Effect of Component Failures on Economics of Distributed Photovoltaic Systems

This report describes an applied research program to assess the realistic costs of grid connected photovoltaic (PV) installations. A Board of Advisors was assembled that included management from the regional electric power utilities, as well as other participants from companies that work in the electric power industry. Although the program started with the intention of addressing effective load carrying capacity (ELCC) for utility-owned photovoltaic installations, results from the literature study and recommendations from the Board of Advisors led investigators to the conclusion that obtaining effective data for this analysis would be difficult, if not impossible. The effort was then re-focused on assessing the realistic costs and economic valuations of grid-connected PV installations. The 17 kW PV installation on the University of Hartford's Lincoln Theater was used as one source of actual data. The change in objective required a more technically oriented group. The re-organized working group (changes made due to the need for more technically oriented participants) made site visits to medium-sized PV installations in Connecticut with the objective of developing sources of operating histories. An extensive literature review helped to focus efforts in several technical and economic subjects. The objective of determining the consequences of component failures on both more » generation and economic returns required three analyses. The first was a Monte-Carlo-based simulation model for failure occurrences and the resulting downtime. Published failure data, though limited, was used to verify the results. A second model was developed to predict the reduction in or loss of electrical generation related to the downtime due to these failures. Finally, a comprehensive economic analysis, including these failures, was developed to determine realistic net present values of installed PV arrays. Two types of societal benefits were explored, with quantitative valuations developed for both. Some societal benefits associated with financial benefits to the utility of having a distributed generation capacity that is not fossil-fuel based have been included into the economic models. Also included and quantified in the models are several benefits to society more generally: job creation and some estimates of benefits from avoiding greenhouse emissions. PV system failures result in a lowering of the economic values of a grid-connected system, but this turned out to be a surprisingly small effect on the overall economics. The most significant benefit noted resulted from including the societal benefits accrued to the utility. This provided a marked increase in the valuations of the array and made the overall value proposition a financially attractive one, in that net present values exceeded installation costs. These results indicate that the Department of Energy and state regulatory bodies should consider focusing on societal benefits that create economic value for the utility, confirm these quantitative values, and work to have them accepted by the utilities and reflected in the rate structures for power obtained from grid-connected arrays. Understanding and applying the economic benefits evident in this work can significantly improve the business case for grid-connected PV installations. This work also indicates that the societal benefits to the population are real and defensible, but not nearly as easy to justify in a business case as are the benefits that accrue directly to the utility. « less