IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v222y2024ics0960148124000053.html
   My bibliography  Save this article

Cost accounting and economic competitiveness evaluation of photovoltaic power generation in China —— based on the system levelized cost of electricity

Author

Listed:
  • Chong, Shijia
  • Wu, Jing
  • Chang, I-Shin

Abstract

Accelerating the penetration of photovoltaics (PV) oriented renewables is a vital mainstay in climate mitigation. Along with continuous growth of PV generation in the power system, PV costs have been rapidly declining. Levelized cost of electricity (LCOE) is commonly applied to cost accounting of energy, while neglecting the specific cost compositions of PV leads to an overly optimistic scenario. By integrating grid costs and balancing costs into conventional LCOE framework, a System LCOE (S-LCOE) model was constructed to evaluate the economic feasibility of PV generation, more accurately. The results revealed that all provincial S-LCOE of China's PV is currently higher than local desulfurized coal electricity price (DCEP). Based on the comparative analysis of provincial S-LCOE and DCEP, four regions with diverse economic competitiveness were identified. PV projects in Region I and Region II are considered to be potentially competitive comparing to thermal generation, in terms of environmental benefits and S-LCOE, especially in Guangdong, Jilin, and Hainan. Furthermore, by simulating the descent trajectory of S-LCOE, we estimate that China will achieve S-LCOE equal to DCEP in Region I as early as 2023, while it will be postponed to 2042 in Region Ⅳ at the latest, depending on different S-LCOE descent rates.

