| dc.description.abstract | Solar energy has a large technical potential that allows it to become one of the main sources of renewable energy in the long-term future. Currently, photovoltaics make up a minor part of the Dutch renewable energy mix and play a minor role in energy policies of the national government. However, the cost price of photovoltaic electricity has reached the same level as the price that small electricity consumers pay to their power utilities. This situation of grid parity creates a potential market for PV systems in the Netherlands that can become the consistent driver of photovoltaic diffusion that the PV innovation system needs. Policy that stimulates the formation of this market is therefore likely to be more effective in diffusing PV systems than current national government energy policy, which focuses on making PV systems cost-competitive with the grid, i.e. reaching grid parity. Facilitating the formation of photovoltaic local renewable utilities (PV-LRUs) can be such an effective PV diffusion policy, as it targets the other barriers to market formation that remain to be addressed now that grid parity is reached.
A PV-LRU is a self-supporting participatory photovoltaic energy project in which solar electricity is produced in the vicinity of the participants. The participants are both producer and consumer of the electricity that the PV-LRU produces. Their number is limited to the amount of people that can be in the vicinity of and supported by the projects collective photovoltaic system. The overall costs of setting up and running the PV-LRU can be financed by the participants themselves, possibly in combination with a low-interest loan. The overall costs could be paid back within the guaranteed technical lifetime of the solar panels with the savings on the energy bills of the participants.
Drawing a parallel with the earlier diffusion of cost-competitive off-grid PV systems in emerging off-grid markets, there are four non-price barriers to the formation of a market for PV systems. The PV-LRU overcomes these four non-price barriers. First, it makes PV systems available to the majority of households that do not own a suitable roof for PV, by installing a collective PV system on a large nearby roof instead of installing multiple PV systems on the smaller roofs of the participating households. Second, it makes PV systems affordable to the households that cannot pay the large up-front investment that PV requires, by allowing the purchase of as little as one panel while still ensuring this panel is placed in an optimally configured PV system. Third, it makes PV systems attractive by relieving households from the efforts of acquiring and managing the PV system and from the need to overlook the entire PV panel technical lifetime of at least 25 year. And fourth, its local character allows for positive referencing which could legitimize the use of PV systems to governments and late adopters by influencing public opinion on solar power.
By realizing the potential market for PV systems, the PV-LRU makes solar power an attractive option for local governments to realize part of their climate and renewable energy goals with. The PV-LRU requires relatively little government funds, as it can be financed by local residents and/or the financial market. It requires relatively little changes in town planning, as the PV systems are placed on existing roofs and produce little nuisance to the city environment. It requires relatively little administrative capacity from the local government, as this can be supplied by market parties. And it could require relatively little effort to reach its target group, households, as it allows for and stimulates social interaction between local residents, thus autonomously spreading information about the government policy to other households and influencing public opinion on solar power.
To create a PV-LRU, a public-private partnership needs to be made, involving local residents, local governments, large roof owners, financers, electricity grid managers and electricity companies. Also, the law proscribing the energy tax that is levied on electricity for households needs to be changed to allow for balancing before the electricity meter, i.e. forgo paying the energy tax over the solar electricity from panels on a third party roof. Currently, there is inequality of justice between PV systems placed on one’s own roof and on a third-party roof. Only when balancing before the electricity meter is allowed, can people place their solar panels on third-party roofs without having to pay energy tax on the produced solar electricity. This would dramatically improve the economic viability of PV-LRUs.
The feasibility of PV-LRUs depends on the readiness of local residents to participate, the ability of the different actors involved to co-operate, the stance of the national government with regard to balancing and the changes in the grid electricity price versus the PV electricity price. There are a number of problems that need to be solved and unknowns that have to be investigated before the PV-LRU is a fully developed concept. For now, it can be concluded that the PV-LRU is an interesting concept with a large potential to diffuse PV systems in the Netherlands. | |
