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Family PV power plant on Drenova

Initial requirements

The idea of investing in a family power plant on Drenova is of course to achieve as much energy autonomy as possible. The property is heated on pellets and the owners own two electric cars: Renault Twingo ZE i Renault Captur 1.6 E-Tech Plug-in Hybrid 160 Intens. Therefore, the planned PV power plant power 8.5 kW slightly higher capacity, and special emphasis was on the possibility of future upgrades with an eye battery 10 kWh that would ensure autonomy for a day or two, so it was selected Suitable power hybrid inverter. An investment in the battery is planned for the coming year.

Planned installation – schematic diagram

Based on the experience of other investors, we expected a lengthy paperwork process: That's how it happened. The reason for part of the problem was the requirement for the power plant to power two OMMs (the family house has two apartments with separate meters). HEP currently has no solution for this case, except to carry out the unification of meters (although according to the Act, the category Active Consumer, but this is not implemented in their systems). And here comes the problem of sequential access, waiting in every step, etc.

Activity timeline

On a family house with two floors (ground floor and first floor) it is planned to install a photovoltaic power plant that would supply energy to the entire building. The apartments are separated and each has its own meter (thus and OMM - Accounting Measurement Place). All common appliances are also connected to the apartment on the ground floor - equipment in garages, boiler room for central heating, taverns and outdoor garden facilities. The initial idea was to connect the photovoltaic power plant to one of the OMMs according to the current HEP procedure, and the other OMM billing “join” as an energy user.

Legal (in the introduction to mention Electricity Market Act) this area is clearly defined through form the ACTIVITIAL BUYER, and defines the obligation System Operator:

Active customer is a final customer, or a group of jointly acting final customers, who consumes or stores electricity generated within its own premises located within defined limits or who sells self-generated electricity or participates in flexibility provision or energy efficiency schemes, provided that those activities do not constitute its primary commercial or professional activity;

Article 3 Paragraph 5

End-customer group jointly referred to in paragraph 1 of Article 25 shall be the metering points of final customers in the same multi-apartment building and/or business premises to which the generating or energy storage facility is connected through the metering point; an individual final customer, a collective consumption metering point or through a dedicated metering point for a generating or energy storage facility.

Article 25 Paragraph 4

The system operator shall enable the group of jointly acting final customers referred to in paragraph 1 of Article 25 and measurement data users; metering data of the metering point of an individual final customer, a collective consumption metering point or a specific metering point for a generating or energy storage installation, necessary to account for electricity taken from the grid or for electricity fed into the grid; depending on the arrangement of use of the production facility i.e. energy storage facilities contracted between final customers acting jointly referred to in paragraph 1 of this Article.

Article 25 Paragraph 9

However, it turns out that the Active Buyer currently impossible to implement in practice because such types of unification and sharing are not supported by HEP's applications, regulations, implementing doluments, etc. (?!). However, it is even more problematic that the existing processes of HEP are completely sequentially arranged, and a good part of the necessary documentation is illogical and, in fact, – unnecessary! Therefore, there are two options, wait for the change of regulations and HEP applications (the deadlines for this operation are completely unclear) or follow the existing procedure.

Proces

According to the applicable HEP procedures, two solutions are possible for the observed case:

  1. Unification of both OMMs into one new OMM, replacement of meters and installation of FNE of required power and
  2. Retain separate OMMs, but install two separate FNEs to be connected to each OMM – two completely independent systems.  

The second variant implies unnecessary technical complexity and costs because for each OMM the same HEP procedure has to be followed (cost of replacing two existing meters, two inverters, more complicated installation in the facility, etc.). Finally, the first variant was chosen, but immediately at the beginning it was noticed that although the entire operation is started due to the installation of the FNE, such a unified "roof" process in HEP does not actually exist, but it all boils down to Sequential series of individual processes which all require practically the same data set Repeated from form to form, where, of course, there are also illogicalities even though the processes themselves are forms correctly explained on HEP's website.

OMM Problems

The first illogicality is that the unification of OMMs cannot be done. if the owners are different persons. This is a serious obstacle in the case of multi-apartment buildings where the owners of apartments are different, so the existing procedure for this case is unusable. In the observed case, it is a family, the owner of one OMM is the father and the other the son. Therefore, the first step is the procedure of transferring the OMM to the selected person. The process is sequential, so the next step can be taken only after the end of this activity (by submitting several forms at HEP's counter). The key part is the accompanying documents - the application for the issuance of electricity approval, statements of co-owners that they agree to change the relationship, evidence of ownership of the facility, cadastre extracts, etc., even though it is an OMM for which there are Fifty-Year-Old Historical data in HEP.

There is no specific process for ‘old’ and ‘new’ customers. The application requests the unification of the OMM, and the total required power of the new connection is slightly less than the total sum of the two OMMs, which is regulated by the issued electricity consent. But due to proedura (they say that the problem is applications), energy consent is released on the unified power, which will later create additional problems. A new Supply Contract is also being concluded – but given the strength of the Exceeding 22kW – automatically switches to the red tariff model (which is for the economy and of course means significantly higher prices). HEP employees claim that it is so procedurally complex and that only after unification can the OMM be given new power reduction requirement and back to the white model.

Switching OMMs takes a few days and now both OMMs are on the same person, so surrender can continue a new request to merge the OMM. But surprises don't end there. Only the ‘new’ OMM is active while the old one is ‘archived’, so no readings can be provided. There may be a problem if the process takes time because one meter is ‘inactive’. HEP solves this case by issuing a multiple-increased invoice for the archived meter and by making a final settlement later.

And this part did not go without problems because double invoices were issued for both OMMs of unusually large amounts, so this also required an additional visit to HEP's counter and explanations. An interesting fact is that the consent of the owner of the object certified by a notary is required for unification. Such certification was not required at the first step, although this first step was in fact the change of the contractual relations and their transfer from the existing customer to the new one.

Technical (and financial) complications

The technical process of unification of OMMs is reduced to the dismantling of existing meters and setting up a new (i.e. in the observed case, a more modern existing meter from one of the apartments was used). This is where the first part of the completely unplanned costs comes in. Namely, since the building was built in the mid-1970s, electrical installations were realized according to the technical requirements of the time, in other words, the existing meters are located inside the apartment in the corridors. However, since a new meter is now being installed, it cannot be installed in the apartment according to the regulations, but must be installed on the outside of the building. This is probably a situation that occurs in most facilities in the Republic of Croatia, and represents a potentially serious cost of several thousand kunas for the typical installation of a new outer cabinet, change of installations and their certification.

And now we come to the most absurd part: although this activity is carried out due to the installation of a photovoltaic plant, nthis OMM will not receive an electric meter which will be immediately ‘two-way’ and to be used for the purpose of joining the FNE. In HEP, this situation is explained by the fact that these are separate business processes and that do not install bidirectional meters (as they are not required in 99% cases), and when set FNE then be in the frame Requests for verification of the possibility of connecting a household with its own production are resolved and the issue of a ‘two-way’ meter. Of course, these operations are not free and the price is several thousand kuna per meter for assembly and dismantling.

Instead of a conclusion

Undoubtedly, there is a need to simplify the process and eliminate unnecessary steps – in other words create a special process for the installation of FNE This will bring together potential steps and drastically reduce the number of arrivals and the necessary documents. An additional problem is that each step means filling in several forms, submitting them to the competent HEP service, then waiting at least ten days in each step.

In the observed case, almost three months were spent on these steps, all before the installation and connection of the power plant even took place. It should be emphasized that in the whole process, the support of HEP employees was correct and very professional, and that they themselves believe that the process could be significantly improved, but they say they are limited by rigid ordinances.


Project progress

11.4.2022.

Preliminary design created

FN 8,5 kW – Drenova, 3t Cable according to investor requirements. Family house with two floors each has its own OMM, different owners. The power of each connection is 13.8 kW, unified connection of 22 kW.

12.4.2022.

Request to switch both OMMs to one person

According to the current procedure, unification of connections can be realized only if the same owner of both OMMs.

20.4.2022.

Request for unification of connectors

After switching both OMMs to the same person, the next step is to request their unification.

1.5.2022.

Request to conclude a new supply contract

New contract regulates the new situation – one owner of both OMMs

8.5.2022.

Signing a new one in the supply speech

A new contract has arrived, so it is promptly signed so that the process can continue.

9.5.2022.

Request for EE consent — Fusion of meters

The next step is to seek a new EE consent as we now have on one OMM double power.