Suggested Citation

  • Chong, Shijia & Wu, Jing & Chang, I-Shin, 2024. "Cost accounting and economic competitiveness evaluation of photovoltaic power generation in China —— based on the system levelized cost of electricity," Renewable Energy, Elsevier, vol. 222(C).
    • Handle: RePEc:eee:renene:v:222:y:2024:i:c:s0960148124000053
    DOI: 10.1016/j.renene.2024.119940
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148124000053
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2024.119940?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. Jinyue Yan & Ying Yang & Pietro Elia Campana & Jijiang He, 2019. "City-level analysis of subsidy-free solar photovoltaic electricity price, profits and grid parity in China," Nature Energy, Nature, vol. 4(8), pages 709-717, August.
    2. Varun Sivaram & Shayle Kann, 2016. "Solar power needs a more ambitious cost target," Nature Energy, Nature, vol. 1(4), pages 1-3, April.
    3. Wang, Rong & Hasanefendic, Sandra & Von Hauff, Elizabeth & Bossink, Bart, 2022. "The cost of photovoltaics: Re-evaluating grid parity for PV systems in China," Renewable Energy, Elsevier, vol. 194(C), pages 469-481.
    4. Javed, Muhammad Shahzad & Ma, Tao & Jurasz, Jakub & Canales, Fausto A. & Lin, Shaoquan & Ahmed, Salman & Zhang, Yijie, 2021. "Economic analysis and optimization of a renewable energy based power supply system with different energy storages for a remote island," Renewable Energy, Elsevier, vol. 164(C), pages 1376-1394.
    5. Zhang, Ruixiaoxiao & Lee, Minhyun & Huang, Lijie, 2023. "Grid parity analysis of photovoltaic systems considering feed-in tariff and renewable energy certificate schemes in Hong Kong," Renewable and Sustainable Energy Reviews, Elsevier, vol. 181(C).
    6. Hirth, Lion & Ueckerdt, Falko & Edenhofer, Ottmar, 2015. "Integration costs revisited – An economic framework for wind and solar variability," Renewable Energy, Elsevier, vol. 74(C), pages 925-939.
    7. Nieto-Díaz, Balder A. & Crossland, Andrew F. & Groves, Christopher, 2021. "A levelized cost of energy approach to select and optimise emerging PV technologies: The relative impact of degradation, cost and initial efficiency," Applied Energy, Elsevier, vol. 299(C).
    8. Qin, Jun & Jiang, Hou & Lu, Ning & Yao, Ling & Zhou, Chenghu, 2022. "Enhancing solar PV output forecast by integrating ground and satellite observations with deep learning," Renewable and Sustainable Energy Reviews, Elsevier, vol. 167(C).
    9. Reichenberg, Lina & Hedenus, Fredrik & Odenberger, Mikael & Johnsson, Filip, 2018. "The marginal system LCOE of variable renewables – Evaluating high penetration levels of wind and solar in Europe," Energy, Elsevier, vol. 152(C), pages 914-924.
    10. Zhang, Fang & Deng, Hao & Margolis, Robert & Su, Jun, 2015. "Analysis of distributed-generation photovoltaic deployment, installation time and cost, market barriers, and policies in China," Energy Policy, Elsevier, vol. 81(C), pages 43-55.
    11. Kou, Gang & Yüksel, Serhat & Dinçer, Hasan, 2022. "Inventive problem-solving map of innovative carbon emission strategies for solar energy-based transportation investment projects," Applied Energy, Elsevier, vol. 311(C).
    12. Chapman, Andrew J. & McLellan, Benjamin C. & Tezuka, Tetsuo, 2018. "Prioritizing mitigation efforts considering co-benefits, equity and energy justice: Fossil fuel to renewable energy transition pathways," Applied Energy, Elsevier, vol. 219(C), pages 187-198.
    13. Ryna Yiyun Cui & Nathan Hultman & Diyang Cui & Haewon McJeon & Sha Yu & Morgan R. Edwards & Arijit Sen & Kaihui Song & Christina Bowman & Leon Clarke & Junjie Kang & Jiehong Lou & Fuqiang Yang & Jiaha, 2021. "A plant-by-plant strategy for high-ambition coal power phaseout in China," Nature Communications, Nature, vol. 12(1), pages 1-10, December.
