Evaluation of incentive mechanisms for distributed solar power generation in San Juan, Argentina

Abstract

The province of San Juan in Argentina presents significant values of solar radiation that stimulate the development of distributed solar photovoltaic generation. Moreover, National Law 27.424 proposes Net Billing as an incentive mechanism for renewable energy sources. This work analyses the profitability of photovoltaic systems in the residential sector under current electricity costs and fare conditions. The analysis allows comparing the leveled cost to generate electricity through photovoltaic generation in contrast to the price of energy consumed from the grid. The results show that, on average, the leveled cost of photovoltaic generation is 20% higher than the average value of the fares for residential users. It is necessary to apply incentive mechanisms as proposed in Law 27.424. to achieve grid parity. In this sense, the impact of the Net Billing mechanism is analyzed and compared with the impact of the Net Metering mechanism. The results show, a priori, that the Net Metering mechanism would be more profitable or economically beneficial for owners of photovoltaic systems. However, this scheme could adversely impact the utilities’ incomes. Finally, discussions on incentive mechanisms are introduced to improve the profitability of photovoltaic systems and to assist the government in making decisions to promote these systems.