18.5.2022.

Energy consent - issued

EE consent was given at 27.60 kW, which created additional problems below, although it was clearly stated that the required power would be 22 kW (this is the maximum for residential consumers).

9.6.2022.

Offer for the construction of FN

3t Cable submits a final bid for the construction of FN, the problem was the lack of equipment on the market and was waiting for the supplier.

10.6.2022.

Request for EE works - new cabinet

In accordance with HEP's procedure, the investor submitted a request for works on the existing installation

13.6.2022.

Installation of a new docking cabinet

In accordance with HEP's request, the investor of the works installed a new connection cabinet on the facade of the building, fortunately it became an underground connection, so the operation could be carried out without excessive construction works, digging and breaking the facade

13.6.2022.

Submitted request for a new Network Usage Agreement

After the physical unification of the OMM, a request for a new contract is submitted – the problem is that it must have a new connection power of 27.6 kW

4.7.2022.

Signed contract for the RED tariff model

A new contract is signed to 27.6 kW – the red tariff model, this is the procedure, only later can a reduction to 22 kW be requested

14.7.2022.

Unification of meters, installation in a new wardrobe

Team from HEP performs dismantling and relocation of meters, newer meter moves to new connection cabinet

21.7.2022.

Submitted request to change the model to white

It is only after physical unification that a request is made to change power to 22 kW and return to the white tariff model

22.7.2022.

Request for verification of the capability to connect FN PM 1.7

It is only now possible to submit a request to check the possibilities for connecting FN – three months after the start of the process!

29.7.2022.

Installation and testing FN 8.5 kW Drenova

3t Cable complete installation and testing of the power plant in three working days. Most of the challenges were with high temperatures (up to 40 degrees).

2.11.2022.

Notification of the possibility of connection

HEP

13.12.2023.

Request for the conclusion of a supply contract for a final customer that also regulates the purchase of electricity

HEP

15.2.2023.

Conclusion of a network usage contract and change of network user status

HEP

6.3.2023.

Equipping OMM - bidirectional meter

HEP

13.7.2023

Issuance of a permanent establishment certificate

HEP

Total duration of the project from the first application according to HEP to the issuance of the final certificate for permanent operation - 458 days!

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Photo documentation

Below is a photo gallery that well documents the entire editing process – from idea to bird's-eye view...


Damir Juričić – writes about economics and finance
Damir Medved – writes to technology and communities

Views: 245

Categories
Expert texts

Energy communities and why do we need them?

In a relaxed atmosphere, we completed our summer programme at Drenova 2022. Topic of this the Solar Barbecue were Energy communities and why we need them – and we need them to achieve energy and financial independence in today's time of general crisis.

Podcast

Our energy communities were illuminated by Damir Juričić and Damir Medved – so listen to what they talked about on our podcast (this time the camera was not active :))

Damir Juričić presented in detail which Legal basis for the establishment of an Energy Community, advantages and disadvantages of individual organizational variants, secrets of EC financing, and what more steps await us when establishing our Drenov Energy Community or Association. Damir Medved presented an example of an interesting island community: the Danish island of Bornholm, which is one of the best examples of sustainable communities in the EU. They are a partner in the project. insulae It takes place on our island of the Union, and can inspire us to build economically and energy-independent communities. Particularly interesting are their models of management and ownership of energy infrastructure.

Presentations

Who is interested in the details – can also see the presentations:

After numerous questions (and answers :)), the participants went for a refreshment with a musical background that she created for us DJ Mirilo.

See you soon – at the beginning of September, we are moving to the final stage of establishing our energy community.


Lenta DCD Partners

Views: 55

Categories
Lectures

Good vibrations from the first solar grill

When you read the title of the event Solar grill you must have wondered what it is and how it works. Those who came (and even those who would look at the pictures from the event) probably thought that the barbecue would be connected to solar panels or something like that, but when the visitors heard the lecture, they realized that the solar was not so simple.

The problem, that is, the complication is not of a technical nature at all, but of course administrative.

Lecture

Damir Medved from the association Without Borders made a simple and concrete introduction to what are photovoltaic power plants, renewable energy sources and what is the percentage of use of these resources in Croatia and in the rest of Europe.

The technical side of photovoltaic power plants and solar panels told Saša Ukić from 3t Cable, our local company from Ičići. The work in progress on the family house of Damir Medved served as an example.

In order for such a project to be financially stable, it is necessary to make a good calculation. Everything that needs to be included in such a calculation as a cost is explained by Damir Jurčić the University Support Centre for Smart and Sustainable Cities.

There were also a lot of direct questions from the audience to which the lecturers responded very competently. It is a real refreshment to hear that with a good company and technical support, everything is possible even though there are certain obstacles to installing a photovoltaic power plant.

The conclusion is that it is not very simple, it should be equipped with knowledge and information and patience in always difficult and complicated administration. Despite all the problems and still vague laws with these alternative energy sources, demand is high.

Mini-jam session

After an hour and a lot of technical, financial and statistical information, electric grills and mini jam session gigs started. In the band (yet) without changes played: Benedikt Perak guitar, Siniša Babić bass guitar, guest from Graz Saša Mitrović trumpet, and as the second surprise guest joined Stipe Bilić on the piano. Pleasant sounds of light jazz filled the courtyard of the Drenova Social Center to the visible satisfaction of the audience. After a break and refreshment with food and drinks, the band played several popular tunes, so the audience was given the opportunity to sing.

From left to right: Stipe Bilić, Siniša Babić, Saša Mitrović, Benedikt Perak

Recording of the lecture

Be sure to watch the video of the technical presentation of the Solar grill on our you tube channel:

The next Solar Grill II is on Friday, July 29 at 6 p.m. where energy communities will be discussed.


Lenta DCD Partners

Views: 35

Categories
Expert texts

Effects of VAT refunds

Summary

For the purpose of a more efficient transition to renewable energy sources, decarbonisation, achieving the goals of the European Green Deal, but mostly due to increasing the availability and affordability of energy from photovoltaic power plants to its citizens, the Council of the European Union adopted on 5 April 2022 Directive (EU) 2022/542 supplementing Directives 2006/112/EC and (EU) 2020/285 as regards the possibility to reduce the VAT rate on the purchase price of photovoltaic power plants. Also, an initiative has been launched in our public space to reduction of the purchase price of photovoltaic power plants by the value of VAT paidWithin this text, the impact of such capital assistance on the financial justification of investments in rooftop photovoltaic power plants will be assessed. Also, attention is drawn to the fact that the regulations should enable the right of all citizens who decide to invest in rooftop photovoltaic power plants regardless of the procurement method (procurement of works, PVaaS or PPA). Otherwise, citizens who assess that the procurement of works is not the most acceptable option for them could be discriminated against.

Introduction

In the last few days, an initiative has been launched on the basis of which, every citizen who installs a photovoltaic power plant on their own, the state roof would return a value equal to the VAT contained in the invoice for the installation of the power plant. Therefore, the installation of photovoltaic power plants would be subsidized by 20% capital values of the project. The procedure would be relatively simple – the citizen presents to the Tax Administration an invoice for the power plant and a certificate from the authorised person that the power plant has been properly installed, and the Tax Administration pays the citizen the equivalent of the VAT contained in the invoice. Such capital assistance could have a positive impact on the financial soundness of investments in rooftop photovoltaic power plants. In order to assess the intensity of such aid, it is necessary, first of all, to establish, or to assess, whether the investment in rooftop photovoltaic power plants is financially justified in the absence of aid. In principle, it is justified to grant public aid to projects that are socially justifiable (eligible economic rate of return) and financially unviable (ineligible financial rate of return).

According to financial justification calculations that can meet in the media, investment in rooftop photovoltaic power plants is financially justified and No capital assistance (aid). In these presentations, citizens are encouraged to invest in photovoltaic power plants on their roofs because the investment is “returned” over several years. However, it should be noted that such calculations are based on the assumption that no costs other than capital investment and, possibly, the replacement of the inverter will be incurred in the 25 years of operation of the power plant. How realistic is this assumption can be judged by citizens from their own experience.

