An Economic Assessment of Grid-Connected Residential Solar Photovoltaic Systems in Brazil
Abstract
This paper analyzes the economic competitiveness of grid-connected distributed solar PV generation through small scale roof top installations in five Brazilian state capitals. The chosen locations represent a comprehensive set of the two essential parameters for the economic viability of solar PV – irradiation and local electricity tariffs. For the assessment, levelized electricity costs (LEC) for solar PV generation and net present values (NPV) for a specific PV system are presented. The analysis comprises three different interest rate scenarios reflecting different conditions for capital acquisition to finance the considered installation; subsidized, mature market and country specific risk-adjusted interest. In the NPV analysis, revenue flow is modeled by the sale of generated electricity at current residential tariffs assuming net metering legislation. Using subsidized interest rates, the analysis performed shows that solar PV electricity is already competitive in Brazil as of today, while in the country specific risk-adjusted scenario, high capital costs make it economically unfeasible. At a mature market interest rate, PV competitiveness is largely dependent on the residential tariff for electricity. Economic competitiveness in this scenario is given for locations with high residential tariffs. The results obtained demonstrate the high potential of distributed electricity generation with photovoltaic installations in Brazil and show that under given conditions, grid-connected PV can be economically competitive in a developing country.