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

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  • 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
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