Savings

The basic principle of assessing the financial justifiability of an investment in a rooftop photovoltaic power plant results from the achieved savings from which project costs are covered. In this sense, the calculation of financial justification is primarily opportunite. Savings are the difference in energy costs before and after investment. In cases where the investor uses only electricity as the only energy source, the savings will be defined by the difference in annual electricity costs before and after the installation of the photovoltaic power plant. However, in cases where the investor uses other energy products (for example, liquefied gas, fuel oil, pellets, etc.), the savings will be determined by a combination of energy costs before the investment and a combination of energy products with included energy from a photovoltaic power plant. What Are Energy Costs Before

the higher the investment will be, and the savings from which the investment in the PV plant is settled will be greater. Of course, the installation of a photovoltaic power plant of optimal capacity is assumed. The optimal capacity depends on a number of factors, the most important of which are the ratio of consumed and produced energy (higher production relative to consumption poses the risk of changing the status of the investor from the manufacturer for own needs to the manufacturer for the market), the potential use of an electric vehicle, participation in the energy community, changes in the price of energy products and security in energy supply. The optimal photovoltaic power plant generates energy that will be fully consumed for its own needs. If regulations are changed in the future, the possibility of favorable sales of energy in the open market through aggregation, energy trading between members of the energy community, etc., optimality is likely to be determined by other parameters.  

Capital assistance

Capital assistance is a contribution to the proceeds of a project that reduces the capital value of the investment or, in other words, increases the proceeds that contribute to a higher value of the operational result and, therefore, the project is more financially acceptable. In general, subsidizing makes sense those projects that are economically justified, ERR(C) > marginal rates and financially unsustainable; FRR(C) < marginal rates. The financial marginal rate is usually determined by the average weighted price of the funding (WACC). In this regard, capital assistance contributes to the financial sustainability, or eligibility, of the project and, at the same time, its amount should be the result of a calculation based on a certain marginal financial rate of return of the project. In this sense, capital assistance equals the value of VAT in the invoice for the photovoltaic power plant (recalculated VAT rate of 20%), will certainly increase the financial eligibility of the investment project in the rooftop photovoltaic power plant, but it is not entirely clear why it is exactly 20% the capital value of the project and whether that amount is the result of the calculations described.

Most likely it is not, but in any case it can contribute to motivating citizens to invest more easily.

person in black suit jacket holding white tablet computer

Example

The example will show the impact of the costs included in the calculation on FRR(C) and the payback period.

Since there are still, for the most part, no photovoltaic power plants in our country whose exploitation has been completed due to wear and tear or obsolescence, and no data on the proper recording of all details of costs and production are known, simulations of calculations based on known data from the operations of other power plants described in various studies, professional and scientific articles will be presented here. Data on energy consumption and prices are taken from the actual household of citizens who prepare the investment decision using systematic calculations.  Given the doubts about the financial sustainability of photovoltaic power plants presented in the media, the investor organizes simulations with regard to:

  • Cost coverage (investment, replacement of inverters, costs and financing structure, maintenance and replacement costs of spent materials, removal costs, etc.);
  • Availability of the plant over its lifetime;
  • Protection effect against future electricity price increases;
  • Inflation;
  • Risks;
  • Impact of capital assistance on financial eligibility;
  • Inclusion of new household appliances (electric vehicle) and the like.

Project assumptions are described in Table 1:

Table 1: Project assumptions (Source:Author)

Explanation of project assumptions

The investor uses electricity from the grid to meet its energy needs. Considering the total annual consumption of 4 693 kWh, it will install a 4.15 kWp photovoltaic power plant consisting of 10 photovoltaic panels with a peak power of 415 Wp. The lifespan of the plant is 25 years, and its production efficiency will be reduced by 20 years.% in the last year of the planning horizon. It is assumed that the plant will operate continuously over its lifetime, i.e. that its availability will be 100% although there is a certain probability that this assumption will not be viable especially at the time of replacement of the inverter.

It is assumed that the inverter will be replaced in the 12th year, and its price (calculation is prepared on the basis of constant prices) will be 392 €. The investor uses the so-called white tariff model with total unit prices (after 1 April 2022) of HRK 1.15/kWh for a higher daily tariff (VT) and HRK 0.531/kWh for a lower (NT) night tariff, which considering the consumption ratio of VT and NT of 86% and 14% gives a weighted average price of electricity from the grid of 1,063 kn/kWh.

The purchase price of the turnkey power plant is € 4,905 or €1,182/kWp. The investor assumes that the cost of the insurance premium of the power plant will be 15 €/year and that the cost of preventive maintenance will be 5 €/year. As part of the analysis of financial effects, the impact of capital assistance (grant, subsidy) announced to the public will also be assessed. At the end of its life, the investor assumes on the basis of the collected information, it will bear the costs of removing the panel in the amount of 25 €/panel and disposal of 20 €/panel.

The costs are grouped into five groups: 

  1. Capital costs (namely, the capital value of the project),
  2. Maintenance (preventive, inverter replacement, removal, disposal),
  3. Management (insurance premium)
  4. Funding and
  5. Risks.

Financing costs

Financing costs refer to the interest rate of the loan that the investor obtains to settle the capital value of the project at an interest rate of 4% per year for 10 years and compensation 0.75%. Risks were estimated based on the calculation of the difference between the most probable value and the expected value within the applied triangular probability distribution where the reliability of the most probable value (ML) is corrected by uniform distribution – the reliability of the ML value of 100% produces triangular distribution, and reliability of 0% produces a uniform distribution of probabilities.

Simulations (cases) of several cost coverage options have been prepared:

  • S0: It is assumed that the investor will finance the investment entirely from its own sources of financing and that, in addition to the capital value of the project, there will be no other costs in 25 years[8];
  • S1: It is assumed that the investor will bear the capital value of the project and the costs of replacing the inverter;
  • S2: It assumes the costs of capital value of the project, replacement of inverters and financial costs in case of financing from other people's (banks) debt (loan) sources of financing;
  • S3: All costs included and option S2 plus operating costs (preventive maintenance, insurance premium and dismantling and disposal costs);
  • S4: All costs included in S3 plus risks;
  • S0G, S1G, S2G, S3G, S4G: Previous options with a 20 grant included% the capital value of the project including VAT.

Projections of total living costs are shown in Table 2:

Table 2: Coverage of costs with respect to the simulated option

Source: Calculations based on data from Table 1

Project savings

The inclusion of certain types of costs reduces the overall savings from which project costs are met. The logical consequence of the inclusion of new costs with regard to the option is also an increase in the unit price of electricity produced from a photovoltaic power plant. The projected savings and unit energy prices are shown in Table 3:

Table 3: Projection of savings and unit prices of energy from a photovoltaic power plant

Source: Calculations based on data from Table 1

The unit cost of energy from a power plant is calculated as the ratio of total living costs to the energy produced, while the unit savings equal the difference between the unit price from the grid and the photovoltaic power plant. This indicator is also linked to an indicator that is often used in the analysis and evaluation of the impact of photovoltaic power plants: LCOE (Levelized COsts of Electricity) with the difference that when applying LCOE items are discounted. Each option is also shown with the impact of capital assistance and the consequences of reducing the total cost of living due to the refund of VAT contained in the capital value of the project.

black and white solar panels

Financial justification of investment in a photovoltaic power plant

Financial justifiability of investment in a photovoltaic power plant measured by the financial rate of return indicator of the FRR(C) project, which represents the average annual ‘recognition’ rate of roles in the lifetime of the project. That rate shall also represent the maximum eligible average weighted funding rate. The value of the investment (capital value of the photovoltaic power plant) is compared to the annual differences in savings (differences in energy costs before and after the investment) and operating costs (insurance premium, maintenance and replacement of spent materials, panel cleaning, dismantling and end-of-life management, risks, etc.). The eligible financial rate of return of the project shall be assumed to be greater than or equal to the average weighted cost of funding consisting, as a minimum, of own and others’ (e.g. loan) funding sources. FRR(C) represents, at the same time, the return that an investor can expect if he invests in a photovoltaic power plant project if he finances the project from his own sources of financing.

The second, derived indicator of the justifiability of investments is an indicator of the payback period most commonly used by the public, and represents the period (year) in which the cumulative value of the difference between investments and costs is equal to the cumulative value of savings. The third indicator is the financial net present value of the investment FNPV(C). This indicator stems from the same function as FRR(C) with the result showing in another way. In particular, for the calculation of this indicator, a target discount rate is determined and the absolute value of CUs is discarded. If the absolute value of CUs is positive, the benefit of the investment is higher than the discount rate (e.g. WACC) and the investment is eligible because the operating result allows for full settlement of the funding. This CU value represents the difference between the discount rate and FRR(C).

If the operation of the photovoltaic power plant is carried out in accordance with the assumptions described in Table 1, then the investor can expect the returns shown in Table 4:

Table 4: Financial justification indicators

Source: The results of the simulation.

