Challenge for Excess Generation

Do you consider to buy a photovoltaic (PV) installation for your house? Or do you already have some solar panels on your roof and you are looking for ways to maximise your return from this investment? Read on as we have some important advice for you:

So far the PV industry's main growth is driven by the government's support with subsidies. Unfortunately, solar panel installations have not yet achieved a competitive advantage due to their still limited efficiency and high cost. This is bound to change in the future. However, if you consider investing into a domestic PV installation today, the governmentally backed financial incentives are key to your investment's return! Here is the secret.

What is Excess Generation?

Sometimes excess generation is also referred to as  surplus generation, excess electricity, or exported energy among others. Excess generation is defined as the amount of electricity generated by your rooftop panels (1. Total generation) minus your daytime electricity consumption (2. Electricity used). It is such excess generation which is available for export to a grid system (3. Export energy).

Feed-in-tariff Incentive Scheme. 

Feed-in tariffs (FITs) are the most widely used policy in the world for accelerating renewable energy (RE) deployment, accounting for a greater share of RE development than either tax incentives or renewable portfolio standard (RPS) policies. In the European Union (EU), FIT policies have led to the deployment of more than 15,000 MW of solar photovoltaic (PV) power and more than 55,000 MW of wind power between 2000 and the end of 2009. In total, FITs are responsible for approximately 75% of the global PV deployment.

In a grid connected rooftop photovoltaic power station, the generated electricity can be sold to the grid at a higher price than what the grid charges for the consumers. This arrangement provides a secure return for the installer’s investment. Many consumers from across the world are switching to this mechanism due to the revenue yielded. However, the details of the financial mechanism varies depending on countries as illustrated by two examples as follows:

Case Study 1: Desincentive for Excess Generation (UK)

In the UK, consumers have a stronger  incentive to minimise Excess Generation, by using the majority of their generated electricity on sunny days. The UK customers receive a guaranteed Feed-in-tariff for all electricity generation (10-14 p/kWh) , plus an 'Export tariff' (4.77 p/kWh) for their excess generation, which, however, is much smaller than the average electricity bill (12-15 p/kWh) . Therefore, customers should consume their generated electricity rather than export it to the grid.

As goes the theory.

However, in reality the ratio of excess generation is fixed to 50% of PV generation due to a lack of smart-meters. Thus, the importance of 'Excess Generation' will definitely emerge with the rollout of smart-meters in the near future.

Case Study 2: Incentive for Excess Generation (JAPAN)

In Japan, FiTs are only paid for 'Excess Generation', not "Total Generation' as it is the case in the UK. FiT’s price is currently much higher (38-42 JPY per kWh) than the average electricity bill (20-25 JPY per kWh), so customers have a strong financial incentive to maximise their amount of 'Excess Generation'. Therefore, customers are willing to change their consumption behaviour by shifting the usage of electricity-heavy appliances, such as dishwashers and wasching machines to the nighttime with cheaper electricity tariff. This individual behavioral change is expected to contribute to a nationwide peak-reduction in the future.

Our Challenge for Excess Generation

We are developing Eneberg, a Domestic PV Generation Forecasting and Trading Software. Eneberg is mainly dealing with aggregated "Excess Generation". Whilst there is a vast body of research and models dealing with  PV Generation and Energy Demand, "Excess Generation" is still an open frontier. It is our aim to pioneer in that new field of Excess Generation.

In-depth excess generation analysis is already covered by this post: Energy Surplus Trends from Domestic UK Solar Panels in October 2013 to January 2014