Monday, December 1, 2014

Grid Parity for PV in Ireland ? Yes, but not always yes...

Grid Parity has been reached for photovoltaic electricity in Ireland. Grid parity meaning that the cost of a unit of electricity from renewable photovoltaics is the same , or less, than the cost of “standard” electricity.

A back of the napkin calculation of grid-parity is as follows :
  • Take the cost of a PV installation : ~ €2200 / kW, incl.VAT ( each kW will produce between 900 and 1000 kWh a year)
    • Let’s take the case of a 5kW installation, total cost €11000 for an annual production of 4750 kWh 
  • Work out the cost of repaying that amount over 20 years (all PV equipment is guaranteed for 20 years minimum, if not you’re being taken for a ride) 
    •  Assuming a 5% interest rate one of those web calculators works that that its €871 / year of repayments 
  •  Divide that cost by the amount of kWh you’ll generate 
    •  €871 / 4750 = 18.3c / kWh

So if you’re currently paying more than that on your electricity bill, then you’re a candidate for a PV installation. Legions of small businesses across Ireland are already paying more than that.
Not only can PV give you cheaper electricity now, but you now know how much that electricity will cost you for the next 20 years, guaranteed no price-rise (see what electricity supplier can give you that !)

Now before the stampede happens, there’s a bump in this road to happiness.
The figures above are based on the assumption that you use every kWh that you generate.  If that’s not the case, i.e. the sun is shining and you’re generating more electricity than you need, then the excess is being given away on the grid for free.
Yes, Ireland doesn’t have an Feed-In-Tariff which allows payment for electricity exported to the grid (  Electric Ireland pulled the plug on their feeble offer in October 2014).

So who can take of advantage of this grid-parity right now ? Well you need to look at two things.
  • Your current electricity usage.
    • Are you a day-time user of electricity ? Are you a 7 days a week user of electricity ? Are you a heavy summertime user ?
  • The size of your installation. 
    •  To get one thing out of the way, forget about providing all your electricity needs from PV, it’s just not going to happen in an economical manner. Size your installation so that your production has the best chance of being used on-site. 
    • From the businesses I’ve worked, aiming for 20% of your annual usage is a good starting point. Remember, it’s only a starting point.
The best candidates are businesses who work 365 days of the year and use electricity throughout the day, such as hotels / restaurants / hospitals.

The moral of the story : PV has it’s place in the Irish energy mix.
I’ll go further, PV could provide 20% of Irish electricity right now, with today’s technology , all while saving money for consumers AND creating jobs for electricians & roofers. And prices are still dropping.

Can this get better ?
Electricity suppliers could start offering feed-in-tariffs to their customers as part of a loyalty package. For example, they could offer to pay 75% of the retail price for all exported electricity and cap the amount of exported electricity per customer of PV at 40% of total annual usage. They have the spreadsheets, they could make this work.