Recovery period

As stated above, the inclusion of costs in the projection reduces the rate of return of FRR(C) and increases the payback period. If the most likely projection for the investor is described in the S4 case, then it can expect a return of 2.65% annually. The decision on the acceptability of this value will depend primarily on the investor's alternatives. For example, an investor can invest an amount equivalent to the capital value of an investment of € 4,905 on a deposit with a commercial bank.

The yield will be relatively small, less than 1%. If these two investments carry the same risks for the investor, then it is more acceptable to invest in a photovoltaic power plant. However, if he is eligible for capital assistance of 20% capital value of the project (VAT refund of 25% in the bill for the power plant) then this yield of 2.65% increase to 8.82% annually, which may constitute adequate compensation for other unquantified risks. A comparison of the project rate of return and the investment payback period with and without capital assistance is shown in Graph 1:

Chart 1: Dependence of FRR(C) and payback periods on capital assistance for different simulation options

Source: Results from Table 4

The impact of the change in the price of electricity

The payback period from 11.63 years to 21.63 years (S0-S4 without grant) will be reduced to 8.79 to 14.34 years with grant. Grant has a similar impact on the rate of return of the project, i.e. the expected return on the bet of € 4,905 over 25 years. Yield of 7.84% to 2.65% (S0-S4 without grant) will increase to 14.20% to 8.82% with a grant. However, irrespective of the justification for investing in a photovoltaic power plant under the conditions described above, the main justification for investing in a rooftop power plant lies in the protection against the increase in the price of electricity from the grid. Of course, if the investor uses other energy sources, then this calculation should include the expected rates of increase in the prices of other energy sources. The ratio of the rate of return to the period of return on investment to the average annual rate of increase in the price of electricity is shown in Figure 2:

Chart 2: Dependence of FRR(C) and RP indicators on the increase in the price of electricity from the grid 

Source: Results of the author's simulation.

The simulation results in Graph 2 are compiled on the basis of the S4 and S4G cases and the assumption of an inflation rate of 4% annually. In case of inflation of 4% and without an increase in the price of electricity from the grid, investment in a photovoltaic power plant would not be financially justified under these criteria. However, with the increase in the price of electricity from the grid, the investment is justified in particular with capital assistance. With an inflation rate of 4% annually without an increase in the price of electricity from the grid, in the case of option S4, the investment would not be financially justified, however, with a capital assistance of 20% the capital value of the FRR(C) project is 5.82% yearly, which would be acceptable. With the expected average annual increase in the price of electricity from the grid, the investment is financially justified with and without capital assistance. It is precisely in the case of S4 with inflation and without an increase in the price of electricity from the grid that the justification for capital assistance to citizens when investing in rooftop photovoltaic power plants is based.

Purchase of photovoltaic power plants and capital assistance

In discussions on capital assistance to citizens in the procurement of rooftop photovoltaic power plants by refunding the VAT paid, it is assumed that the citizen, the owner of the building on whose roof the power plant is installed, is the investor. The supplier supplies the power plant, installs it and delivers the invoice to the citizen for the completed works. The citizen – investor is the recipient of the invoice and with such an invoice proves to the Tax Administration the right to the payment of capital assistance, in kind 20% of the total value of the invoice relating to it. However, there are also alternative models on the market for the procurement of photovoltaic power plants that do not involve a citizen – the owner of a building on whose roof the power plant is installed as an investor and on which no invoice is issued for the works carried out.

PVaaS

These are models in which a third party (investor) installs a photovoltaic power plant on the roof of the building owner (energy user) and supplies it with the service of availability of a photovoltaic power plant (PV).PVaaS - PhotoVoltaic as a Service), and the citizen-user of the availability service pays the investor a monthly fee for the availability service of the power plant usually about 10 years. A similar situation occurs when a citizen concludes a contract for the supply of electricity from an investor who has installed a power plant on the roof of a building owned by a citizen and sells it to the citizen at a predetermined price of electricity (PPA - Power Purchase Agreement) the same over a period of about 10 years or more. In this case too, the citizen – the owner of the roof – is also not the investor and the invoice for the works carried out for the installation of the photovoltaic power plant does not refer to him, but to the investor – a third party.

If regulations are adopted that will enable the right to capital assistance only to citizens - investors, other citizens who assess that alternative models are more acceptable to them, will be unfairly discriminated against, their affordability and availability of affordable energy will be reduced. In the case of the citizen-investor, VAT is included in the invoice for works, and in the case of the citizen-user of the service, in the invoice for the delivered availability fee or in the invoice for the delivered electricity. Therefore, the regulations, which will regulate the payment of the paid

As capital assistance, the circumstances of all the legitimate models available should have been taken into account.  

Conclusion and recommendations 

The entry into force of the new Directive of the Council of the European Union (EU) 2022/542 has created the possibility for the Government of the Republic of Croatia to propose a regulation that will further stimulate citizens to invest in rooftop photovoltaic power plants by reducing or abolishing the VAT rate. The conducted analysis has shown that, despite often unsupported media thesis about unquestionable profitability and financial justification of investments in photovoltaic power plants, there are borderline cases and risks of financial unjustified investments.

Therefore, the adoption of the proposal regarding the VAT refund in the invoices of procured and installed photovoltaic power plants would be a good measure to protect citizens from precisely the described borderline cases. But the question remains whether this measure is fully elaborated. For example, the question should be asked: Will citizens who do not procure works to install solar power plants on their roofs and are not investors, i.e. citizens entering into a PVaaS or PPA contract, also be entitled to capital assistance that will allow them to pay a lower price for the availability fee (PVaaS) or a lower price for the energy produced (PPA)?


Expanded version of the text originally published in the Journal the Center for Public and Non-Profit Sector Development, Tim4Pin No.5 2022

Damir Juričić – writes about economics and finance
Damir Medved – writes to technology and communities

Views: 55

Categories
Expert texts

Energy communities – economy and cost-effectiveness

In mid-October this year it was published. Electricity Market Act (ZTEE) which introduces numerous newspapers of which, for the purposes of this text, we find an interesting part related to energy communities. It is about the possibility of associating citizens into formations that would enable them to jointly produce electricity (here we assume the energy produced by photovoltaic power plant technology) and to share the produced energy in the scope of the same substation. The law provokes divergent views regarding its potential to accelerate individual micro-generation of electricity and the mutual sharing (trading) of generated energy surpluses among members of the energy community. 

Uplatoon

In recent years, since the prices of solar panels have decreased significantly, photovoltaic power plants have become financially self-sustaining projects. The possibility of achieving profitability by investing in photovoltaic power plants justifiably directs the attention of citizens to investment. Also, lately, the term “” has often been encountered.prosumer’, a word composed of ’producer" and "consumer’ and denotes the entity that consumes (consumer) electricity, but it also generates (producer). The role of the entity in the consumption of electricity is known, but questions, especially practical ones, of implementation, arise precisely in relation to the process of electricity production.

Energy communities whose purpose is the production and sharing of produced electricity can be joined by citizens among themselves, but with them or independently and other entities such as local, regional self-government units, institutions, utility companies and other entities gathered around a substation. Here, the most intriguing is that limited possibility of pooling at a location covered by a substation, which significantly limits the meaning of sharing the electricity produced. It is emphasized that members of the energy community produced energy You can share, but not sell..     

Bringing citizens together to share energy

Article 26. ZTEE stipulates that citizens can come together to jointly produce and share the energy produced for their own consumption. This will be done through so-called energy communities. Citizen Energy Community is a legal person established in the territory of the Republic of Croatia, whose shareholders or members voluntarily come together to benefit from the exchange of energy produced and consumed in a specific spatial area of a local community. It is particularly important to point out that a shareholder or member of a citizen energy community may be a natural or legal person, including local self-government units, a micro-enterprise or a small enterprise whose place of residence, establishment or business premises are in the territory of the local self-government unit where the citizen energy community is based. Thus, the regulation allows citizens to join forces with persons governed by public law such as cities, municipalities, institutions or utility companies in order to better exploit the potential of producing and (in-house) consuming (in-kind, sharing) the electricity produced.

