Economics of distributed photovoltaics: an illustration from Bangladesh

Distributed photovoltaics are a growing technology for grid electricity consumers in low- and middle-income countries due to declining costs and government support. In Bangladesh, distributed photovoltaics iare part of broader solar and consumer programs. This study analyzes the economics of stylized grid-connected residential, commercial, and industrial distributed photovoltaics in Bangladesh, considering a year of hourly patterns of solar irradiation and electricity exchanges between the distributed photovoltaics owners and the electricity utilities. The economics vary between different stakeholders—distributed photovoltaics owners, electricity utilities, and society. From the consumers’ perspective, the study finds that the economics of distributed photovoltaics depends on the difference in electricity production costs between the distributed photovoltaics and the electricity utility, transmission and distribution loss, and feed-in arrangements. The study also reveals that a distributed photovoltaics do not necessarily cause loss to the national electricity utility if they replaces expensive oil-fired generation. From a national or societal perspective, distributed photovoltaics are beneficial even if their positive environmental effects are not taken into account. The environmental benefits further improve the economics of distributed photovoltaics.