Cost benefit analysis for peer-to-peer mechanism in residential sector of a single buyer electricity market

Abstract

Recently, feed-in-tariff (FIT) is no longer under government’s preference due to fiscal support limits and reluctance of utility to purchase RE-based electricity at higher price. Indeed, the absence of any incentives will significantly impact to renewable market growth. Therefore, net metering/billing implemented, but sometimes its price is unfairly offered in comparison with utility retail price. To seek more interesting model that can benefit to government utility and people, a so-called mechanism peer-to-peer (P2P) is proposed as alternative solution in this study. This study investigates an applicability of this new energy trading mechanism in vertically integrated unit electricity market (regulated market), by comparing this mechanism with the existing mechanism e.g. net metering/billing. The P2P was studied using a built-own optimization tool (in excel base) to determine its economic analysis, its market price and cost-benefit for utility and P2P participants. As a result, using P2P, each participant which install solar photovoltaic (solar PV) can fasten their payback period up to 2 years from its net metering payback, raise internal rate of return (IRR) by 2-3%, obtain 500 US$ net present value (NPV) for prosumer only (a consumer with electricity generator such as solar PV) and 3,000 US$ for prosumer with storage system in comparison with its analysis with existing net metering. Besides, P2P also brings monetized benefits for a single-buyer utility than its lost market. This study also show that P2P is institutionally feasible for regulated market with any restriction to sell electricity from non-utility entities.