision making is complex Commercial buildings can be grouped into subsectors with distinct building types, but building type is not the main driver 180,0% 160,0% Self-Sufficiency Ratio of Various Commercial Building Types 170,1% 140,0% 120,0% 100,0% 80,0% 60,0% 73,6% 67,2% 66,8% 40,0% 20,0% 15,2% 4,6% 6,3% 4,9% 21,1% 29,3% 23,5% 0,0% Full-Service Restaurant Hospital Large Hotel Large Office Medium Office Primary School Secondary School Standalone Retail Strip Mall Supermarket Warehouse Source: Ong et al

13 Commercial decision making is complex Solar PV adoption may depend heavily on building ownership and property management strategy Category of Building Considerations Commercial real estate Leased and managed by the owner Leased but managed by a property management company Owner-occupied Franchises and chains (e.g. supermarkets, retail, restaurants, and hotels) Institutional (e.g. public buildings, universities, and hospitals) Highly diverse ownership, management and corporate strategies) Long-term occupancy May be enabled or constrained by government policy 14

14 Commercial decision making is complex Organizational decision making is the ultimate determinant of commercial PV adoption Create longterm plans Set targets Executive team responsible for energy Routinely review opportunities Metrics to track progress Benchmark vs. leaders Executive Leadership Clear mandate & formal responsibilities Crossfunctional teams Engaged employees Learning opportunities Results of projects are widely shared Regular energy & GHG reporting Potential projects are continuously identified Pipeline of projects implemented Projects are highly visible Executives involved in PR Potential energy savings is modeled Energy data is monitored and used in decisions Public Relations Projects & Performance Mgmt. Continuous Improvement Financial Resources Human Resources $ $ $ $ Clear process for obtaining funding Ample funding available for projects Reliable funding available 15

15 Commercial decision making is complex Key take aways Commercial prosumer emergence cannot be determined based on building type alone Ownership and property management, which are complex in the commercial sector, are a critical factor in PV adoption PV adoption is heavily influenced by the organizational decision making structure of each entity, e.g. PV may not be adopted unless the executive commitment and technical capability are in place 16

16 RE-COM-PROSUMERS Agenda Revisiting RE-PROSUMERS Commercial PV: Through the PROSUMER lens Commercial decision making is complex Commercial prosumers are not yet emerging in major markets 17

17 Case Study Case study objectives What is currently occurring in the countries in scope with respect to onsite PV in the commercial sector and what are the primary drivers behind PV prosumers? Are commercial prosumers emerging and what are the drivers for this? Where is the outlook for widespread PV prosumers in the near term? Is a breakout scenario for commercial prosumers imminent? If not, what conditions and barriers are holding back widespread adoption of PV for self-consumption in the commercial sector? Building types selected based on which ones had strong potential to emerge as prosumers in a given country. The criteria included: Good available roof space, i.e. roofs are typically flat with minimal mechanical systems Relatively steady and large daily load profiles throughout the week and year Common building type within the country Data availability from either public or private sources 18

18 Case Study: United States The United States: 50 states with 50 policy environments, and lagging commercial prosumer growth across the board Commercial PV growth declined by 7% from 2013 to 2014; commercial installations overtaken by residential 30% investment tax credit on PV systems drops to 10% at end of 2016, likely slowing the solar market 50 states with significantly policies and attitudes towards solar Over 4,600 electric utilities with 13,000+ commercial rate structures High return on investment needed for energy-related investments Massachusetts is an ideal state for commercial prosumer emergence Strong incentives (net metering, SRECs) and ambitious state-level targets Strong commercial solar market: 22% of all new commercial capacity in 2014 Average commercial retail electricity rates are 60% greater than national average Big box retail stores owned by major national chains likely to adopt PV 7 of top 10 companies in installed capacity are chain retailers (~300 MW installed) Favorable building qualities (roof space and energy use profile) Large chains more likely to own buildings and have better access to finance 19

19 1:00 7:00 13:00 19:00 1:00 7:00 13:00 19:00 1:00 7:00 13:00 19:00 1:00 7:00 13:00 19:00 1:00 7:00 13:00 19:00 1:00 7:00 13:00 19:00 1:00 7:00 13:00 19:00 kw Case Study: United States The United States: Big box retail store in Massachusetts 2320 m 2 floor space 1 floor, flat roof 310,000 kwh annual consumption 98.6 kw peak demand (July) 100 kw PV at $2.25/W installed costs 4.33 kwh/m 2 /day avg. annual insolation 90.8% self-consumption ratio 37.4% self-sufficiency ratio 100 Energy Usage, Week of July With Incentives No Incentives No incentives ($1.50/W) 50 0 Net Present Value $179,298 -$21,774 $35, Simple Payback 2.6 years 7.4 years 5.1 years Consumption PV Generation Net Grid Injection IRR 30.5% 10.2% 16.1% Building load data from U.S. DOE Commercial Reference Data for standalone retail; hourly PV data modeled from PVWatts 12% discount rate, 1.8% annual electricity rate escalator Despite very favorable system economics from incentives and high electricity rates, commercial prosumers are not scaling up rapidly in Massachusetts. 20

20 Conclusions Commercial prosumers are not yet breaking loose As a result of organizational decision-making and comparatively low commercial electricity rates, the commercial sector is less wellpositioned for growth than residential prosumers. Traditional emphasis on the influence of commercial building type in driving prosumer behavior overlooks other more significant factors, such as rate structure. Commercial prosumers have been slow to emerge on an incentive free basis. The slow emergence of commercial prosumers has been largely due to poor economics In Germany, the economics for commercial prosumers are good, but new taxes on self-consumption has pushed back competitiveness 21

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