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Evaluating consumer investments in distributed energy technologies

The adoption of solar photovoltaic and electrical energy storage by end users depends on their economic attractiveness, which is typically assessed with metrics of future cash flow such as Net Present Value (NPV). Yet analyses using NPV typically do not account for the evolution towards low-carbon electricity systems in the short and long term. We show this to be of critical importance for accurately calculating the profitability of these technologies. By linking an energy system model with a power system model, we observe substantial differences between NPV estimates calculated with and without representing potential evolutions of the electricity system. Our results suggest that not accounting for short- and long-run changes in the electricity system could underestimate the NPV of an investment in photovoltaic and storage by around 20%, especially in scenarios with high levels of renewables, moderate flexibility, and high electrification in the energy system. Using system-dependent cash flow metrics can have a major impact on end-users' energy technology profitability.
- Aalborg University Denmark
- Aalborg University Library (AUB) Aalborg Universitet Research Portal Denmark
- Aalborg University Library (AUB) Denmark
- University of Zurich Switzerland
- University College London United Kingdom
690, System value, ta222, Energy storage, 330, Private investment, Feasibility study, 333, Solar PV, Renewable energy integration, Prosumer
690, System value, ta222, Energy storage, 330, Private investment, Feasibility study, 333, Solar PV, Renewable energy integration, Prosumer
citations This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).13 popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.Top 10% influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).Average impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.Top 10%
