Distributed photovoltaic demand-side generation: an economic evaluation for electric utilities

Abstract

From an electric utility's viewpoint, distributed photovoltaic demand-side generation (PV-DSG) systems can be evaluated in a similar manner to other demand-side management (DSM) technologies. This study evaluates the economic benefits of PV-DSG systems, using hourly utility cost and performance data, as a function of the utility's load duration curve (LDC). The analysis focuses on one utility, New England Electric System (NEES), USA. Actual utility hourly system load data for 1991 and corresponding PV output data from a 2.2 kW (DC) grid-connected residential PV system, installed as part of the NEES Gardner project, are used for this study. At NEES's weighted average cost of capital of 8.78% the energy and capacity benefit values calculated equate to an allowable installed PV system cost of $2.41/watt. A social discount rate of 3% allows for an even higher installed cost-per-watt figure of $4.72. The higher the, allowable installed cost, the easier it will be for the PV industry to enter the utility market. These results are represented graphically as a target to emphasize the importance of the utility target market to the PV industry.