Funny how “the blindingly obvious” is sometimes, not so obvious.
Although the scale benefits of Large Scale PV seem obvious, the debate on where the best economics lie is heating up.
Recent research on the Spanish PV market has lead to a proposal being considered to support residential PV instead of Large Scale PV. How can Residential PV be more cost effective than Large Scale? Simple:
- Talk to anyone who has done large and small projects and they’ll tell you that permit costs, project management, grid connection and administration gets very, very complex the larger the project. It adds significantly to the cost.
- At Large scale, you are competing with wholesale electricity prices, which are much lower (typically60-70% ) than Retail electricity prices. So you (often) sell your electricity at a lower rate in larger projects.
- And there is also the issue of finance. Getting project finance for a few million dollars on a project that might happen is a year or two is complex, expensive and involves risk mitigation and legal issues.
At a Residential level connection, project management and administration is relatively simple.
At a residential level, you can (often) get the Retail electricty price or even more, if you have an FIT.
At the residential level, you can finance a PV system through your home mortgage, pretty competitive Personal loans or even a credit card – if the revenues are satisfactory.
And of course there’s also the benefits of distributed generation, dispersed asset ownership and output profile diversity. There are also less tangible benefits such as improved understanding of energy demand, the “keeping up with the Jones’ effect”, and diverse market based competition from a residential market.
There are disadvantages too, however. Utilities legitimately need control over when and where electricity is injected into their network. Residential market forces can attract “sharks” - to consumers detriment. And the optimisation of PV generation cant be assured on hundreds of thousands of roof tops. And States, Councils and regional administrators can vary and influence the results with their own policies.
These facts are blindingly obvious but the industry seems to have overlooked them in some cases, because we were blinded by the allure of scale.
I hate to admit it, but by chasing Residential votes with Residentially focused PV schemes, the Australian Government has actually demonstrated how good Residential PV can be.
Forget “Peak Oil” – maybe we’ve hit “Peak Large Scale PV”?
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