IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v149y2021ics0301421520307199.html
   My bibliography  Save this article

Evaluating consumer investments in distributed energy technologies

Author

Listed:
  • Castagneto Gissey, Giorgio
  • Zakeri, Behnam
  • Dodds, Paul E.
  • Subkhankulova, Dina

Abstract

The adoption of solar photovoltaic and electrical energy storage by end users depends on their economic attractiveness, which is typically assessed with metrics of future cash flow such as Net Present Value (NPV). Yet analyses using NPV typically do not account for the evolution towards low-carbon electricity systems in the short and long term. We show this to be of critical importance for accurately calculating the profitability of these technologies.

Suggested Citation

  • Castagneto Gissey, Giorgio & Zakeri, Behnam & Dodds, Paul E. & Subkhankulova, Dina, 2021. "Evaluating consumer investments in distributed energy technologies," Energy Policy, Elsevier, vol. 149(C).
  • Handle: RePEc:eee:enepol:v:149:y:2021:i:c:s0301421520307199
    DOI: 10.1016/j.enpol.2020.112008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421520307199
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.enpol.2020.112008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. O'Shaughnessy, Eric & Cutler, Dylan & Ardani, Kristen & Margolis, Robert, 2018. "Solar plus: Optimization of distributed solar PV through battery storage and dispatchable load in residential buildings," Applied Energy, Elsevier, vol. 213(C), pages 11-21.
    2. Burger, Scott & Chaves-Ávila, Jose Pablo & Batlle, Carlos & Pérez-Arriaga, Ignacio J., 2017. "A review of the value of aggregators in electricity systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 395-405.
    3. Colmenar-Santos, Antonio & Campíñez-Romero, Severo & Pérez-Molina, Clara & Castro-Gil, Manuel, 2012. "Profitability analysis of grid-connected photovoltaic facilities for household electricity self-sufficiency," Energy Policy, Elsevier, vol. 51(C), pages 749-764.
    4. Comello, Stephen & Reichelstein, Stefan J. & Sahoo, Anshuman, 2018. "The Road ahead for Solar PV Power," Research Papers 3620, Stanford University, Graduate School of Business.
    5. Clastres, C. & Ha Pham, T.T. & Wurtz, F. & Bacha, S., 2010. "Ancillary services and optimal household energy management with photovoltaic production," Energy, Elsevier, vol. 35(1), pages 55-64.
    6. Muhammad-Sukki, Firdaus & Ramirez-Iniguez, Roberto & Abu-Bakar, Siti Hawa & McMeekin, Scott G. & Stewart, Brian G., 2011. "An evaluation of the installation of solar photovoltaic in residential houses in Malaysia: Past, present, and future," Energy Policy, Elsevier, vol. 39(12), pages 7975-7987.
    7. Paul L. Joskow, 2011. "Comparing the Costs of Intermittent and Dispatchable Electricity Generating Technologies," American Economic Review, American Economic Association, vol. 101(3), pages 238-241, May.
    8. Hoppmann, Joern & Volland, Jonas & Schmidt, Tobias S. & Hoffmann, Volker H., 2014. "The economic viability of battery storage for residential solar photovoltaic systems – A review and a simulation model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 1101-1118.
    9. He, Xian & Delarue, Erik & D'haeseleer, William & Glachant, Jean-Michel, 2011. "A novel business model for aggregating the values of electricity storage," Energy Policy, Elsevier, vol. 39(3), pages 1575-1585, March.
    10. Varghese, Sushant & Sioshansi, Ramteen, 2020. "The price is right? How pricing and incentive mechanisms in California incentivize building distributed hybrid solar and energy-storage systems," Energy Policy, Elsevier, vol. 138(C).
    11. Severin Borenstein, 2017. "Private Net Benefits of Residential Solar PV: The Role of Electricity Tariffs, Tax Incentives, and Rebates," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(S1), pages 85-122.
    12. Boampong, Richard & Brown, David P., 2020. "On the benefits of behind-the-meter rooftop solar and energy storage: The importance of retail rate design," Energy Economics, Elsevier, vol. 86(C).
    13. Pfenninger, Stefan & Staffell, Iain, 2016. "Long-term patterns of European PV output using 30 years of validated hourly reanalysis and satellite data," Energy, Elsevier, vol. 114(C), pages 1251-1265.
    14. O'Shaughnessy, Eric & Cutler, Dylan & Ardani, Kristen & Margolis, Robert, 2018. "Solar plus: A review of the end-user economics of solar PV integration with storage and load control in residential buildings," Applied Energy, Elsevier, vol. 228(C), pages 2165-2175.
