The Economics and Potential Uptake of PV Solar Power by Region and PV System Cost

In 2015 the GREEN Grid project examined the economics of Photovoltaic solar power (PV) to residential users, commercial users, and utility companies. They found that for a certain number of residential households, PV was already financially viable. They also found that the financial viability was highly dependent on local irradiation, nature of the household load, access to capital, and cost of the PV system. Given that people are more likely to install solar when it becomes financial viable to do so, by exploring the factors affecting financial viability, potential uptake can be inferred. This paper extends the economics of PV to residential users to all regions of New Zealand, to understand the local irradiation and retail electricity pricing components, uses a greater sample of households’ load profiles, and looks at the potential uptake based on PV system cost. The paper also looks at the sensitivity of potential uptake based on PV system cost. It concludes that if all homes for which PV is financially viable under existing distribution pricing regimes install PV, the PV system cost is close to a point in most regions where the installed capacity of PV will rise very rapidly. From the analysis, the PV system cost needs to fall to about 2.3 $/Wp for the New Zealand wide median NPV to be at zero (i.e. where PV is financially viable for 50% of households), subject to assumptions. This is an important conclusion, as the PV system cost in New Zealand is not far from this already, and worldwide PV prices are forecast to continue to fall. The paper also concludes that for some regions, such as Marlborough and Gisborne, this point occurs at a higher system cost, around 3 $/Wp (i.e. those regions are already close to the point where PV is financially viable for around 50% of the population). The reasons for this relate mainly to high irradiation and variable retail prices in those regions. The same conclusion could not be made for the Nelson and Tasman regions due to lack of load profile data