Energy community activities

The citizen energy community may participate in the production of electricity for the needs of shareholders or members of the citizen energy community, as follows:

  • From renewable energy sources;
    • Electricity supply to shareholders or members of the citizen energy community;
    • Managing the consumption of electricity by shareholders or members of the citizen energy community;
    • Aggregation of shareholders or members of the citizen energy community;
    • Energy storage for shareholders or members of the citizen energy community;
    • Energy efficiency services for shareholders or members of the citizen energy community;
    • Charging services for electric vehicles of shareholders or members of the citizen energy community;
    • It may provide other energy services to shareholders or members of the citizen energy community in accordance with the rules governing individual electricity markets.

However, the provision of Article 3 of the Article 21 of the ZTEE defines the meaning of the Energy Community as a ‘legal person based on voluntary and open participation and effectively controlled by members or shareholders who are natural persons, local self-government units or small enterprises, whose primary purpose is to provide environmental protection. economic or social benefits to its members or shareholders or to the local areas in which it operates, and No financial gain and may participate in generation, including from renewable sources, supply, consumption, aggregation, energy storage, energy efficiency services or recharging services for electric vehicles, or provide other energy services to its members or shareholders.

The problem of non-profit

Also, the provision of Article 26 stipulates that the Energy Community shall act on the basis of the law governing Financial operations and accounting of non-profit organisations. It should also be added here that neither the Directive nor the ZTEE clearly define the concept of ‘sharing’ energy within a community. Energy sharing can be with or without compensation. Reimbursement can be financially or naturally nominated. In this respect, it is not clear whether any contribution to shared energy is allowed or prohibited. Of course, the ban on compensating those who share their excess energy should be inadmissible because, so to speak, it discriminates against the right of a member of the community to make a profit if all members of the community agree on the price of shared excess energy.

Finally, a member of the community in need of energy can take it from the grid and will pay a fee for the energy taken (energy price – HRK/kWh). He considers that price to be economically justified. The question is why he could not buy energy from his community member who at that moment has excess energy at a lower price than that of the grid (if such circumstances arise). Why should members of the community (those who surrender their excess energy to those who are currently claiming energy) not be provided with economic and financial benefits – one additional income and the other with savings? All the more so since these revenues and expenditures for purchased (shared) energy are not recorded in the account of the legal entity of the energy community, but in the private accounts of the members of the community. These are certainly questions that should be clearly answered before the implementation of the set goals of the energy transition and the operational association of citizens in energy communities begins.

EU regulation

These provisions could, through their vague wording, make it more difficult for the immediate organisation, organisation and final implementation of the intended purpose and objectives. It would be inferred from those provisions that an economic advantage does not involve the making of a financial profit. Also, there is a limitation or assurance of the legislator that energy communities must not be legally organized in any other way than in a way that implies recording business changes in accordance with the rules of non-profit organizations, that is, associations or cooperatives. This could be controversial because Directive of the European Union in paragraph 44 of the preamble stresses that “Member States should be able to ensure that citizen energy communities are subject to any form, for example an association, a cooperative, a partnership, a non-profit organisation or a small or medium-sized enterprise;, “as long as such an entity may, acting in its own name, exercise rights and be subject to obligations”.

Therefore, the question remains as to why the legislator limited Croatian citizens exclusively to non-profit organisations of all the above mentioned possibilities of founding forms. Such formulations of the ZTEE could, in immediate practice, give rise to a number of contentious situations.

Purchase and exploitation of photovoltaic plants

In order to achieve the purpose of its establishment, the Energy Community will focus its attention on two groups of processes. The first refers to the preparation, procurement, design, installation, financing and maintenance of the photovoltaic plant, while the second group of processes refers to the sharing of the generated energy among the members of the community. However, before the practical implementation of the project, several questions need to be answered.

  1. Will the legal owner of the photovoltaic power plant be the energy community as a legal person or will the legal owners be the members of the community installing the power plants on their roofs?
  2. Who will be the economic owner in these cases?
  3. Will the surpluses of energy produced be shared between the members of the community who are its co-owners, or will the co-owners of the community be able to share their surpluses with other neighbours within one substation who are not formal owners of the legal entity of the energy community?
  4. Will the sharing be operationally carried out with financial compensation (will it be possible to trade with each other the surpluses produced) or will the surpluses produced be given to community members? Or, on the other hand, will some calculation price of the surpluses produced be formed in advance, which will be divided among the members according to certain keys?
  5. Finally, how will energy surpluses be shared among its members in cases where the supply of surpluses is lower than the energy demand among members?
  6. In this case, who will have priority in taking over the energy surplus – proportional split or split according to the criterion of the maximum price offered?

The general organisation of the relationships between entities within and outside the energy community within a substation can be illustrated by schema 1:

Scheme 1: General organisational chart of relations within the energy community (Source: Authors)

Legend: G – a citizen who is a member of an energy community or a citizen who is not a member of an energy community but who falls within the territory of the same substation.

Purchase of photovoltaic installations

Rational members of the energy community in the preparation phase, and upon the formal establishment of the energy community, which could be either an association or a cooperative within the ZTEE, will ask the question of how to procure the plant. Whether the power plant will be purchased as works, as a service of availability, or whether it will give the surfaces in its legal ownership to a third party and conclude an energy purchase contract with it (so-called energy purchase contract). the PPA Agreement). The procurement of works is preceded by the procurement of design and financing. The following is the procurement of contractors (installation of a photovoltaic power plant) and maintenance of the power plant in its lifetime. It should be noted here that the risks of design and maintenance, and partly assembly, are taken over by the energy community. Members of the community will, in this regard, assess their knowledge and skills in the implementation of these processes, i.e. their capacity to take on the aforementioned risk groups. In this case, the energy community will be the permanent legal and economic owner of the plant. All energy produced belongs to the energy community.

Under the second option, the procurement of the availability of a photovoltaic power plant, the energy community will prepare a preliminary design with precisely defined output characteristics of the plant and procure a project executor who, based on the preliminary design and defined standards, will design, finance, install and maintain the plant in its lifetime. During the period of the contract for the procurement of the power plant, the community will pay a fee for the availability to the contractor as long as the power plant is operational in accordance with the defined standards and output characteristics of the project. In this case, the energy community will be the permanent legal owner of the facility, but the economic owner will be the contractor. Upon termination of the contract, the energy community will also become the economic owner. All energy produced belongs to the energy community.

In the third case, the members of the community will acquire a contractor who will design, install, finance and maintain the plant and conclude a contract with the energy community, or its members, on the purchase of electricity based, if available, on a predetermined quantity and price. Here, all energy produced may belong to the Energy Community or its members, depending on the content of the contract.

In these processes related to the procurement of a photovoltaic plant, the citizen is recognized as a co-owner of the energy community, who with his financial contribution participates in the full or partial financing of the procurement of the power plant. The question here is who will be the legal owner of the power plant – the energy community or a citizen member of the community? Both options are possible.

Exploitation of photovoltaic power plant

Once the PV plant is installed and put into service, community members are expected to use the energy produced. Energy will most likely be used in the following ways:

  • For self-consumption (each member of the community will first use the energy produced on, for example, the roof of their building for their own energy needs in order to replace more expensive energy from the grid with cheaper energy from their own plant and thus achieve savings);
  • They will share the excess energy produced with members of the community;
  • To compensate for the energy shortage by taking over the surpluses generated by the photovoltaic power plants of other members of the community who currently have surpluses at their disposal;
  • Compensate the energy shortage with energy from the grid;
  • Excess power handed over to the grid.

In order for energy to be shared and distributed transparently and securely billed and recorded, an intelligent system will be needed to enable automatic monitoring and recording of energy surpluses and deficits produced and shared among members of the community, automatic comparison of prices produced by members' individual PV systems with the price of energy procured from the grid, and in particular recording and accounting of shared internally traded surpluses. In relation to the above, since the Directive and the ZTEE are not clearly defined, it will be of particular importance for the more efficient implementation of energy communities to clearly define what energy sharing means – whether this redistribution at a predetermined fixed fixed price or sharing also implies trading internal prices between members of the community (possibly citizens who are not members of the community because they are not able to participate materially and financially in the procurement of a photovoltaic power plant, but they contribute to the achievement of common interests with formal members of the community).

Managing the part related to the exploitation of a photovoltaic power plant within the energy community is also a good idea to consider the possibility of bringing together different members whose rhythm of production and consumption of the energy produced is in a kind of discrepancy – when one member produces energy and does not consume it, the other member consumes energy, and the opposite. For example, it is efficient to associate citizens and schools because the school in the morning hours of the day consumes the energy that citizens produce, but do not consume because, most often, they are in workplaces dislocated from their place of residence (energy production). On the other hand, the school in the afternoon does not consume energy while the citizens spend it. Also, school in the summer months is the predominant energy producer, and citizens are the predominant consumer. Such ‘symbiosis’ can make a significant contribution to better achieving the transition targets.