    15. Sargent, Thomas J. & Wallace, Neil, 1976. "Rational expectations and the theory of economic policy," Journal of Monetary Economics, Elsevier, vol. 2(2), pages 169-183, April.
    16. Ramadhan, Mohammad & Naseeb, Adel, 2011. "The cost benefit analysis of implementing photovoltaic solar system in the state of Kuwait," Renewable Energy, Elsevier, vol. 36(4), pages 1272-1276.
    17. Comello, Stephen & Reichelstein, Stefan & Sahoo, Anshuman, 2018. "The road ahead for solar PV power," Renewable and Sustainable Energy Reviews, Elsevier, vol. 92(C), pages 744-756.
    18. Zakeri, Behnam & Syri, Sanna, 2015. "Electrical energy storage systems: A comparative life cycle cost analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 569-596.
    19. Castagneto Gissey, Giorgio & Subkhankulova, Dina & Dodds, Paul E. & Barrett, Mark, 2019. "Value of energy storage aggregation to the electricity system," Energy Policy, Elsevier, vol. 128(C), pages 685-696.
    20. Dietrich, Andreas & Weber, Christoph, 2018. "What drives profitability of grid-connected residential PV storage systems? A closer look with focus on Germany," Energy Economics, Elsevier, vol. 74(C), pages 399-416.
    21. Chesser, Michael & Hanly, Jim & Cassells, Damien & Apergis, Nicholas, 2018. "The positive feedback cycle in the electricity market: Residential solar PV adoption, electricity demand and prices," Energy Policy, Elsevier, vol. 122(C), pages 36-44.
    22. Ross, Martin T., 2018. "The future of the electricity industry: Implications of trends and taxes," Energy Economics, Elsevier, vol. 73(C), pages 393-409.
    23. Padmanathan K. & Uma Govindarajan & Vigna K. Ramachandaramurthy & Sudar Oli Selvi T., 2017. "Multiple Criteria Decision Making (MCDM) Based Economic Analysis of Solar PV System with Respect to Performance Investigation for Indian Market," Sustainability, MDPI, vol. 9(5), pages 1-19, May.
    24. Poullikkas, Andreas, 2009. "Parametric cost-benefit analysis for the installation of photovoltaic parks in the island of Cyprus," Energy Policy, Elsevier, vol. 37(9), pages 3673-3680, September.
    25. Thomas P. Lyon, 2016. "Drivers and Impacts of Renewable Portfolio Standards," Annual Review of Resource Economics, Annual Reviews, vol. 8(1), pages 141-155, October.
    26. Kaldellis, J.K. & Zafirakis, D. & Kaldelli, E.L. & Kavadias, K., 2009. "Cost benefit analysis of a photovoltaic-energy storage electrification solution for remote islands," Renewable Energy, Elsevier, vol. 34(5), pages 1299-1311.
    27. Ringkjøb, Hans-Kristian & Haugan, Peter M. & Solbrekke, Ida Marie, 2018. "A review of modelling tools for energy and electricity systems with large shares of variable renewables," Renewable and Sustainable Energy Reviews, Elsevier, vol. 96(C), pages 440-459.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Franz Harke & Philipp Otto, 2023. "Solar Self-Sufficient Households as a Driving Factor for Sustainability Transformation," Sustainability, MDPI, vol. 15(3), pages 1-20, February.
    2. Zakeri, Behnam & Gissey, Giorgio Castagneto & Dodds, Paul E. & Subkhankulova, Dina, 2021. "Centralized vs. distributed energy storage – Benefits for residential users," Energy, Elsevier, vol. 236(C).
    3. Elias Carayannis & Pantelis Kostis & Hasan Dinçer & Serhat Yüksel, 2022. "Balanced-Scorecard-Based Evaluation of Knowledge-Oriented Competencies of Distributed Energy Investments," Energies, MDPI, vol. 15(21), pages 1-23, November.
    4. Jorge Luis Angarita-Márquez & Geev Mokryani & Jorge Martínez-Crespo, 2021. "Two-Stage Stochastic Model to Invest in Distributed Generation Considering the Long-Term Uncertainties," Energies, MDPI, vol. 14(18), pages 1-12, September.
    5. Rui Ai & Yuhang Zheng & Serhat Yüksel & Hasan Dinçer, 2023. "Investigating the components of fintech ecosystem for distributed energy investments with an integrated quantum spherical decision support system," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-28, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zakeri, Behnam & Gissey, Giorgio Castagneto & Dodds, Paul E. & Subkhankulova, Dina, 2021. "Centralized vs. distributed energy storage – Benefits for residential users," Energy, Elsevier, vol. 236(C).
    2. Zakeri, Behnam & Cross, Samuel & Dodds, Paul.E. & Gissey, Giorgio Castagneto, 2021. "Policy options for enhancing economic profitability of residential solar photovoltaic with battery energy storage," Applied Energy, Elsevier, vol. 290(C).