    14. Hong, Soonpa & Yang, Taeyong & Chang, Hyun Joon & Hong, Sungjun, 2020. "The effect of switching renewable energy support systems on grid parity for photovoltaics: Analysis using a learning curve model," Energy Policy, Elsevier, vol. 138(C).
    15. Yuhji Matsuo, 2022. "Re-Defining System LCOE: Costs and Values of Power Sources," Energies, MDPI, vol. 15(18), pages 1-39, September.
    16. Yu, Shiwei & Han, Ruilian & Zhang, Junjie, 2023. "Reassessment of the potential for centralized and distributed photovoltaic power generation in China: On a prefecture-level city scale," Energy, Elsevier, vol. 262(PA).
    17. Zou, Hongyang & Du, Huibin & Brown, Marilyn A. & Mao, Guozhu, 2017. "Large-scale PV power generation in China: A grid parity and techno-economic analysis," Energy, Elsevier, vol. 134(C), pages 256-268.
    18. Wang, Yu & He, Jijiang & Chen, Wenying, 2021. "Distributed solar photovoltaic development potential and a roadmap at the city level in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).
    19. Yang, Ying & Campana, Pietro Elia & Yan, Jinyue, 2020. "Potential of unsubsidized distributed solar PV to replace coal-fired power plants, and profits classification in Chinese cities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 131(C).
    20. Chen, Hao & Gao, Xin-Ya & Liu, Jian-Yu & Zhang, Qian & Yu, Shiwei & Kang, Jia-Ning & Yan, Rui & Wei, Yi-Ming, 2020. "The grid parity analysis of onshore wind power in China: A system cost perspective," Renewable Energy, Elsevier, vol. 148(C), pages 22-30.
    21. Xingping Zhang & Wenfeng Liu & Hongyang Zhang & Jiahai Yuan, 2021. "Can China Realize the Grid Parity Target of Centralized Photovoltaic Power by 2020?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(3), pages 740-756, February.
    22. Idel, Robert, 2022. "Levelized Full System Costs of Electricity," Energy, Elsevier, vol. 259(C).
    23. Zhao, Ge & Zhou, P. & Wen, Wen, 2022. "What cause regional inequality of technology innovation in renewable energy? Evidence from China," Applied Energy, Elsevier, vol. 310(C).
    24. Zheng Lu & Yunfei Chen & Qiaoqiao Fan, 2021. "Study on Feasibility of Photovoltaic Power to Grid Parity in China Based on LCOE," Sustainability, MDPI, vol. 13(22), pages 1-14, November.
    25. Hassan, Qusay, 2021. "Evaluation and optimization of off-grid and on-grid photovoltaic power system for typical household electrification," Renewable Energy, Elsevier, vol. 164(C), pages 375-390.
    26. Castrejon-Campos, Omar & Aye, Lu & Hui, Felix Kin Peng, 2022. "Effects of learning curve models on onshore wind and solar PV cost developments in the USA," Renewable and Sustainable Energy Reviews, Elsevier, vol. 160(C).
    27. Lin, Boqiang & Li, Jianglong, 2015. "Analyzing cost of grid-connection of renewable energy development in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 1373-1382.
    28. Gao, Xue & Rai, Varun & Nemet, Gregory F., 2022. "The roles of learning mechanisms in services: Evidence from US residential solar installations," Energy Policy, Elsevier, vol. 167(C).
    29. Huiming Zhang & Kai Wu & Yueming Qiu & Gabriel Chan & Shouyang Wang & Dequn Zhou & Xianqiang Ren, 2020. "Solar photovoltaic interventions have reduced rural poverty in China," Nature Communications, Nature, vol. 11(1), pages 1-10, December.
    30. Che, Xiao-Jing & Zhou, P. & Chai, Kah-Hin, 2022. "Regional policy effect on photovoltaic (PV) technology innovation: Findings from 260 cities in China," Energy Policy, Elsevier, vol. 162(C).
    31. Bai, Bo & Wang, Yihan & Fang, Cong & Xiong, Siqin & Ma, Xiaoming, 2021. "Efficient deployment of solar photovoltaic stations in China: An economic and environmental perspective," Energy, Elsevier, vol. 221(C).
    Full references (including those not matched with items on IDEAS)

