Mapping the geographic distribution of the economic viability of photovoltaic load displacement projects in SW USA

Highlights

Internal rate of return (IRR) is not correlated with irradiance.

IRR depends primarily on electricity tariff.

Optimal orientation of PV modules increases IRR when optimal azimuth >20° west.

IRR increases significantly if project start date is deferred till 2020.

IRR is in general lower for photovoltaic (PV) than for concentrating PV.

Abstract

While maps of solar irradiance are readily available, they do not represent the economic viability of a solar project in any particular location. This paper provides a financial analysis with different electricity tariffs and then maps the internal rate of return (IRR) of solar load displacement projects. We examine 25 locations in the southwestern USA and show that IRR maps differ substantially from irradiance maps. Our analysis includes 27 scenarios derived from the following combinations: three types of solar installations (concentrated photovoltaic (CPV), south-facing PV and PV oriented so as to optimize IRR); three project start dates (2016, 2018, 2020); and three price projections for grid-connected systems (optimistic, central, pessimistic). The variation of irradiance across these 25 locations is much lower than the variation of IRR. Direct normal irradiance is almost uncorrelated with the IRR from CPV projects, indicating that irradiance alone is a poor predictor of IRR. Tariff differences among the 25 locations, including time of use aspects, play a major role in determining economic viability and IRR varies considerably even within a single city. Orienting PV modules so as to optimize the IRR brings little benefit unless the optimized azimuth is greater than 20° west of south.

Graphical abstract

Example map of internal rate of return, IRR, of solar load displacement projects in populated areas of SW USA: CPV projects starting in 2020.

Keywords

  • Economic analysis;
  • Solar power;
  • Internal rate of return;
  • Geographic distribution;
  • Time-of-use electricity tariffs;
  • Map

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