Tag Archives: Photovoltaics

It’s an ill wind… that benefits the electricity companies

Alvaro Ok

Dr. Álvaro Luna

The winds of change indicate that the next government will repeal Royal Decree 900/2015, regulating the administrative, technical and economic conditions of methods of electricity supply based on self-consumption and production with self-consumption, so that it will never be applied. Nevertheless, the 8th of April has been and gone: the day that marked the end of the six-month moratorium established in the Decree. The Decree was the final bomb dropped in the last legislative session, characterised by hostile control of renewable energies. It is, as the saying goes, oœan ill wind that blows nobody any good… in this case, the electricity companies will stand to benefit.

The decree on self-consumption, which was described by the Spanish National Energy Commission (CNE) as “discriminatory” against renewable energies, not only affects the installation of new self-consumption systems, but also acts retroactively, so that self-consumption installations that were already legal must go through legalization procedures again, leading to further administrative costs, and costs derived from any required changes in the installation. In addition, since the draft bill first loomed over the sector in 2013, it has managed to generate fear and halt new initiatives.

TIME RAN OUT

Time ran out several weeks, or perhaps even months, ago for all those who have installations of this kind and had hoped for change in some of the political parties with seats in parliament. Clearly, in the political arena, renewable energies are no more than a photo at a world summit or four tweets, if that, during “Earth Hour”.

The renewable energy deficit is the most hackneyed tag line to justify the decree to tax renewable energy production, even when it is not fed into the grid. This tax is known as the ‘sun tax‘, given that it has the greatest impact on the photovoltaic sector. It is a formula supported by the main electricity companies to compensate for loss in consumption. However, such companies openly admit that they already charge for this concept in a fixed fee for contracted power included in electricity bills. Consequently, there is a difference in saving a watt via self-consumption or buying energy-saving lightbulbs.

In Spain today, a person who wishes to buy more efficient electrical appliances or change lightbulbs for ‘leds’, only needs to go to the shop to purchase them, something that everyone should do of course, as part of their social responsibility. In contrast, if you opt for a self-consumption system, you must obtain a report on the installation from an accredited company; request a point of connection to the grid from the company; obtain a technical study on the connection point; contract and pay for the tasks of adapting the line; obtain the appropriate installation licence, certificate of completion, official installation record and statement of responsibility; and apply to be included in the register… all in all, a real bureaucratic adventure.

Although it is true that renewable energies in Spain cover around 37% of demand, it is also true that almost 30% are from hydraulic power stations, which have to achieve a difficult balance between social and energy use of water. A country that does not have its own energy resources and that, due to its geographic situation, has a low level of interconnection with other countries must optimise its production of renewable energies. Furthermore, it cannot turn its back on self-consumption, which makes the end user an active participant who will be more aware of energy in all respects.

DROP IN COSTS

Nevertheless, I am convinced that self-consumption based on renewable energies will survive after the Royal Decree. A similar situation to that found after the withdrawal of bonuses in 2007 will occur. This led to a sharp drop in the installation of renewable energy systems, which picked up again as costs gradually fell. Accordingly, in a few years’ time, the ‘sun tax’ will have less of an impact on the recovery of investments in self-consumption, as the price of photovoltaic panels, and that of the electronic systems required to connect them, is decreasing constantly.

Until then, Spanish companies will have to continue to look to other countries in which this sector is considered strategic, and make a huge effort not to lose a technology race in which others have been several steps ahead for a long time.

Dr. Álvaro Luna
Researcher at SEER UPC and Professor on the Terrassa Campus,
Universitat Politècnica de Catalunya (UPC),

Published in ElPeriódico de Catalunya on April 29 2016

Energy Hackers are on their way

The power generation costs of photovoltaic systems have dropped in recent years and are still falling. Lazard, a consultancy, calculated that at the end of 2014 in the USA the Levelized Cost of Energy (LCOE) was 180-265$/MWh for domestic installations and 126-177$/MWh for installations in businesses and industry. According to these figures, photovoltaic energy has a lower LCOE than electricity generation using a diesel generator, and is at the same order of magnitude as gas turbine generators at peak times. The Rocky Mountain Institute, Colorado (USA) forecasts that this technology will be used in combination with batteries for storing photovoltaic energy, whose installation costs will also fall. Using a system of these characteristics, consumers will have the opportunity to decide freely between connecting to a traditional electrical grid or going off-grid.

Using a system of these characteristics, consumers will have the opportunity to decide freely between connecting to a traditional electrical grid or going off-grid.

Operating an off-grid system still has considerable technical problems that need to be resolved for users to enjoy the same kind of quality as that provided by connection to a grid. Although not at first evident, the impact that consumers going off-grid could have on the electrical grid is vast. If an increasing number of consumers chose this option, the grid will have fewer consumers connected to the same infrastructure. This means that a decreasing number of consumers will have to bear the cost of the infrastructure, which will lead to higher access charges. This will encourage consumers who are still connected to take the step of going off the grid, as others will already have done. This is a variant of the economy of scale, but with a reduction in production. In an economy of scale, the product gets cheaper because the costs are divided between an amount that increases constantly. If the amount that is produced is reduced, the product gets more expensive. If we apply this process to electricity grids, it is called “grid defection”: consumers deserting the traditional electrical grid.

Currently, a similar process is happening in Spain, caused by the recession and the resulting decrease in demand.

The Decree on Energy Self-Consumption was drawn up to regulate aspects of this trend. It introduces a backup toll for photovoltaic installations that enable self-consumption and are connected to the grid. The success of the measure still remains to be seen. It adds costs to energy self-consumption installations that will limit the expansion of these systems.

In any case, this measure will provide an additional incentive for consumers who are considering off-grid systems to take the next step. These consumers are known as Energy Hackers, as they seek a technological solution for a need that is not met by the current electricity system. They prefer renewable, locally generated energy. They already have part of the installations (their homes or businesses), energy resources and investment capacity. They are proactive, and want to be able to decide on energy issues. They differ from computer hackers: they are not young people, but people with homes, capital, and grey hairs on their heads. Energy hacking is not an illegal activity, as everyone is free to do what they want in their homes. However, it forces the system to react and respond. Energy hackers have strong allies: the Internet of Things (IoT) and home automation. The IoT is developed in the homes of consumers, it is user-centred, and can offer new services to consumers in exchange for their data. Energy hackers may explore its potential in energy-related applications, and try to create added value to make investment in automation worthwhile.

Electricity companies are beginning to realize that they must change their business strategy. Added value is no longer created by the distribution and sale of energy; with these new actors a very different economic ecosystem is emerging. Currently, energy is an undifferentiated asset; to create added value, services must be offered that differentiate the product from that of other companies. A system will numerous small producers, active consumers, management of demand, renewable energy and batteries would provide the perfect ecosystem for creating new services with a much greater added value than the sale of energy. We should not forget that, like the IoT, electricity distribution companies have direct access to the client and home installations. Energy hackers could be allies of electricity companies and create value with them. The coming years will be very interesting as we will see how the two giants of the IoT and electricity distribution fight to gain control of a market that is still hard to imagine.

Dr. Andreas Sumper, CITCEA UPC Researcher,
CIT UPC member
Article published in the journal “Automática e Instrumentación” on 27.10.2015