IDEAS home Printed from https://ideas.repec.org/p/ags/feemer/162564.html
   My bibliography  Save this paper

Solar Grid Parity Dynamics in Italy: A Real Option Approach

Author

Listed:
  • Biondi, Tommaso
  • Moretto, Michele

Abstract

Over the past three years Italy has witnessed a rapid growth in the photovoltaic energy market, followed by an equally sudden decline when the government decided to reduce the incentives. This sharp change in the trend of the market calls into question the achievement of Grid Parity and the possibility that the market is able to develop independently. Starting from the standard Grid Parity Model, widely used for the photovoltaic (PV) market, we internalize the uncertainty surrounding both the energy price and PV module costs, to forecast the dynamics of the Italian PV market. We show that these sources of uncertainty can delay the Grid Parity timing of several years compared to current forecasts, well describing the current market situation.

Suggested Citation

  • Biondi, Tommaso & Moretto, Michele, 2013. "Solar Grid Parity Dynamics in Italy: A Real Option Approach," Energy: Resources and Markets 162564, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemer:162564
    DOI: 10.22004/ag.econ.162564
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/162564/files/NDL2013-109.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.162564?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Haas, Reinhard & Lettner, Georg & Auer, Hans & Duic, Neven, 2013. "The looming revolution: How photovoltaics will change electricity markets in Europe fundamentally," Energy, Elsevier, vol. 57(C), pages 38-43.
    2. Lund, P.D., 2010. "Exploring past energy changes and their implications for the pace of penetration of new energy technologies," Energy, Elsevier, vol. 35(2), pages 647-656.
    3. Valentina Bosetti & Michela Catenacci & Giulia Fiorese & Elena Verdolini, 2012. "The Future Prospects of PV and CSP Solar Technologies," Review of Environment, Energy and Economics - Re3, Fondazione Eni Enrico Mattei, January.
    4. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    5. Che, Jinxing & Wang, Jianzhou & Wang, Guangfu, 2012. "An adaptive fuzzy combination model based on self-organizing map and support vector regression for electric load forecasting," Energy, Elsevier, vol. 37(1), pages 657-664.
    6. Bosetti, Valentina & Catenacci, Michela & Fiorese, Giulia & Verdolini, Elena, 2012. "The future prospect of PV and CSP solar technologies: An expert elicitation survey," Energy Policy, Elsevier, vol. 49(C), pages 308-317.
    7. Branker, K. & Pathak, M.J.M. & Pearce, J.M., 2011. "A review of solar photovoltaic levelized cost of electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4470-4482.
    8. Nemet, Gregory F., 2006. "Beyond the learning curve: factors influencing cost reductions in photovoltaics," Energy Policy, Elsevier, vol. 34(17), pages 3218-3232, November.
    9. Mitscher, Martin & Rüther, Ricardo, 2012. "Economic performance and policies for grid-connected residential solar photovoltaic systems in Brazil," Energy Policy, Elsevier, vol. 49(C), pages 688-694.
    10. Ciabattoni, Lucio & Grisostomi, Massimo & Ippoliti, Gianluca & Longhi, Sauro, 2014. "Fuzzy logic home energy consumption modeling for residential photovoltaic plant sizing in the new Italian scenario," Energy, Elsevier, vol. 74(C), pages 359-367.
    11. Biondi, Tommaso & Moretto, Michele, 2015. "Solar Grid Parity dynamics in Italy: A real option approach," Energy, Elsevier, vol. 80(C), pages 293-302.
    12. Zhang, Da & Chai, Qimin & Zhang, Xiliang & He, Jiankun & Yue, Li & Dong, Xiufen & Wu, Shu, 2012. "Economical assessment of large-scale photovoltaic power development in China," Energy, Elsevier, vol. 40(1), pages 370-375.
    13. Beliën, Jeroen & De Boeck, Liesje & Colpaert, Jan & Cooman, Gert, 2013. "The best time to invest in photovoltaic panels in Flanders," Renewable Energy, Elsevier, vol. 50(C), pages 348-358.
    14. Yang, Chi-Jen, 2010. "Reconsidering solar grid parity," Energy Policy, Elsevier, vol. 38(7), pages 3270-3273, July.
    15. Alvaro Escribano & J. Ignacio Peña & Pablo Villaplana, 2011. "Modelling Electricity Prices: International Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73(5), pages 622-650, October.
    16. repec:dau:papers:123456789/9492 is not listed on IDEAS
    17. Lund, P.D., 2011. "Boosting new renewable technologies towards grid parity – Economic and policy aspects," Renewable Energy, Elsevier, vol. 36(11), pages 2776-2784.
    18. Fernandez, Pablo & Aguirreamalloa, Javier & Corres, Luis, 2011. "Market risk premium used in 56 countries in 2011: A survey with 6,014 answers," IESE Research Papers D/920, IESE Business School.
