332
S. Nowak
reduction—the advanced determination of the right level of the tariff scheme, possibly leading to overly generous tariffs, and—when uncapped—the growing burden on
the electricity consumers. Together with the fact that LCOE costs of PV have drastically come down, often to below the consumer price of electricity, the time of the FITscheme, in particular in Europe, is coming to an end. The FIT scheme is increasingly
replaced by other, more sophisticated schemes such as self-consumption.
The concept of self-consumption can be defined as the share of the total PV
production directly consumed by the PV system owner him/herself. Benefits associated with self-consumption are a higher economic value of PV electricity and a lower
stress on the electricity distribution grid. Over the past years, this concept has evolved
and distinguishes between local self-consumption (a PV system owner consumes a
part or all of his/her electricity production), collective self-consumption (a group of
people consumes electricity from a shared PV system) and virtual self-consumption
(generation and consumption take place at the same time but in different locations)
[22]. These variations of self-consumption are expected to form an important driver
of the PV market in the coming years. Self-consumption can be optimised by adding a
local storage unit and by an effective management of the electricity demand (demand
side management). This can, for example, be achieved by cooling the refrigerator
or running the heat pump when PV electricity is abundantly available. Collective
self-consumption offers the possibility to use PV electricity by neighbouring consumers which form a self-consumption community, formed by several buildings in
a neighbourhood.
As the level of penetration of photovoltaic electricity increases in a given market
area (country, state, region), new questions arise regarding the future development
of the regulatory framework. On one hand, as PV becomes a relevant part of the
electricity supply, its economic value on the market at a given time may change,
depending on the price of electricity. For example, in situations of low electricity
demand and high PV penetration, such as on sunny weekends, grid injection can
become economically unattractive. On the other hand, if many consumers (often
called prosumers) self-consume their PV electricity production, the costs of the grid
may not be properly covered.
Moreover, increasing shares of electricity production from PV and wind power
plants which vary with time pose new challenges regarding the flexibility of the
electricity system and hence the security of supply. New electricity market models
are therefore needed which are currently under development. The baseline of these
new electricity market models is to allow for more flexibility in the market, providing
adequate price signals for generation capacity depending on production, storage
and demand requirements. Topics under discussion include volume and price-based
market mechanisms allowing for the needed system flexibility [23].
Another critical element regarding regulatory issues is continuity. Over the past
10 years, there have been many cases where the conditions of the regulatory framework to support PV market development in a given country, particularly those with
rapid market growth, were changed over time, sometimes with short lead times and
in some cases even retroactively. This does not allow a secure and stable investment
S. Nowak
reduction—the advanced determination of the right level of the tariff scheme, possibly leading to overly generous tariffs, and—when uncapped—the growing burden on
the electricity consumers. Together with the fact that LCOE costs of PV have drastically come down, often to below the consumer price of electricity, the time of the FITscheme, in particular in Europe, is coming to an end. The FIT scheme is increasingly
replaced by other, more sophisticated schemes such as self-consumption.
The concept of self-consumption can be defined as the share of the total PV
production directly consumed by the PV system owner him/herself. Benefits associated with self-consumption are a higher economic value of PV electricity and a lower
stress on the electricity distribution grid. Over the past years, this concept has evolved
and distinguishes between local self-consumption (a PV system owner consumes a
part or all of his/her electricity production), collective self-consumption (a group of
people consumes electricity from a shared PV system) and virtual self-consumption
(generation and consumption take place at the same time but in different locations)
[22]. These variations of self-consumption are expected to form an important driver
of the PV market in the coming years. Self-consumption can be optimised by adding a
local storage unit and by an effective management of the electricity demand (demand
side management). This can, for example, be achieved by cooling the refrigerator
or running the heat pump when PV electricity is abundantly available. Collective
self-consumption offers the possibility to use PV electricity by neighbouring consumers which form a self-consumption community, formed by several buildings in
a neighbourhood.
As the level of penetration of photovoltaic electricity increases in a given market
area (country, state, region), new questions arise regarding the future development
of the regulatory framework. On one hand, as PV becomes a relevant part of the
electricity supply, its economic value on the market at a given time may change,
depending on the price of electricity. For example, in situations of low electricity
demand and high PV penetration, such as on sunny weekends, grid injection can
become economically unattractive. On the other hand, if many consumers (often
called prosumers) self-consume their PV electricity production, the costs of the grid
may not be properly covered.
Moreover, increasing shares of electricity production from PV and wind power
plants which vary with time pose new challenges regarding the flexibility of the
electricity system and hence the security of supply. New electricity market models
are therefore needed which are currently under development. The baseline of these
new electricity market models is to allow for more flexibility in the market, providing
adequate price signals for generation capacity depending on production, storage
and demand requirements. Topics under discussion include volume and price-based
market mechanisms allowing for the needed system flexibility [23].
Another critical element regarding regulatory issues is continuity. Over the past
10 years, there have been many cases where the conditions of the regulatory framework to support PV market development in a given country, particularly those with
rapid market growth, were changed over time, sometimes with short lead times and
in some cases even retroactively. This does not allow a secure and stable investment