Small scale solar installations
Solar is quickly becoming the cheapest source of electricity, out-competing conventional power generation plants in several parts of the world.
But it will only reach its full potential in a real decentralized energy system that enables integration of major shares of variable sources of electricity and recognizes appropriately the benefits of small scale, clean and local solar installations.
These solar rooftop systems can compete on retail price with grid power at most places in the world; still only few countries, like Australia, have been truly tapping this attractive solar solution.
Small solar systems are the backbone of a digitalized, decarbonized, distributed and democratized energy system (4D), which empowers consumers and territories (e.g. households, hospitals, public buildings, hotels, etc.) with cleaner, cheaper and local electricity.
They have the potential to support the competitiveness of local businesses, revive rural areas and foster sector-coupling synergies at all levels of society. Last but not least, small scale solar provides three times more jobs than ground mounted installations, as shown by the “Solar Jobs Study”, published by Solar Power Europe and Ernst & Young (EY) in November 2017.
No level playing field
Today, there is no level playing field for small solar players in the energy world. Many obstacles hinder investors in rooftop solar solutions to reach their full economic potential in a smarter and cleaner energy system.
In the European Union, a global pioneer in rooftop solar, the Clean Energy for All Europeans package, a set of legislative proposals currently in the final discussion stages in Brussels, could make the difference, but political leadership is lacking.
What is at risk? No less than the EU missing on the “renewable industrial revolution”, a more complex yet much smarter energy system, building on the synergies provided by digital solar & storage to penetrate all sectors of the economy (sector coupling).
From local to national level, small-scale solar is already today capable of reducing significantly CO2 emissions, provide cheap and controllable energy and flexibility sources, and generate new business opportunities – if political framework conditions are set appropriately.
The epilogue for small-scale installations in the European Union isn’t so far away, as negotiations between European institutions and national governments continue with the enactment of a new EU legislation beginning 2019. Some of the following challenges remain crucial to ensuring a cost-efficient transition towards a cleaner and more decentralized electricity system that will unlock the economic and social potential of small-scale solar installations.
More liquid and short-term markets are needed to create a level-playing field between smaller and bigger power generators in Europe and integrate the participation of new players through storage and aggregation services. The implementation of markets fit for PV installations below 500 kW will be a crucial feature to develop new solar business models.
Creating a regulatory framework that truly incentivizes small-scale PV installations
Small scale solar represents a significant opportunity for Europe in terms of economic and employment benefits and could provide 150,000 jobs in 2021, according to Solar Power Europe’s Solar Jobs study 2017.
Until a level-playing field is met between smaller and bigger power generation players, small scale solar producers need to be exempted from disproportionate financial and administrative burdens, such as bidding on the market (removal of priority dispatch) balancing responsibilities.
Empowering renewable prosumers in Europe
Self consumption drives technological developments which provide European companies with the opportunity to maintain global industrial leadership.
Future business models will emerge from the increasing penetration of small-scale renewables in all sectors of the economy: on-site generation combined with storage, digitalization and home automation appliances will guarantee direct renewable supply to key sectors of the economy such as electro-mobility, or zero-emission buildings.
Such installations will also procure valuable services to the electricity grids, setting the stage for the uptake of new services for energy supply and aggregation. Renewable prosumers should therefore be incentivized and not be exposed to disproportionate levies and charges, as it is the case if some EU countries.
A flexibility Roadmap for European Electricity markets
All potential sources of flexibility should be optimized to transition towards a cleaner and more decentralized energy system.
An adequate flexibility roadmap would enact the phasing out of the most inflexible and polluting generation capacities, foster the penetration of key enabling technologies (digitalization, storage, electrical vehicles), and encourage transparency and competition for the uptake of new service providers (aggregation, prosumers).
Restrict the use of capacity remuneration mechanisms (CRM)
Subsidizing inflexible conventional capacities through capacity markets will increase the cost of the energy transition and hinder the uptake of more decentralized and flexible solutions, such as small-scale renewables and storage. The addition of a carbon criteria, excluding the worst environmental performers from capacity mechanisms,remains a crucial feature of the debate.