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Revisiting the techno-economic analysis process for building-mounted, grid-connected solar photovoltaic systems: Part two - Application

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  • Sommerfeldt, Nelson
  • Madani, Hatef

Abstract

Part One in this two part paper identified Monte Carlo analysis as an improved approach over traditional deterministic techno-economic methods for solar PV prosumers in deregulated markets. In this paper a novel Monte Carlo methodology is described and demonstrated through a case study for the Swedish residential sector, which includes a review of relevant market, climate, and policy conditions, their use in determining inputs, and the probabilistic results. The probability of profitability (PoP) is introduced as an indicator in conjunction with result distributions. The results show that under current policy conditions, Swedish PV investors with well positioned buildings have a 71% chance of making a 3% real return on investment, and virtually no chance of losing their original investment. Without subsidies the PoP drops to 8%. In none of the simulated cases was any of the original investment lost. The PoP is most sensitive to the capital subsidy and the uncertainty of market based, long-term support is less critical to the chances of a successful investment. Given the current market conditions, Swedish PV prosumers can expect a return on investment. The decision to install will also depend on the probability of achieving their desired profitability, which Monte Carlo analysis quantifies well.

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  • Sommerfeldt, Nelson & Madani, Hatef, 2017. "Revisiting the techno-economic analysis process for building-mounted, grid-connected solar photovoltaic systems: Part two - Application," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 1394-1404.
    • Handle: RePEc:eee:rensus:v:74:y:2017:i:c:p:1394-1404
    DOI: 10.1016/j.rser.2017.03.010
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    7. Sommerfeldt, Nelson & Lemoine, Ida & Madani, Hatef, 2022. "Hide and seek: The supply and demand of information for household solar photovoltaic investment," Energy Policy, Elsevier, vol. 161(C).
    8. Malinina, Tatiana (Малинина, Татьяна) & Gromov, Vladimir (Громов, Владимир), 2016. "Directions of Perfection of the Russian Tax Legislation on Topical Issues of Taxation of Income from Transactions with Financial Instruments [Направления Совершенствования Российского Налогового За," Working Papers 544, Russian Presidential Academy of National Economy and Public Administration.
    9. Yang, Ying & Campana, Pietro Elia & Stridh, Bengt & Yan, Jinyue, 2020. "Potential analysis of roof-mounted solar photovoltaics in Sweden," Applied Energy, Elsevier, vol. 279(C).
    10. Castellini, Marta & Menoncin, Francesco & Moretto, Michele & Vergalli, Sergio, 2021. "Photovoltaic Smart Grids in the prosumers investment decisions: a real option model," Journal of Economic Dynamics and Control, Elsevier, vol. 126(C).
    11. Vakilifard, Negar & A. Bahri, Parisa & Anda, Martin & Ho, Goen, 2019. "An interactive planning model for sustainable urban water and energy supply," Applied Energy, Elsevier, vol. 235(C), pages 332-345.
    12. Feldman, David & Jones-Albertus, Rebecca & Margolis, Robert, 2020. "Quantifying the impact of R&D on PV project financing costs," Energy Policy, Elsevier, vol. 142(C).
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    14. Lee, Minhyun & Hong, Taehoon & Jeong, Kwangbok & Kim, Jimin, 2018. "A bottom-up approach for estimating the economic potential of the rooftop solar photovoltaic system considering the spatial and temporal diversity," Applied Energy, Elsevier, vol. 232(C), pages 640-656.
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