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Increased Roof-Top PV Market Penetration Rate May Affect Electricity Company Revenue

published: 2013-12-28 9:13
Impacted by the decreased PV system installation cost and Feed-in Tariff (FiT) as well as increased electricity price, roof-top system market continues to grow in Europe and USA. According to EnergyTrend’s investigation, the return rate of electricity cost saved from using self-consumption systems in certain regions has become much greater than that of large-scale projects. It shows that the penetration rate of self-consumption segment is increasing.
Since Europe and USA have cut down the subsidy for large-scale projects, project return rate has declined substantially, leaving challenges to large-scale power plants. As indicated by EnergyTrend’s investigation, the return rate for large-scale projects is around 8%-12% in the German market. Fewer investors are willing to invest in these kinds of projects. On the other hand, due to the decreased FiT, investors have started to ask suppliers to revise the price downward so they can at least maintain the basic rate of return. Currently, module price has dropped below US$0.7/watt and Balance of System (BOS) cost has also declined, which causes system cost to be around US$3.0/watt. Although there are doubts on large-scale project development, roof-top market grows thanks to the decreased system cost and increased electricity price. For example, roof-top system market grew by 85%-90% in 2013 in California, USA.
Furthermore, the growth of roof-top systems may affect the revenue of traditional electricity companies. Based on former business model, traditional electricity companies purchase electricity generated from power plants and then re-sell it to the consumers in order to benefit all three parties. But the increased electricity price and the decreased FiT and power generation cost caused electricity cost saved from using self-consumption systems to be greater than revenues generated from FiT price. Hence, consumers are more willing to install roof-top PV systems. From the current trend, revenue for traditional electricity companies will be impacted. For example, electricity companies in Western Australia have proclaimed their electricity demand has declined. In another word, it can bring larger financial pressure to those who still use traditional electricity. With surcharge fees increasing, it will affect electricity price trend and indirectly create an unfair situation – those who still use traditional electricity will have to pay more electricity cost and grid-connection cost. 
Judging from the spot market’s overall performance, since Chinese polysilicon price remains high and suppliers’ January quotation continues to increase, this week’s price reflects an uptrend, with average price reaching US$17.883/kg, a 2.1% rise. For multi-si wafers, supply shortage remains for high-efficiency products. Also, manufacturers have revised the price upward, which causes spot price to continuously rise. This week’s average price comes to US$0.921/piece, a 0.66% rise. For mono-si wafers, this week’s average price declines to US$1.148/piece, a 0.95% drop. For cells, market demand and utilization rate remain high. However, due to the increased wafer price and decreased module price, market price still fluctuates. This week’s average price comes to US$0.388/watt, a 0.26% drop. For modules and inverters, this week’s price decreases for both, with module average price reaching US$0.661/watt, a 1.2% drop and inverter average price reaching US$0.194/watt, a 2.51% drop.
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