Abstract
The price of photovoltaics (PV) has been steadily decreasing over the last decade, and many reports suggest that PV has become considerably cheaper than conventional electricity sources. In this paper, we critically evaluate the PV grid parity and use China as a case study. China is an interesting case study due to the wealth of data combined with the recent decrease in financial subsidies. Electricity costs are commonly compared in the literature using levelized costs of electricity (LCOE). However traditional LCOE analyses neglect important cost factors that are specific to PV, in particular the cost of grid integration. Here, we demonstrate that system LCOE calculation more accurately estimates the grid parity of PV. We find that the integration costs account for 15% of the total system costs, which cannot be neglected with the higher penetration of PV in the electricity system. Further, provincial grid parity indexes are greater than 1, indicating that the grid parity from a system LCOE perspective has not yet been achieved. The learning rate of Chinese PV is still relatively small, and we estimate that grid parity for PV in China will be achieved between 2020 and 2032, depending on the region. These findings shed new light on assessing grid parity of PV systems by considering relevant local parameters and thereby offer an assessment method framework and prediction modeling for assessing grid parity of PV installations.
| Original language | English |
|---|---|
| Pages (from-to) | 469-481 |
| Number of pages | 13 |
| Journal | Renewable Energy |
| Volume | 194 |
| Early online date | 25 May 2022 |
| DOIs | |
| Publication status | Published - Jul 2022 |
Bibliographical note
Funding Information:The author (Rong Wang) gratefully acknowledges the financial support from the China Scholarship Council (CSC) 2019 grant which enabled her to conduct research on the topic within the scope of the doctoral program.
Funding Information:
Like many other leading countries in the development of renewable energy, China's PV developments have relied heavily on government subsidies funding in recent years. Along with the rapid increase of installed capacity (as shown in Fig. 1), the financial subsidy payments from the government have increased substantially, leading to a huge gap in the financial budget. According to the data from the National Energy Administration (NEA) [6], the cumulative subsidy gap for PV has reached 45.5 billion CNY in 2017 and shows a trend of expanding year by year. The financial subsidy gap has become a challenge, simulating a decline or even cancellation of subsidies for the PV industry [7,8].Here, we adopted the system LCOE to understand the current question of PV grid parity in China. We show that the costs of grid integration have important implications for subsidy reduction of support for PV systems installation in China. The price of PV is furthermore impacted by the continuous development and increasing installed capacity of PV. Therefore, a quantitative understanding of the timeline for PV cost is an important aspect to consider in discussions about grid parity. We addressed this aspect by employing a learning curve as an established approach to predict the LCOE decline with the continuous increase of installed capacity [ 24–27] and integrated it with our system LCOE framework. This enables predictions for when grid parity can be achieved.There are two notable shortcomings with current calculations relative to grid parity for PV in China. First, grid parity estimation and prediction studies have not considered the integration costs incurred by the connection of PV into the existing grid, which may defer the achievement of grid parity [12,20]. Unlike conventional power generation methods, such as burning coal, the inherent characteristics of electricity generated from PV, such as intermittency and randomness, require additional supporting and balancing facilities, which would consequently push up the costs of the whole system [38,39]. With the increasing amount of PV installation, the integration costs are also growing [40]. Thus, ignoring or underestimating integration costs will lead to optimistic projections for grid parity.The author (Rong Wang) gratefully acknowledges the financial support from the China Scholarship Council (CSC) 2019 grant which enabled her to conduct research on the topic within the scope of the doctoral program.
Publisher Copyright:
© 2022 The Authors
Keywords
- China
- Grid parity
- Learning curve
- Levelized costs of electricity
- Photovoltaics
- System LCOE