    19. Wu, Zhibin & Xu, Jiuping, 2013. "Predicting and optimization of energy consumption using system dynamics-fuzzy multiple objective programming in world heritage areas," Energy, Elsevier, vol. 49(C), pages 19-31.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bertolini, Marina & D'Alpaos, Chiara & Moretto, Michele, 2018. "Do Smart Grids boost investments in domestic PV plants? Evidence from the Italian electricity market," Energy, Elsevier, vol. 149(C), pages 890-902.
    2. Bertolini, Marina & D’Alpaos, Chiara & Moretto, Michele, 2016. "Investing in Photovoltaics: Timing, Plant Sizing and Smart Grids Flexibility," MITP: Mitigation, Innovation and Transformation Pathways 244540, Fondazione Eni Enrico Mattei (FEEM).
    3. Sommerfeldt, Nelson & Madani, Hatef, 2017. "Revisiting the techno-economic analysis process for building-mounted, grid-connected solar photovoltaic systems: Part one – Review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 74(C), pages 1379-1393.
    4. Spiros Papaefthimiou, Manolis Souliotis, and Kostas Andriosopoulos, 2016. "Grid parity of solar energy: imminent fact or future's fiction," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
    5. Orioli, Aldo & Di Gangi, Alessandra, 2017. "Six-years-long effects of the Italian policies for photovoltaics on the grid parity of grid-connected photovoltaic systems installed in urban contexts," Energy, Elsevier, vol. 130(C), pages 55-75.
    6. Benson, Christopher L. & Magee, Christopher L., 2014. "On improvement rates for renewable energy technologies: Solar PV, wind turbines, capacitors, and batteries," Renewable Energy, Elsevier, vol. 68(C), pages 745-751.
    7. Chiara D'Alpaos & Marina Bertolini & Michele Moretto, 2016. "Do Smart Grids Boost Investment in Photovoltaics? The Prosumer Investment Decision," "Marco Fanno" Working Papers 0203, Dipartimento di Scienze Economiche "Marco Fanno".
    8. Andreolli, Francesca & D’Alpaos, Chiara & Moretto, Michele, 2022. "Valuing investments in domestic PV-Battery Systems under uncertainty," Energy Economics, Elsevier, vol. 106(C).
    9. Tae Yong Jung & Donghun Kim & Jongwoo Moon & SeoKyung Lim, 2018. "A Scenario Analysis of Solar Photovoltaic Grid Parity in the Maldives: The Case of Malahini Resort," Sustainability, MDPI, vol. 10(11), pages 1-14, November.
    10. Lafond, François & Bailey, Aimee Gotway & Bakker, Jan David & Rebois, Dylan & Zadourian, Rubina & McSharry, Patrick & Farmer, J. Doyne, 2018. "How well do experience curves predict technological progress? A method for making distributional forecasts," Technological Forecasting and Social Change, Elsevier, vol. 128(C), pages 104-117.
    11. Marco Rogna, 2019. "A First-Phase Screening Device for Site Selection of Large-Scale Solar Plants with an Application to Italy," BEMPS - Bozen Economics & Management Paper Series BEMPS57, Faculty of Economics and Management at the Free University of Bozen.
    12. Moon, Yongma & Baran, Mesut, 2018. "Economic analysis of a residential PV system from the timing perspective: A real option model," Renewable Energy, Elsevier, vol. 125(C), pages 783-795.
    13. Erin Baker & Olaitan Olaleye & Lara Aleluia Reis, 2015. "Decision Frameworks and the Investment in R&D," Working Papers 2015.42, Fondazione Eni Enrico Mattei.
    14. Mayr, Dieter & Schmid, Erwin & Trollip, Hilton & Zeyringer, Marianne & Schmidt, Johannes, 2015. "The impact of residential photovoltaic power on electricity sales revenues in Cape Town, South Africa," Utilities Policy, Elsevier, vol. 36(C), pages 10-23.
    15. Zou, Hongyang & Du, Huibin & Brown, Marilyn A. & Mao, Guozhu, 2017. "Large-scale PV power generation in China: A grid parity and techno-economic analysis," Energy, Elsevier, vol. 134(C), pages 256-268.
    16. Rogna, Marco, 2020. "A first-phase screening method for site selection of large-scale solar plants with an application to Italy," Land Use Policy, Elsevier, vol. 99(C).
    17. 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).
    18. Andreolli, Francesca & D'Alpaos, Chiara & Kort, Peter, 2023. "Does P2P Trading Favor Investments in PV-Battery Systems?," FEEM Working Papers 330498, Fondazione Eni Enrico Mattei (FEEM).
    19. Farmer, J. Doyne & Lafond, François, 2016. "How predictable is technological progress?," Research Policy, Elsevier, vol. 45(3), pages 647-665.
    20. Mundada, Aishwarya S. & Shah, Kunal K. & Pearce, J.M., 2016. "Levelized cost of electricity for solar photovoltaic, battery and cogen hybrid systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 692-703.

    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:feemer:162564. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/feemmit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.