Grid Parity and Carbon Footprint

Nowadays, the world population is growing faster than ever and the standards of living are rapidly increasing too, the combination of these two factors lead to global needs in energy higher and higher. Besides, fossil energies have never been so close to exhaustion.

Grid parity can be basically defined as the intersection of the price of the electricity generated by a PV system and the price of conventional electricity production (Hurtado Munoz et al. in Technol Forecast Soc Change 87:179–190, 2014, [1]). This expression was first used in a scientific publication in 2005, when an article for the magazine “Frontiers, the BP magazine of technology and innovation” related it with making solar PV competitive [1]. Since then the term has been used in almost every paper dealing with the development or the future of PV energy. This chapter will provide a literature review about the different definitions that exist, the methods of calculation and the geographic areas where it will be reached.

Thanks to the literature review we have seen that grid parity is a phenomenon which had been widely studied by the scientific community during the last decade. Some affirms that it is already present in a large number of countries, others are more conservative and think it will take a few years more to be reached.

In this section we will carry out the study in other European countries so as to determine in which country grid parity is more likely to be reached. The first problem we faced is that the daily curve of the domestic electrical consumption is not publicly available in most of the countries. Consequently, we decided to limit our study to Mediterranean countries and to make the hypothesis that the shape of the load curve in Spain is acceptable for them. Indeed, what greatly characterizes its profile are the peak hours which depends on the climate (necessity for heating or for air-conditioning) and on the duration of the day (if the sunset comes early the needs in lighting are higher); and we can consider that these parameters are quite similar for all the Mediterranean area. However, these countries have different standards of living that influence the electric consumption. For instance, Greece is poorer than Spain, this is why, on average, Greek households have less domestic equipment (TV, dishwasher, video games console…) than Spanish one, and therefore they consume less electricity. Moreover, the load curve is also influenced by the heating system most used in the country, as in some gas heating systems are more popular than electrical one for example. To take that into account, each curve will be weighted with the average electric consumption of its respective country.

Until now, the profitability of a PV system was evaluated according to the common project indicators, the Net Present Value and the Internal Rate of Return. They give really useful information and they have the advantage of being simple to calculate and to interprete. In short, they are a very good first approximation of the project’s profitability and most of the time they offer enough information for the client to take the decision to invest or not. However, the NPV does not take into account the variability of some parameters and in some cases does not reflect all the possibility of investment. In particular, basing the decision of starting a project only on the value of its NPV is most of the time equivalent to forget the possibility of postponing the project and not to consider that the different variables may change in the course of the project’s life time. For long-term investment with uncertain variables it can be a problem. The investment in solar energy corresponds to this case, as it is a project over 25 years with a great uncertainty on the evolution of electric prices. This is why the purpose of this chapter is to include in our financial evaluation hypothesis about changes in the electricity tariffs and see if it could change the decision about the investment.

Until now we focused our study on the economic profitability of a PV system and it turned out that the investment was worth it for the finances of its owner. The next question is to know if this investment is also profitable for the Earth. As PV is most of the time considered as a green energy, we are tempted to answer a great yes to that question without thinking more. However, the reality is not so easy. It is true that once installed PV modules produce electricity without carbon emission, but their fabrication is a process quite complex that requires a significant quantity of energy and emits several GHG (Green House Gases). The objective of this chapter is therefore to quantify these emissions and to compare them to the emissions corresponding to the production of the national grid electricity. By doing so, we will be able to determine the energy payback time and the carbon footprint of our PV model.

In this project, an extensive and multidisciplinary study on the residential use of solar energy was carried out. After the presentation of the chosen model, the focus was initially put on the economic issue. The model consists in a basic system that does not include energy stockage or resale to the grid. The first objective was to determine the optimum capacity particulars have to install to maximize their benefits. A higher capacity generates more energy but as the totality of this production cannot be consumed (because of the very distinct profiles of the load curve and the solar production parabola) it might be more profitable to choose a lower capacity, which would be cheaper and which would limit the losses of the system. The optimization was done using the typical financial indicators (NPV, IRR and Payback) and was conducted in different countries of the Mediterranean area.