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What is “socket” parity and is rooftop solar PV there yet without subsidies?

What is “socket” parity and is rooftop solar PV there yet without subsidies?. Shelly Hagerman Advisors: Granger Morgan and Paulina Jaramillo May 20, 2014. Background. Growing need for renewables Focus on wind and solar Federally subsidized by the Investment Tax Credit (ITC)

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What is “socket” parity and is rooftop solar PV there yet without subsidies?

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  1. What is “socket” parity and is rooftop solar PV there yet without subsidies? Shelly Hagerman Advisors: Granger Morgan and Paulina Jaramillo May 20, 2014

  2. Background • Growing need for renewables • Focus on wind and solar • Federally subsidized by the Investment Tax Credit (ITC) • 30% of upfront capital costs • Set to expire at end of December 2016 • State and local subsidies • Tax incentives, rebates, loans, etc.

  3. Research Questions • Is residential solar at “socket” parity? • Technology breaks even when paid retail electricity price. • If not, how to get there? • Cost reductions

  4. How to assess socket parity?

  5. Calculating the NPV Module Characteristics Electricity Price Escalation Rate (ER) System Size (4 kW) Financing (rate, term) Operation and Maintenance Discount Rate (DR) Parameters Capital Cost (Installation Cost) Required Inputs Net Present Value (NPV) Residential Electricity Price Output Solar Insolation

  6. Parameters Used • Retail Price of Electricity • State average residential prices [EIA] • Escalation Rate of Electricity Prices (2-5%) • Discount Rate (7%) • System Details • 4 kW, 25 year lifetime, 0.5% degradation rate after initial 3% loss in first year1 • Financing • 15-25 years, 5-8% interest rate 1S. Roe, “Solar Efficiency Losses Over Time.”

  7. Installation Costs ($/W) Values based on NREL PV Pricing Trends 2013 * Information not available. Applied average range for 2-5kW systems.

  8. Residential Electricity Price(Sept 2013 State Averages) Based on EIA Electric Power Monthly

  9. Energy Produced by System • Using Sandia PV Performance Model • Sun-Earth geometry • Solar insolation • Module performance characteristics • U.S. weather data from 1011 stations • Typical meteorological year (TMY) • Locations across all 50 states

  10. Energy Produced by 4 kW System

  11. Scenarios for Evaluating NPV

  12. NPV Pessimistic Estimate Features: Median installation costs Electricity Price ER = 2% Loan Interest Rate = 8% Loan Term = 15 years

  13. NPV Best Estimate Features: 20th Percentile installation costs Electricity Price ER = 3% Loan Interest Rate = 7% Loan Term = 20 years

  14. NPV Optimistic Estimate Features: 20th Percentile installation costs Electricity Price ER = 5% Loan Interest Rate = 5% Loan Term = 25 years

  15. Socket Parity Summary

  16. Break-even Analysis PessimisticEstimate Optimistic Estimate Best Estimate

  17. Sensitivity Analysis

  18. Conclusions • These results suggest that residential solar PV is still not at “socket” parity in most of the U.S. • Mean break-even cost of $1.5-$2/W for “socket” parity without subsidies

  19. Future Work • Cost of variability • Regional variation of cost to grid and technology performance • Use of empirical data to evaluate solar output aggregation effects • Optimizing subsidy allocation

  20. Acknowledgements • ClIMA Research Group • This work was supported by academic funds from the Department of Engineering and Public Policy, by the program for Graduate Assistance in Areas of National Need (GAANN) of the U.S. Department of Education, by the Department of Energy under Awards DE-OE0000300 and DE-OE0000204, and by the NSF center for Climate and Energy Decision Making Center (CEDM) (SES- 0949710).

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