Saturday, 13 July 2013

Consumption Assumption – The Proportion of Solar Electricity Used in a Home


The answer is 50%, now what was the question?


Three very different distributions,
each with the same average - 50%
If you have a solar PV system fitted to your home, then the amount of electricity you generate is changing all the time as the sun travels across the sky and clouds come and go.  Your electricity use also changes as you switch electrical appliances on and off.  

If solar electricity production exceeds your electricity use at any moment, power flows out of your home to supply the electricity grid (called export).  If, on the other hand, your electricity use exceeds the electricity produced by the solar panels then all of the solar electricity is used in your home and supplemented by power drawn from the grid.

Over the course of the day your electricity meter will record the flows of electricity into your home (for which you will be billed). If you can meet your electricity needs with a unit of electricity from your solar panels, then you save yourself buying that unit from your supplier.  

This saving on electricity bought represents an increasingly large part of the financial benefits of owning a solar PV installation.

So what percentage of the electricity that is generated by a solar PV system is actually used in a building?


It seems that the UK solar industry has found a rather simple way to answer this question:

Q: Retired couple at home during the day, 1kWp system
A: 50%

Q: Working couple no-one at home during the day, 1kWp system
A: 50%

Q: Working couple no-one at home during the day, 4kWp system,
A: you guessed it, 50%

For smaller residential solar systems claiming the Feed in Tariff (FIT) , the government decided that it wouldn't measure exported solar electricity, only generated electricity.  However, the design of the scheme was to reward people with money for everything they generate, plus a little more for the energy that is exported.  So it came up with a way of calculating the exported energy. A figure of 50% is multiplied by the generated energy to calculate a value for the exported electricity. 

The industry has embraced that figure as if it represents some kind of truth written on tablets of stone. Every presentation of financial benefits from the FIT I have seen assumes that the household will use 50% of the energy it generates. 

When the UK FIT was paying people £0.43 for each unit (kWh) of solar electricity generated and electricity cost £0.14/kWh all that really mattered to the financial calculation was how much you generated, not how much of it you used yourself (called self-consumption). 

PV prices have fallen dramatically and to keep the financial benefits consistent the FIT now pays new installations much less, about £0.15/kWh generated.  In the meantime electricity costs have risen to around £0.15/kWh.  Self-consumption is becoming the greater part of the financial benefit. 

To illustrate this, let’s consider a house with a 2kWp system installed. To keep the maths easy, we'll assume its in a very good location and generates 2,000 kWh per year.  What happens to the financial return as the proportion of energy used in the home changes?

How the make-up of Feed in Tariff Benefits has Changed Since Launch
Savings on electricity bills forms a much larger proportion of the financial calculation

When the FIT launched, any inaccuracy in the self-consumption figure was much less significant than today.  The value of the savings on the electricity bill represented only 14% of the total benefits (assuming this figure of 50%).

Now the proportion of the benefit that comes through electricity savings is 30%.  Inaccuracies in the self-generation assumption have a much bigger impact on the financial returns calculated.  If solar prices continue to fall then the FIT will fall too, and this trend will continue.

As an aside, the table above is absolutely not an advert for so-called PV switches that divert solar electricity to an immersion heater in your hot water cylinder .  Once you ‘degrade’ high value electricity to heat, you reduce its value to that of the cost of the fuel would have used to heat the water.  In 80% of homes this is gas, so it’s not 15p/kWh you’re saving, but more like 5p/kWh. 

(See the outspoken guest blog from Tom Seppings of solaplug for more on this point).

Far better to use it to power electrical appliances if possible, or store it in a battery, an emerging technology already causing great excitement in the industry.


Your Guess is a Good as Mine


How good a guess is 50%?  What evidence was the government’s choice based on?  If anyone has information on this, I’d love to hear it. Please post a comment at the bottom of the article.

Let's pause to consider averages for a moment. The graphs above show three 'distributions', each of which has an average of 50%. Only the top one (1) would strongly justify using the average value for all customers. 

My hunch is that the reality is most like the bottom distribution (3), with two distinct groupings - households with people at home during the day, and households where people are out at work and school during the day. 