Financing the procurement of energy communities

A particularly important issue, arising from the questions raised above, relates to the financing of the procurement of photovoltaic power plants within the energy community. For the implementation of the processes related to financing, it is important to answer the question of who is the legal and economic owner of photovoltaic power plants, especially if the members of the energy community are local and regional self-government units and institutions or companies in their ownership. If the energy community will be an investor in photovoltaic power plants, then it will obtain sources of financing and refund them from the availability fee or the price of energy sold to other members of the community. It is clear here how important it is to define precisely the dual role of a member of the community – as a co-owner of the community (procurement processes of a photovoltaic power plant) and as an energy consumer (processes of exploitation of a photovoltaic power plant).

Power Plant Procurement Variants

The purchase of the power plant will most likely be financed from its own sources (contribution of community members, the so-called equity, a founding bet) and from debt obtained from, most often, commercial banks. Of course, the relationship between one's own and another's debt sources will depend on the overall risks of the project. Scheme 2 presents two possibilities of community financing:

Scheme 2: Financing options for the Energy Community (Source: Authors)

As far as possible a) on scheme 6, the energy community, as a legal entity established by the role of its members, invests in photovoltaic power plants on the property of its members. The legal entity of the energy community, in addition to the founding roles of its members, also obtains debt sources of financing in order to settle the capital value of the investment. The legal basis for an investment may be, for example, a lease agreement for members' assets.

The legal person of the energy community will compensate the acquired right to invest on other people's property by means of a fee (rent) to the owners of the property (members - but this immediately raises the question whether the legal person of the energy community could conclude contracts on the lease of property and other citizens who are not members of the energy community). From the price of energy sold to its members, the legal entity of the energy community will settle debt sources of financing and reduce its income and expenditure account to zero (0) since it keeps business books according to the rules for non-profit organizations. As far as possible b) members of the energy community obtain financing sources themselves (own and others – debt) in order to invest in a photovoltaic power plant on their assets. Also, for the purpose of sharing energy surpluses, it will conclude an agreement with the legal entity of the energy community in which it will precisely define the rules of energy sharing.

In order to encourage citizens to invest in photovoltaic power plants within energy communities, it is also worth raising the issue of easier use of financial instruments in order to make commercial sources more accessible and minimize their own sources. The financial instruments of the Multiannual Financial Framework 2021-2027 could be used significantly here. Namely, Regulation (EU) 2021/1060 programming, design and implementation of financial instruments has been significantly facilitated. A wide range of possible financial instruments suggests that, precisely for the purpose of financing energy communities, instruments could be created that would contribute to accelerating the implementation of such projects. According to the authors, this could be a non-repayable aid instrument (to cover part of the costs of project preparation) combined with a subordinated loan. Such an instrument could facilitate and speed up the preparation of a project for citizens and enable the reduction of own funding sources with a higher probability of obtaining commercial debt financing sources.

Zplugin

The entry into force of the ZTEE is a major step forward in the implementation of the goals of the energy transition, especially in the part related to the goal of energy production at the place of consumption, while the choice of energy production technology will meet the goal related to decarbonisation. However, the current articulation of regulations is insufficiently clear for the immediate implementation of the set goals and poses significant risks in terms of achieving the set goals. In this regard, it is of particular importance to stimulate and conduct expert discussions in the shortest period of time in order to clearly define all the processes necessary for the low-risk implementation of projects. A specially programmed EU combined financial instrument structured with capital assistance to cover part of the costs of project preparation and a subordinated loan with a reduced interest rate and an extended repayment period in relation to the current market conditions could also contribute to accelerating the implementation of projects of this type.

This is the second part of the extended version of the text originally published in the Journal the Center for Public and Non-Profit Sector Development, Tim4Pin No.1 2022

The first part is available at:


Damir Juričić – writes about economics and finance
Damir Medved – writes about technology and communities

Views: 90

Categories
Expert texts

Energy Communities – technical background

In mid-October this year it was published. Electricity Market Act (ZTEE) which introduces a number of novelties of which, for the purposes of this text, we find an interesting part related to the Energy Communities. It is about the possibility of associating citizens into formations that would enable them to jointly produce electricity (here we assume the energy produced by photovoltaic power plant technology) and to share the produced energy in the scope of the same substation. The law provokes divergent views regarding its potential to accelerate individual micro-generation of electricity and the mutual sharing (trading) of generated energy surpluses among members of the energy community. In this first part we present the technical background of financing photovoltaic plants.

Introduction

In recent years, since the prices of solar panels have decreased significantly, photovoltaic power plants have become financially self-sustaining projects. The possibility of achieving profitability by investing in photovoltaic power plants justifiably directs the attention of citizens to investment. Also, lately, the term ‘prosumer’, a word composed of the words ‘producer’ and ‘consumer’, has been frequently encountered to denote the entity that consumes (consumer) electricity, but it also generates (producer).

The role of the entity in the consumption of electricity is known, but questions, especially practical ones, of implementation, arise precisely in relation to the process of production and sharing of electricity. Energy communities, the purpose of which is the production and sharing of electricity produced, can be joined by citizens among themselves, but also, with them or independently, other entities such as local, regional self-government units, institutions, utility companies and other entities gathered around a transformer station. Here, the most intriguing is this limited ability to team up on site included in one substation This significantly limits the sense of sharing the electricity produced, especially in the Croatian context of low population density, which causes a relatively large number of substations with a small number of connections. It is stressed that members of the energy community can share the energy produced; but not to sell. Thus, at least, it can be deduced from insufficiently clear formulations from the regulations.

In most EU countries, it is a practice not to look at the transformer station but at the physical distance (1 km, etc.)

COMPILE Project

Energy production from photovoltaic systems

The technological revolution over the past hundred years has brought democratization and proliferation of numerous products or services that until then were available to a very narrow circle of privileged. It is enough just to recall the expansion of the use of personal vehicles, air travel or the availability of computers and mobile devices. There are hundreds more, but now another highly centralised branch of the economy is on the path of mass decentralisation – electricity generation and distribution.

Photovoltaic power plants are not a new technology, but significant changes have occurred in the past ten years with a dramatic fall in the prices of solar panels and control equipment, so that a typical photovoltaic plant for home installations of 10 kW ten years ago was worth over half a million kuna, while today the price of the plant with installation is about seventy thousand kuna, which, making it available to the average household, i.e. the price is comparable, for example, to the installation of central heating or heat pumps.

In addition to PV, major developments are also taking place in the context of energy storage – batteries, where battery installations are no longer large in size and do not require special maintenance. The growing number of electric passenger cars should not be overlooked, which will also have a major impact on the consumption and storage of electricity in their own batteries, which are often very high capacity. In addition to these technical innovations, innovative exploitation models have emerged that seek to look at the life-long cost of the plant, and then open up some other opportunities in the context of ownership and control of the plant itself, i.e. new long-term more sustainable financial models.

Finally, in an increasingly volatile world, it will be particularly important to secure stable and secure energy sources, thus reducing the dependency and impact of externalities, while it is critical that these energy sources are also environmentally friendly, do not increase their carbon footprint and are economically viable in the long term.

However, each new technology brings some kind of risks (technical and financial), and in order to understand the risks it is important to understand its functioning, so for a start let's look at which are the basic components of the photovoltaic plant.

Types of photovoltaic systems

The key task of the PV system is the direct conversion of solar energy into electricity, which enables the operation of a certain number of AC (AC) or DC (DC) loads. The FN system can also have an additional backup system, typically a battery or generator, which allows isolated operation. Photovoltaic systems consist of PV modules, energy converters and control electronics. Simpler systems (for cottages, etc.) power only DC consumers (smaller lamps, radios, etc.), but with the addition of a DC/AC converter, such a system can then produce electricity for all common AC consumers.

Generally, the PV system can be divided into the following groups:

1. Independent (autonomous) – completely independent from the network

2. Grid, connected to the mains:

  • Active (interactive) - bi-directional, can take energy from the grid but also send surpluses from FN
  • passive – unidirectional, the network serves (only) as a backup source when there is no production in FN

3. Hybrid, essentially self-contained with the addition of renewable energy sources (most often wind farms).

Autonomous systems are by capital value the most significant of photovoltaic systems connected to the distribution network. The difference in capital value arises due to the existence of a battery system, additional control equipment and regulators. In addition, the network converter for grid-connected photovoltaic systems is simpler by function and typically has less power than autonomous ones.
systems.

