Profitability Analysis for a Distributed Grid Connected Photovoltaic System in Qatar
Authors: Ellabban Omar 
Published: June 2019

Qatar is emerging as one of the most dynamic and innovative economies in the Middle East over the last decades. The rapid expansion in the industrial sector, as the key economic driver, in addition to, the strong growth in construction sector, driven by large government investments, alongside the rapidly increasing population and rising living standards put continuously increasing pressures on domestic energy consumption leading to the escalating demand for electricity. To meet these challenges, Qatar has started thinking for long term plans for reducing it dependency on fossil fuels and implementing energy conservation measures as part of its 2030 National Vision. Therefore, Qatar start investing large amounts of money in supporting research and development in the renewable energy sector, in particular, the photovoltaic (PV) technologies for electricity production due to the high level of insolation resulted from its geographical location in the subtropical ridge. Plans are underway to generate 2% of the national electricity production from solar photovoltaic systems by 2020, and 20% by 2030. Solar PV is one of the four main direct solar-energy technologies, in addition to, the concentrating solar power (CSP), solar thermal and solar fuels. Solar PV has various applications and the majority of the installed PV systems are grid connected either through small-scale rooftop (up to ten kWs) or ground-mounted systems installed on residential or commercial properties (ten kW to one MW), or through utility-scale PV farms (one MW or more). Solar PV systems are being installed everywhere around the globe and in developed countries the fastest growing sector is the distributed, grid-connected, rooftop systems. The motivation for individuals to install their own PV system can vary; early solar adopters chose to own solar PV system because of environmental concerns, or a desire to reduce their reliance on the electric power grid. In recent years due to the rapid decline in PV system installed price, the market for solar photovoltaic systems is growing rapidly into a mature industry welcoming an entirely new class of consumers motivated by the prospect of saving money on their electricity bills and making a responsible investment in their home. The projective of this work is creating a Profitability Analysis Tool (PAT) for PV systems in the context of distributed, grid-connected buildings. An economic evaluation model will be designed to evaluate the electrical energy production from PV systems taking into account all the operational incomes as well as all the expenses for the implementation, operation and maintenance of the PV system during its entire lifetime based on discounted cash flow analysis. The proposed profitability analysis tool will help the investors (home owners) to evaluate their solar PV investment through a wide range of economic inductors such as, Net Present Value (NPV), Internal Rate of Return (IRR), Simple Payback Time (SPT), Benefit to Cost Ratio (BCR) and Profitability Index (PI). The proposed profitability analysis tool gives the investors the ability to investigate different financing methods (combination between equity and debt) in addition to evaluating the advantages of applying different proposed governmental incentives (subsidies and tax incentives). Furthermore, since the variations in discount rate, tariff rate, installation and maintenance cost per kW and solar insolation will have a great impact in the profitability analysis, a sensitivity analysis using Monte Carlo simulation will be included in the proposed profitability analysis tool to highlight the impact of these variations. Furthermore, this Monte Carlo based sensitivity analysis will act as a guide for governmental policy designers to navigate their way to increase distributed solar PV adaptation in Qatar.