The economics of solar photovoltaics and its potential in Finland

Abstract

The solar photovoltaics (PV) is one way for us to deploy free, abundant and clean solar energy. The development trend of solar PV deployment around the world is growing over time thanks to the price drops in solar PV modules and systems and low greenhouse gas emission of solar energy. The goal of this thesis is to estimate the solar PV potential in Finland. A comprehensive climatological database, Meteonorm, is our primary tool for the estimation of annual solar irradiations in different Finnish cities. Afterwards, the annual energy output of a 1 kWp solar PV system inclined to the optimum angle in 30 Finnish cities is calculated in the mathematical frameworks of Huld, Beyer and Topič (2010) and Macedo and Zilles (2007). The results state that the climate conditions for solar generation in Finland are almost as good as those in Germany by comparing the annual yield of solar in both countries. Due to the short and dark winter days in Finland, especially in northern Finland, solar produces very little electricity during the period from November to January. Nevertheless, the long and bright summer days compensate the shortages in electricity generation from winter days. Coastal cities have higher yield than inland cities.

In itself the annual electricity output of a solar system doesn’t give us information on how profitable the project is. From the viewpoint of a household, the self consumption rate can be a tipping point of whether the solar project is invested. It has a dynamic element due to the time-varying global solar irradiation and fluctuating load file. The special electricity consumption pattern in Finland, which correlates negatively with the solar generation, makes it less profitable to invest in solar there. In Utsjoki of Finland we can expect constant mismatching of production and load profile, which easily results in negative profitability for a solar project. Therefore the economic evaluation of a solar project should be conducted separately for each project if possible. Nevertheless the LCOE of a solar project can be calculated if the discount rate and the system degradation rate are properly assumed. In our simple calculation of different solar systems in Oulu, it is profitable for some family of four in Oulu invest in a solar system of 5 kWp. Anyhow, this result is not subject to generalization.

We expect our results to provide a general idea of the solar PV potential in Finland to those who are considering to invest in solar and to the Finnish governmental officials in the hope that they would be more motivated to draft support policies to solar PV deployment.