Of course, higher capital values of such projects will also cause higher operating costs in the lifetime of the photovoltaic power plant.

Independent (autonomous) PV system

Self-contained systems produce all the energy needed by consumers on their own and this creates significant challenges. For example, when electricity is to be supplied at night or in periods with low solar radiation intensity, a battery of appropriate capacity is certainly needed to serve as an electricity reservoir.

A key component of the system is the controller for controlled charging and discharging the battery, and by adding an inverter (=12 V to ~230 V), the system is also capable of powering regular consumers such as washing machines, televisions, refrigerators, computers and smaller household appliances – naturally according to the installed capacity of the PV system and batteries. Typically used in isolated areas, islands or remote mountain settlements, both for private and business applications (e.g. telecommunication base stations, lighthouses, road monitoring systems, etc.). An example of this system is shown in Figure 1. Due to lower losses, it is desirable to have as many DC loads as possible.

Autonomous system
Figure 1 Autonomous system

Hybrid PV systems

The basic idea of the Hybrid PV system is to increase the availability and reliability of the system by connecting standalone PV plants with other backup sources of electricity, such as wind turbines, small hydropower plants, auxiliary gasoline or diesel power units.

Modern inverters enable the connection of wind turbines and photovoltaic systems without major problems, giving greater safety and availability of electricity supply and enabling smaller battery capacity as an electricity reservoir. For solutions that use gasoline and diesel aggregates, the systems are dimensioned in such a way that the aggregates are used minimally, which saves fuel, reduces the maintenance costs of the aggregates and extends their service life. An example of a hybrid photovoltaic system is shown in Figure 2.

Hybrid PV System
Figure 2 Hybrid PV System

Passive and active network PV system

The complexity of the PV system is determined by the level of automation. In general, we distinguish passive network PV systems that use the power grid only conditionally, in periods when PV modules cannot produce sufficient amounts of electricity, for example at night when the batteries are empty at the same time (Figure 3). Usually all regulation is manual.

Passive network PV system
Figure 3 Passive network PV system

Active, interactive network PV systems use the network dynamically, taking energy from the public network in case of greater needs or when energy is cheap, or returning it to the public network in case of surplus electricity produced in PV modules or when it is profitable to sell energy (Figure 4). Typically, such systems are automated and autonomous, and if they are connected to some AI/ML logic, they can run more complex algorithms for electricity trading.

Active network PV system
Figure 4 Active network PV system

Connection of the system to the network

Photovoltaic systems are connected via the inverter to the distribution network, where they themselves produce direct current in FN panels, which needs to be subsequently converted into an alternating voltage of the network frequency in order to power consumers or work in parallel with the power grid. Public electric power supply is responsible for maintaining the quality of frequency and voltage, whereby in the event of a deviation, the operation of the inverter is automatically switched off or interrupted.

The problem of grid stability is very complex and goes beyond the scope of this article, but it should be noted that there may be bad effects of PV systems connected to the distribution network (if not implemented by standards), such as increasing short-circuit current, undermining the sensitivity of protection in the electricity network, impact on the quality of electricity, availability of the distribution network, and increasing network losses. Impacts depend on the power of the source (FN system), its consumption at the connection point and the characteristics of the plant, and the characteristics of the distribution network to which it is connected. Connecting the PV system to the network also presents new challenges for network operators who now have power flows in two directions, and not only towards the consumer, therefore necessarily meeting all the positive legal standards.

In addition to the issue of physical electricity production, it is also important to properly measure, record surpluses or deficits, and the entire context of energy trading. In the usual way of connecting the PV system to the network, the output current from the PV system is used to supply primarily consumers in the household, and the produced surplus is fed into the network (Figure 5).

Normal connection of the PV system to the network
Figure 5 Normal connection of the PV system to the network

Intelligent system management (electricity generation, consumption and trade)

An important element of the establishment of a sustainable PV plant is the management (if possible automated) of the processes of production, consumption and sale of electricity.

The core of the system is a smart electric meter (Prosumer meter) that allows the control of energy flows in a PV plant. Prosumer can be relatively simple with logic based on smaller rules (time switch or some simple rules such as making decisions based on the state of charge of the battery) or aided by a more complex external system (usually in a cloud with AI/ML properties associated with relevant sources of information on real-time energy prices) that will determine the best moment to buy or sell electricity in accordance with demand and price. In addition to Prosumers, smart appliances that can be remotely controlled are also key. This smartness can be built into devices or (for older equipment) smart sockets can be used that also allow for power quality control.

We can therefore identify the following typical scenarios:

Night, no sun, energy is cheap
Photo 6 Night, no sun, energy is cheap
Dan, the energy from the grid is expensive, there are no surpluses
Figure 7 Day, energy from the grid is expensive, there are no surpluses
Dan, the power from the grid is expensive, we have surpluses
Figure 8 Day, energy from the grid is expensive, we have surpluses
Day, no sun, energy together
Photo 9 Day, no sun, energy set

Criteria for selecting equipment

Photovoltaic systems are very different from all conventional sources of electricity, mostly by:

  • choosing an individual and by no means routine technical solution
  • the critical choice of the size of the photovoltaic and conventional systems, on which the cost-effectiveness depends the most;
  • very critical selection of equipment that has to do 25g without repair.
  • very important to whom to subject the execution of works.

The most important part of any photovoltaic system are photovoltaic modules, which must meet the appropriate technical characteristics. This means that there must be all the necessary technical documentation to prove the tests, the functionality and the annual production under precisely defined conditions.

The criteria for selecting equipment are:

  • Known origin of equipment
  • technical documentation of equipment
  • Atheists and technical guarantees of equipment
  • Instructions for management and assembly
  • Contract on technical and production guarantees for equipment
  • specific price, term and method of payment, duration of the guarantee
  • a list of references of the manufacturer or their authorised representative;

Cost-effectiveness, revenue, expenditure, plant costs

The cost-effectiveness of all energy production technologies, including photovoltaic systems, is determined by:

  • revenues and savings from the use of the system
  • investment costs (investments)
  • Operating costs
  • service and maintenance costs
  • Dismantling costs at the end of the plant’s life
  • indirect (preventive and remediation) costs of preserving the surroundings.

The costs of investing in PV equipment can, in principle, be divided into:

  • investment costs for photovoltaic modules
  • investment costs for inverters
  • investment costs for voltage regulators and battery charging
  • Battery investment costs
  • investment costs in other equipment
  • costs of design and consulting services
  • equipment installation costs.

Three key items in the total cost of building a photovoltaic system are:

  • PV modules with a cost share of 77.3 %,
  • exchanger with a cost share of 9.97 %,
  • construction with a cost share of 4.15 %.

Questions about the efficiency of the system

What is the temperature coefficient of the solar panel?

Solar panels are most effective at a temperature of 25 degrees C. For each degree C above this value, the efficiency shall fall by a percentage between 0,3% and 0.5% On average. This percentage is known as the plate temperature coefficient.

In PVGIS, the losses of the photovoltaic system due to the elevated temperature with modules installed next to the roof of the house amount to 15,2%, and with modules mounted on the load-bearing structure 10,5% . The reason for this is due to greater ventilation, and thus a smaller decrease in the maximum power of the module. There are still losses due to reflection. 2,4% and losses of inverters and cables from 4%.

How can I increase the output of my solar panel?

PWM or MPPT regulator? Always use the MPPT solar controller - they are up to 30% More effective than PWM The guy. Regular maintenance and cleaning helps maintain the output power of solar panels. Ensure that the array of solar panels is in direct sunlight without shading. Solar spotlights can help increase the output power, but you need to be careful not to overheat the panels, which will reduce the output.

Which solar panels are the best poly or mono?

Monocrystalline solar panels are more efficient than polycrystalline, but they are also more expensive. However, relative costs and efficiency are approaching and there is little difference.

Is it worth installing a Solar Tracking system?

For fixed installations, it is necessary to choose the optimal angle for maximum annual energy or for maximum energy during the period in which we need more electricity production. It is theoretically the best solution with two-axis monitoring of the apparent movement of the Sun. This can increase the energy obtained by 25-40%. But is that exactly true?

A budgetary example for the area of southern Croatia is given in Figure 1., from it it is evident that monitoring the movement of the sun has certain advantages, but this should then be put in the context of economic profitability, both investment and exploitation. Tracking systems are complex, they have many moving elements – motors or switches that, in addition to increasing investment, are later a significant consumer of energy. This increases the possibility of system failures, and such plants are significantly less resistant to wind gusts, which is a significant factor in our conditions.

