Abstract:

Distributed solar photovoltaic （PV） investment has been a promising choice for manufacturing firms to realize its energy consumption transition， while the interplay between time-of-use （TOU） electricity pricing scheme and PV power output post uncertainties to the firm’s generation value. An optimal solar PV investment capacity is determined by developing an electricity cost minimization model for a manufacturing firm and studying the synergy or complementary effect between TOU electricity pricing and power output on firm’s solar PV investment. It is found that a higher synergy will lead to a greater firm’s solar PV investment. While the PV power output exhibits a synergy with TOU electricity pricing， the synergy increases in the level of TOU electricity pricing， which will both incentive firm’s solar PV investment. In contrast， the impact of increasing or decreasing the level of TOU electricity pricing on firm’s solar PV investment is two-sided， including positive and negative effects. Our results suggest that the policy maker can take advantage of the fluctuations in TOU electricity pricing and PV power output to incentive distributed solar PV investment.

Key words: distributed solar photovoltaic, investment decision, time-of-use pricing, photovoltaic power output, synergy