1College of Teacher Education, Mindoro State College of Agriculture and Technology, Calapan City, Philippines
2Utrecht University School of Economics, Utrecht University, Utrecht;, Netherlands
3Copernicus Institute of Sustainable Development, Utrecht University, Utrecht;, Netherlands
4 Senior High School Department, Ceriaco A. Abes Memorial National High School, Calapan City, Philippines
5 English Department, Oriental Mindoro National High School, Calapan City, Philippines
BibTex Citation Data :
@article{IJRED32657, author = {Charmaine Guno and Casper Agaton and Resy Villanueva and Riza Villanueva}, title = {Optimal Investment Strategy for Solar PV Integration in Residential Buildings: A Case Study in The Philippines}, journal = {International Journal of Renewable Energy Development}, volume = {10}, number = {1}, year = {2021}, keywords = {investment strategy; investment under uncertainty; real options; renewable energy; residential building; solar PV}, abstract = { In developing countries, particularly in rural areas, long periods of power outage s are experienced as the electricity grid is technically or economically unfeasible. As solar photovoltaic (PV) is the most potential and suitable source of renewable energy for these areas, this paper analyzes the economic viability of its integration in different types of residential buildings . A pplying real option s approach under uncertainty in electricity prices , this study compare s the attractiveness of adopting solar PV over continuing electricity from the grid focusing on various investment payment schemes including (i) full payment, (ii) distributed payment for 5 or 10 years without a down payment, and (iii) distributed payment for 5 or 10 years with 20% or 40% down payment. Applying the model with the case of the Philippines, the r esults with the full payment strategy obtain option values of USD 6888 for building type -I, USD 15349 for building type -II, USD 21204 for building type -III, USD 27870 for building type -IV, and USD 34251 for building type -V. These option values increase by 21.6% and 22.5% with distributed payment scheme to a 5- or 10-year period and increase by 5% and 13% for distributed payment with 40% and 20% down payment. These option values decrease with investments at later periods . Contrary to the conventional option valuation results of an optimal decision to wait, our findings show the otherwise as earlier investment reduces the risk of opportunity loss from delaying the adoption of solar PV. Among the payment schemes analyzed, the distribution of PV system cost in a 10-year installment period without down payment shows to be the most optimal investment strategy which may encourage lower-income and risk-averse consumers whose decision to adopt solar PV is affected by cost barriers, economic status, and household income. The study suggests the government, particularly in developing countries, to support the integration of own-use solar PV in buildings through incentives and subsidies, as well as financial institutions to offer more affordable terms of payment that encourages low to medium income households to adopt solar PV. Further, this will not only augment the energy deficiency in these countries but also support the global aspirations of reducing greenhouse gas emissions and its adverse effects through gradually shifting to renewable sources of energy. }, pages = {79--89} doi = {10.14710/ijred.2021.32657}, url = {https://ejournal.undip.ac.id/index.php/ijred/article/view/32657} }
Refworks Citation Data :
In developing countries, particularly in rural areas, long periods of power outages are experienced as the electricity grid is technically or economically unfeasible. As solar photovoltaic (PV) is the most potential and suitable source of renewable energy for these areas, this paper analyzes the economic viability of its integration in different types of residential buildings. Applying real optionsapproach under uncertainty in electricity prices, this study compares the attractiveness of adopting solar PV over continuing electricity from the grid focusing on various investment payment schemes including (i) full payment, (ii) distributed payment for 5 or 10 years without a down payment, and (iii) distributed payment for 5 or 10 years with 20% or 40% down payment. Applying the model with the case of the Philippines, the resultswith the full payment strategy obtain option values of USD 6888 for building type-I, USD 15349 for building type-II, USD 21204 for building type-III, USD 27870 for building type-IV, and USD 34251 for building type-V. These option values increase by 21.6% and 22.5% with distributed payment scheme to a 5- or 10-year period and increase by 5% and 13% for distributed payment with 40% and 20% down payment. These option values decrease with investments at later periods. Contrary to the conventional option valuation results of an optimal decision to wait, our findings show the otherwise as earlier investment reduces the risk of opportunity loss from delaying the adoption of solar PV. Among the payment schemes analyzed, the distribution of PV system cost in a 10-year installment periodwithout down payment shows to be the most optimal investment strategy which may encourage lower-income and risk-averse consumers whose decision to adopt solar PV is affected by cost barriers, economic status, and household income. The study suggests the government, particularly in developing countries, to support the integration of own-use solar PV in buildings through incentives and subsidies, as well as financial institutions to offer more affordable terms of payment that encourages low to medium income households to adopt solar PV.Further, this will not only augment the energy deficiency in these countries but also support the global aspirations of reducing greenhouse gas emissions and its adverse effects through gradually shifting to renewable sources of energy.
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