The Value of Decentralized Solar PV for Consumers, Suppliers and Society

Abstract

New dynamics are taking place in the European power sector. The strong cost decrease of distributed generation and battery technologies drive the decentralization of the European energy system but also, and more importantly, transform the way value is created. Evidently, players in the retail market today need to operate closer to the residential and commercial end-consumer.

Against this background and in order to shed some new light on the current debate around prosumers, this report analyses different policy scenarios. It models – for three European markets – several combinations of solar and battery storage solutions. For each combination and market various options are considered on how self-consumed and injected excess solar electricity is remunerated. This approach allows to better estimate the concrete economic benefits for end-consumers and, from there, to explore how energy suppliers – incumbents or new entrants – will be able to capture business opportunities by creating new value propositions for their customers. These new offers will in turn make distributed generation smarter and more system relevant. In this decentralized world, solar will become a new factor of performance and differentiation amongst electricity suppliers. Some may decide to continue operating in a business as usual mode. Others will seize this opportunity, create new business models, and run ahead of the pack.