    3. O'Shaughnessy, Eric & Cutler, Dylan & Ardani, Kristen & Margolis, Robert, 2018. "Solar plus: A review of the end-user economics of solar PV integration with storage and load control in residential buildings," Applied Energy, Elsevier, vol. 228(C), pages 2165-2175.
    4. Ahmed Gailani & Tracey Crosbie & Maher Al-Greer & Michael Short & Nashwan Dawood, 2020. "On the Role of Regulatory Policy on the Business Case for Energy Storage in Both EU and UK Energy Systems: Barriers and Enablers," Energies, MDPI, vol. 13(5), pages 1-20, March.
    5. Andreolli, Francesca & D’Alpaos, Chiara & Moretto, Michele, 2022. "Valuing investments in domestic PV-Battery Systems under uncertainty," Energy Economics, Elsevier, vol. 106(C).
    6. Giarola, Sara & Molar-Cruz, Anahi & Vaillancourt, Kathleen & Bahn, Olivier & Sarmiento, Luis & Hawkes, Adam & Brown, Maxwell, 2021. "The role of energy storage in the uptake of renewable energy: A model comparison approach," Energy Policy, Elsevier, vol. 151(C).
    7. Ray, Manojit & Chakraborty, Basab, 2019. "Impact of evolving technology on collaborative energy access scaling," Renewable and Sustainable Energy Reviews, Elsevier, vol. 110(C), pages 13-27.
    8. Claudia Gunther & Wolf-Peter Schill & Alexander Zerrahn, 2019. "Prosumage of solar electricity: tariff design, capacity investments, and power system effects," Papers 1907.09855, arXiv.org.
    9. Martin, Nigel & Rice, John, 2021. "Power outages, climate events and renewable energy: Reviewing energy storage policy and regulatory options for Australia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    10. Günther, Claudia & Schill, Wolf-Peter & Zerrahn, Alexander, 2021. "Prosumage of solar electricity: Tariff design, capacity investments, and power sector effects," Energy Policy, Elsevier, vol. 152(C).
    11. Kovač, Marko & Stegnar, Gašper & Al-Mansour, Fouad & Merše, Stane & Pečjak, Andrej, 2019. "Assessing solar potential and battery instalment for self-sufficient buildings with simplified model," Energy, Elsevier, vol. 173(C), pages 1182-1195.
    12. Müller, Simon C. & Welpe, Isabell M., 2018. "Sharing electricity storage at the community level: An empirical analysis of potential business models and barriers," Energy Policy, Elsevier, vol. 118(C), pages 492-503.
    13. Hoppmann, Joern & Volland, Jonas & Schmidt, Tobias S. & Hoffmann, Volker H., 2014. "The economic viability of battery storage for residential solar photovoltaic systems – A review and a simulation model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 1101-1118.
    14. Aniello, Gianmarco & Shamon, Hawal & Kuckshinrichs, Wilhelm, 2021. "Micro-economic assessment of residential PV and battery systems: The underrated role of financial and fiscal aspects," Applied Energy, Elsevier, vol. 281(C).
    15. Sommerfeldt, Nelson & Madani, Hatef, 2017. "Revisiting the techno-economic analysis process for building-mounted, grid-connected solar photovoltaic systems: Part one – Review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 1379-1393.
    16. Aniello, Gianmarco & Bertsch, Valentin, 2023. "Shaping the energy transition in the residential sector: Regulatory incentives for aligning household and system perspectives," Applied Energy, Elsevier, vol. 333(C).
    17. Lai, Chun Sing & McCulloch, Malcolm D., 2017. "Levelized cost of electricity for solar photovoltaic and electrical energy storage," Applied Energy, Elsevier, vol. 190(C), pages 191-203.
    18. Olivella, Jordi & Domenech, Bruno & Calleja, Gema, 2021. "Potential of implementation of residential photovoltaics at city level: The case of London," Renewable Energy, Elsevier, vol. 180(C), pages 577-585.
    19. Scheller, Fabian & Burkhardt, Robert & Schwarzeit, Robert & McKenna, Russell & Bruckner, Thomas, 2020. "Competition between simultaneous demand-side flexibility options: the case of community electricity storage systems," Applied Energy, Elsevier, vol. 269(C).
    20. Pena-Bello, A. & Barbour, E. & Gonzalez, M.C. & Patel, M.K. & Parra, D., 2019. "Optimized PV-coupled battery systems for combining applications: Impact of battery technology and geography," Renewable and Sustainable Energy Reviews, Elsevier, vol. 112(C), pages 978-990.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:149:y:2021:i:c:s0301421520307199. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.