Economic analysis of small photovoltaic facilities and their regional differences

Small grid‐connected photovoltaic (PV) facilities in Spain receive either a premium of 0.36€ kWh^?1 over the average price on the power market or a fixed price of 0.40€ kWh^?1. However, legislation on this matter (Royal Decree 2818/98) requires a periodic review of these figures. The basis of on‐going revision of these prices has been their profitability. However, the economic success of such PV facilities is clearly affected by the amount of solar radiation at the site where they are located. Since Spain is between latitudes 44 and 36° in the northern hemisphere, the feasibility of these systems must be analysed for different regions. Two different models have been used to produce the required input data for such an analysis: a model that generates typical solar radiation years and temperatures taken from satellite images and an empirical model for the prediction of daily power produced by a grid‐connected photovoltaic system. From the results of this regional economic analysis, it may be concluded that the existing prices are insufficient in and of themselves to make these small grid‐connected systems profitable anywhere in Spain. To guarantee the economic feasibility of these PV installations in any given location, the fixed price paid for the electricity should be around 0.93€ kWh^?1. Nevertheless, if the Government were to double the current fixed price, in consideration of the slow increase in the PV market in recent years, this would mean that small grid‐connected installations would become profitable in at least 77% of the Spanish territory. Copyright © 2004 John Wiley & Sons, Ltd.