    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. Wang, Rong & Hasanefendic, Sandra & Von Hauff, Elizabeth & Bossink, Bart, 2022. "The cost of photovoltaics: Re-evaluating grid parity for PV systems in China," Renewable Energy, Elsevier, vol. 194(C), pages 469-481.
    2. Song, Chenchen & Guo, Zhiling & Liu, Zhengguang & Hongyun, Zhang & Liu, Ran & Zhang, Haoran, 2024. "Application of photovoltaics on different types of land in China: Opportunities, status and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 191(C).
    3. Wang, Tiantian & Wang, Yanhua & Wang, Ke & Fu, Sha & Ding, Li, 2024. "Five-dimensional assessment of China's centralized and distributed photovoltaic potential: From solar irradiation to CO2 mitigation," Applied Energy, Elsevier, vol. 356(C).
    4. Yang, Ying & Campana, Pietro Elia & Yan, Jinyue, 2020. "Potential of unsubsidized distributed solar PV to replace coal-fired power plants, and profits classification in Chinese cities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 131(C).
    5. Xue, Liya & Liu, Junling & Lin, Xiaojing & Li, Mengyue & Kobashi, Takuro, 2024. "Assessing urban rooftop PV economics for regional deployment by integrating local socioeconomic, technological, and policy conditions," Applied Energy, Elsevier, vol. 353(PA).
    6. Jiehui Yuan & Wenli Yuan & Juan Yuan & Zhihong Liu & Jia Liao & Xunmin Ou, 2023. "Policy Recommendations for Distributed Solar PV Aiming for a Carbon-Neutral Future," Sustainability, MDPI, vol. 15(4), pages 1-16, February.
    7. Du, Hua & Han, Qi & de Vries, Bauke & Sun, Jun, 2024. "Community solar PV adoption in residential apartment buildings: A case study on influencing factors and incentive measures in Wuhan," Applied Energy, Elsevier, vol. 354(PA).
    8. Chen, Hao & Gao, Xin-Ya & Liu, Jian-Yu & Zhang, Qian & Yu, Shiwei & Kang, Jia-Ning & Yan, Rui & Wei, Yi-Ming, 2020. "The grid parity analysis of onshore wind power in China: A system cost perspective," Renewable Energy, Elsevier, vol. 148(C), pages 22-30.
    9. Zhang, Yijie & Ma, Tao & Yang, Hongxing, 2022. "Grid-connected photovoltaic battery systems: A comprehensive review and perspectives," Applied Energy, Elsevier, vol. 328(C).
    10. Zhang, Minhui & Zhang, Qin, 2020. "Grid parity analysis of distributed photovoltaic power generation in China," Energy, Elsevier, vol. 206(C).
    11. Yingxin Zhang & Sainan Wang & Wei Shao & Junhong Hao, 2021. "Feasible Distributed Energy Supply Options for Household Energy Use in China from a Carbon Neutral Perspective," IJERPH, MDPI, vol. 18(24), pages 1-16, December.
    12. Yuhji Matsuo, 2022. "Re-Defining System LCOE: Costs and Values of Power Sources," Energies, MDPI, vol. 15(18), pages 1-39, September.
    13. Zhang, Libo & Chen, Changqi & Wang, Qunwei & Zhou, Dequn, 2021. "The impact of feed-in tariff reduction and renewable portfolio standard on the development of distributed photovoltaic generation in China," Energy, Elsevier, vol. 232(C).
    14. Hongli Liu & Xiaoyu Yan & Jinhua Cheng & Jun Zhang & Yan Bu, 2021. "Driving Factors for the Spatiotemporal Heterogeneity in Technical Efficiency of China’s New Energy Industry," Energies, MDPI, vol. 14(14), pages 1-21, July.
    15. Chen, Han & Chen, Wenying, 2021. "Status, trend, economic and environmental impacts of household solar photovoltaic development in China: Modelling from subnational perspective," Applied Energy, Elsevier, vol. 303(C).
    16. Tu, Qiang & Betz, Regina & Mo, Jianlei & Fan, Ying, 2019. "The profitability of onshore wind and solar PV power projects in China - A comparative study," Energy Policy, Elsevier, vol. 132(C), pages 404-417.
    17. Lan, Haifeng & Gou, Zhonghua & Yang, Linchuan, 2020. "House price premium associated with residential solar photovoltaics and the effect from feed-in tariffs: A case study of Southport in Queensland, Australia," Renewable Energy, Elsevier, vol. 161(C), pages 907-916.
    18. Zhang, Yusheng & Ma, Chao & Yang, Yang & Pang, Xiulan & Lian, Jijian & Wang, Xin, 2022. "Capacity configuration and economic evaluation of a power system integrating hydropower, solar, and wind," Energy, Elsevier, vol. 259(C).
    19. Fuquan Zhao & Fanlong Bai & Xinglong Liu & Zongwei Liu, 2022. "A Review on Renewable Energy Transition under China’s Carbon Neutrality Target," Sustainability, MDPI, vol. 14(22), pages 1-27, November.
    20. Zhuang, Minghao & Lu, Xi & Peng, Wei & Wang, Yanfen & Wang, Jianxiao & Nielsen, Chris P. & McElroy, Michael B., 2021. "Opportunities for household energy on the Qinghai-Tibet Plateau in line with United Nations’ Sustainable Development Goals," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).

    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:renene:v:222:y:2024:i:c:s0960148124000053. 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.journals.elsevier.com/renewable-energy .

    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.