Comparison of production for fixed and mobile FN
Figure 10 Comparison of production for fixed and mobile FN

Below (Figure 2) we present a realistic example created on the basis of real measurements at a plant in Portugal.

Fixed solar power generation and mono-axis on-site monitoring system
Figure 11 Electricity generation from a fixed solar system and a mono-axis monitoring system at the same location

The graph shows the use of a photovoltaic system with a monitoring system that has a uniaxial drive actuator that moves the photovoltaic panel to track the direction of sunlight. This actuator consumes electricity as its source, and the electricity consumed comes from solar panels powered by actuators, which causes a reduction in the energy available to consumers.

In conclusion, compared to fixed panel systems, a photovoltaic system with a solar energy monitoring system less effective to use.

You can learn more about this topic from the excellent manual (you can order it for free) Schrack TechnikPhotovoltaic manual.


This is the first part of the extended version of the text originally published in the Journal the Center for Public and Non-Profit Sector Development, Tim4Pin No.1 2022

The second part is available at:


Damir Juričić – writes about economics and finance
Damir Medved – writes about technology and communities

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Lectures

Energy Communities – Theory and Practice of Solar Power Plants

As part of the joint activities to establish the energy communities of Drenova and Veprinac, we organized lectures entitled Energy Communities – Theory and Practice of Solar Power Plants, which explain a little deeper the technology of photovoltaic systems, the benefits of introducing sensors in our houses, how to finance the energy community and the currently open tenders for co-financing.

Theory and practice of solar power plants - lecture by dr.sc. Josip Zdenković, Schrack Technik

Schack Technik is one of the most renowned companies in the field of technical solutions in energy and telecommunications, and dr.sc. Josip Zdenković has been in the company Schrack Technik in Zagreb since 2008, where he is still the director. His main area of expertise is electric motor drives and renewable electricity sources – especially batteries (Be sure to check out his lecture on battery dimensioning).

Lecture by Josip Zdenković

It was really great to listen to the lecture of the doyens of renewable energy sources dr.sc. Josip Zdenković, and especially to flip through his book Photovoltaic island systems which we can freely call the Bible of solar technologies. We can certainly recommend that you get your free copy if you are interested in examples of good practice and a handful of technical information.


Processes, Sensors and Finance

  1. 10 STEP from design to grid connection of own small PV plant – Saša Ukić, 3t.Cable
  2. Smart Home Solutions (Efficient Energy Management) - Damir Medved, EZ Drenova, Association Without Borders
  3. Opportunities for alternative sources of financing: Damir Juričić, Center for Support to Smart and Sustainable Cities of the University of Rijeka,
  4. Available sources of financing photovoltaic plants from HR and EU projects, Tina Ragužin, 3t.Cable
Lecture Ukić, Medved, Juričić, Ragužin

This is only the first in a series of joint lectures that we will organize at Drenova and Veprinac in order to promote the concepts of civic energy, which should result in the formation of the Drenova Energy Cooperative and the Veprinac Energy Community – these two peripheral settlements of larger cities really share a lot of common interests. Only together we can make some progress – we look forward to working together!


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Lectures

Energy Day 2021

Organized by the Regional Development Agency of Primorje-Gorski Kotar County and the Regional Energy Agency Kvarner, the conference "Energy Day 2021" was held yesterday in Opatija's Gervais Centre, with live broadcast on the Vimeo channel. The conference is dedicated to the topics of green transition of Primorje-Gorski Kotar County, with the presentation of the possibilities of financing green projects through ESI Funds 2021-2027. The lecture was also attended by our permanent associates Darko Jardas and Damir Medved who presented the activities of their organizations in the field of energy transition.

Lectures

In the part of the conference dedicated to the energy transition of the island, a recording of the speech Tonino Picula, Member of the European Parliament on the opportunities brought by the European Green Deal and examples of good practice from Croatian islands.
He spoke about the Cres-Lošinj archipelago. dr. sc. Ugo Toić, Director of the OTRA Island Development Agency and President of the Assembly of the “Apsyrtides” Energy Cooperative, putting emphasis on people, as the basis of the energy transition, and on the need for a general change of thinking and action in the direction of decarbonisation.

Damir Medved (ENT) - Lecture on experiences from the Insulae project

Another example of good practice of the Cres-Lošinj archipelago was presented by mr. sc. Damir Medved from Ericsson Nikola Tesla, referring to the analysis of big datasets on the example of the INSULAE EU project dedicated to the decarbonisation of EU islands.

Presentation Darko Jardas, Director of REA, ‘What are the energy trends in the European Union and what is the position of Croatia and Primorje-Gorski Kotar County in relation to the rest of the EU’.

Recording of the lecture

Check out some interesting lectures and videos:

Statements

And look at the short testimonials of the participants at Canal Ri:


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Lectures

(almost) all about solar power

Friday evening passed in the Drenova Social Center in a pleasant gathering with Faithful Pirsic from Eco Kvarner and dr. sc. Damir Juričić from the Smart and Sustainable Cities Support Center University of Rijeka, and the conversation was moderated by Damir Medved from the association Without borders. In a lecture that lasted almost two hours, we learned (almost) everything about solar energy, and a handful of information about the importance of new green energy sources.

As Verily says, Green energy sources They are no longer an alternative at all. they already represent obligation agreed at EU level. The obligation that says that in the next twenty years we must completely change if we want to live on a planet without (or with minimal) extreme weather conditions, with high biodiversity, productive and quality for life everywhere, and not only in isolated enclaves as from some dystopian film.

Take a look at the integral recording of the lecture, download the excellent brochure that Vjeran Piršič gives us MY ENERGY, MY FREEDOM, and consider whether you want to join the founding initiative the Drenova Energy Cooperative!

Links to information sources

You can find out more about solar energy and how it is used at the following links:

Eco Kvarner

Island of Krk Energy Cooperative

Island of Krk Energy

Electricity Market Act

Croatian Power Exchange

EU directives by 2030

We particularly recommend the excellent brochure by Vjeran Piršić: How to make a photovoltaic power plant – MY ENERGY, MY FREEDOM

Photos from the lecture

In spite of Covid -19, a lot of interested people gathered in the premises the Drenova Social Center and much more online on the live Facebook stream. Questions were numerous and encouraging – the road to founding was opened the Drenova Energy Cooperative.

See you soon in your new classes!


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Announcements

Solar Evening on Drenova

Everything you wanted to know about this renewable energy source, and you did not dare to ask!

With the help of Vjeran Piršić from Eco Kvarner and dr. sc. Damira Juričić-a from the Smart and Sustainable Cities Support Center The University of Rijeka will have the opportunity to learn all about the possibilities of installing a photovoltaic plant on your roofs. The lecture will be held on Friday. 22.10.2021. starting in 19:00 hours in our Drenova Social Center, and a live video broadcast on social networks will be organized.

He's faithful right now. Published an excellent brochureMY ENERGY, MY FREEDOM or how to make a photovoltaic power plant that we highly recommend as a preparation material for our evening.

We highlight several themes:
1. Why is solar energy important? – what are the current problems with conventional energy sources and why these problems will not disappear so quickly
2. What does new legislation in the field of energy bring us? – is the paperwork now simpler?
3. Why an Energy Cooperative? – what are the real opportunities for the inhabitants of Drenova and Škurinje – a concrete example of how to calculate the solar capacity of our roofs will be shown; and why it would be important to establish a debt
4. How to finance it, what incentives and alternative sources of financing are available, and why investing in solar is better than saving at an interest of 0.1 percent or keeping the euro in a mattress!

See how much electricity could be generated and your roof on the Drena with the help of the Solar Calculator. It gives only orientation values, the right calculation should of course be made by the designer!

Darko Jardas (Rea Kvarner)

And the last part of the material worth watching “for warming up” is the performance of Darko Jardas a few days ago at the RI Channel. Darko is the director REA Kvarner, and we had him the opportunity to host on Drenova With an interesting conversation a few months ago:

Darko Jardas, Rea Kvarner

This is the first in a series of lectures that will encourage the establishment of the Drenova Social Center the Drenova Energy Cooperative with which, after successful realization on the island of Krk, they would demonstrate the whole concept in our city (i.e. suburbs). This is part of an activity called ‘Drenovski HUB Idea’, which promotes new ideas and technologies in our centre.


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