I also suspect that the 50% figure was arrived at when the average PV system size was much smaller than it is today. Falling prices have brought larger installations within the reach of more people (capped by the 4kWp tariff band limit). In 2011, the EST had the average system size as 2.75kWp.  Today it is 3.75kWp. The larger the system, the larger the midday energy peak, and the less likely it is that there's sufficient instantaneous electricity use in the home to mop up the solar electricity. 

Yet the industry persists with presenting financial benefits based on this 50% figure.  

Does anyone know of any work that has been done on the profile of electricity demand during the day in homes with differing types of occupancy?  How could the solar industry offer its customers a better prediction of how much solar energy they will consume themselves?

Do you think solar PV systems will become smaller to increase the proportion of self-consumption as levels of FIT support falls and electricity prices rise?

Let's hear what you think - post a comment below.





4 comments:

  1. I would guess that the reason we ended up with 50% was a result of a Friday afternoon Whitehall meeting that ran on too long and it was the last thing to agree on the agenda...

    Of course the feed in tariff should always really have been called a "generation tariff" given its bias towards generation, and it should really be re-worked now to incentivise export rather than generation and especially it should discourage self-consumption. Given the huge % of people on mains gas you do risk far more electricity being used to heat water at a high carbon cost, as well as reducing the benefit that domestic PV was supposed to bring, i.e a reduction in fossil fuel powered electricity.

    I am aware of a project taking place in Bristol, where Siemens, Bristol Council and a utility company are working on monitoring energy consumption patterns. The aim is to install batteries and some low voltage DC circuits alongside PV in some trial houses, to reduce peak loads on the network. I know one of the project managers working at council level if you would be interested to talk to them about it?

    I would hope that we end up with an upside down tariff where the higher amount is given for export, and a smaller amount for generation. This should be the focus of the next tariff review rather than continuing with the status quo... after all people are already benefitting from "free" electricity, why would you also incentivise more self consumption?

    it's a shame the roll out of smart metering has been delayed, because the generated info could help make some better informed decisions and policy.

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  2. My understanding is that the 50% figure came from detailed monitoring done by the Fraunhofer Institute in Freiburg on houses in the original German 1000 roofs programme undertaken in the mid-1990s. From recollection, the study showed that between 40% and 60% of electricity generated was used on site. Of course issues such as system size, occupancy etc are probably very different to the UK today.

    More recently, the EST did a small study in Tonbridge which gave a figure of around 25% on-site use, although I am not sure of sample size, system sizes, occupancy or housing type (social or privately owned / tenanted).

    It is a great pity that the monitoring done 7 or 8 years ago for Domestic Field Trials (the UK’s 100 roofs programme) did not look at this issue – but it didn’t look at very much at all and certainly told us nothing we didn’t already know!

    More seriously, the ratio of export / on site use is an increasingly import factor in calculating returns and certainly merits further investigation by NSC / EST?

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  3. Although some of DTI PV Domestic Field Trial conclusions may seem obvious now, it did measure import and export consumption using back to back meters for about 470 systems installed 1998 - 2005.

    Data was analysed for 274 systems (many had incomplete data sets due to shading, construction /DNO problems, inverter drop outs etc).

    Figure 65 (p.95) shows the 'solar fraction' as ratio of PV production to building load in the range 20-80%, average 51%, so I expect this fed into the 50% deeming. Average system size is 1.6kWp - a lot less than even the 2011 EST average.

    There's some astonishing hindsight nuggets in the final report:
    - Average installed cost £5,900/kWp
    - suggestion that householders can claim ROCs, but the Ofgem procedure is a little complex
    - suggestion electricity suppliers might offer a uniform tariff to purchase green electricity

    The report is still on the web - search "PV DFT final report"

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    Replies
    1. Thanks for this Nick, a great report, full of interesting stuff. However, if figure 65 was the basis for the 50% deeming figure, then it's been applied wrongly.

      On page 95 it says:

      "This [the 'solar fraction']is the overall output of the system as a percentage of the overall demand in a given period, in this case one year. It does not distinguish between the electricity used in the house immediately and that which is exported...but expresses the total contribution that is made."

      So, across the study the total annual output of the systems averaged 51% of the total annual household electricity consumption, but this is different from what proportion of the solar electricity was consumed at the point of generation and therefore not exported. The report unfortunately didn't answer the question about the relative timing of generation and consumption, although I suppose the data may be gathering dust on a hard drive at BRE somewhere....

      Stuart

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