Distributed photovoltaic demand-side generation: an economic evaluation for electric utilities

From an electric utility´s viewpoint, distributed photovoltaic demand-side generation (PV-DSG) systems can be evaluated in a similar manner to other demand-side management (DSM) technologies. This study evaluates the economic benefits of PV-DSG systems, using hourly utility cost and performance data, as a function of the utility´s load duration curve (LDC). The analysis focuses on one utility, New England Electric System (NEES), USA. Actual utility hourly system load data for 1991 and corresponding PV output data from a 2.2 kW (DC) grid-connected residential PV system, installed as part of the NEES Gardner project, are used for this study. At NEES´s weighted average cost of capital of 8.78% the energy and capacity benefit values calculated equate to an allowable installed PV system cost of $2.41/watt. A social discount rate of 3% allows for an even higher installed cost-per-watt figure of $4.72. The higher the, allowable installed cost, the easier it will be for the PV industry to enter the utility market. These results are represented graphically as a target to emphasize the importance of the utility target market to the PV industry