Techno-economic analysis and policy design for PV electricity net-metering systems in Lesotho

Abstract

Lesotho imported 65% of its electricity from Electricidade de Moçambique (EDM) and Electricity Supply Commission (ESKOM) in 2019/2020 (Lesotho Electricity Company (LEC), 2020). This is higher as compared to 59% in 2018/2019 ( Lesotho Electricity and Water Authority (LEWA), 2019). This shows that there is an increasing demand, but stagnant generation capacity hence the ne e d for the security for the supply of electricity in Lesotho. Studies have shown that the interconnection of Solar Photovoltaic (PV) systems to the grid can reduce electricity imports amongst others. The objective of my study is to design optimum grid-connected solar PV systems for residential, commercial, industrial and institutional purposes; predict the system field performance and d o a cost-benefit analysis on net metering. Optimal PV system is designed using the Typical Meteorological Year data closest to Maseru. PV power and inverter power outputs are calculated for each hour of the given typical year. The different load profiles from the utility are also used. Net metering policy options guidelines are designed such that PV electricity is sold to the grid at the utility retail price with no PV capacity cap for net metered systems. The benefits from net metered PV systems are calculated. These are from surplus sales, avoided energy savings and peak shaving in the billing period of 12 months. The results show that with the current electricity tariffs, the PV system that gives the net electricity payments of zero at the end of the billing period for commercial and industrial customers results in negative NPV values which indicate that the system is not acceptable. On the contrary, the net-metered residential PV system offers the profitability index of 2.7643 at the discount rate of three percent (3%) which is very attractive for investment on the customer‟s perspective. The internal rate of return of the project is thirteen percent (13%). Based on these results, it is concluded that with the current tariff settings for residential customers, only the residential PV net metering is technically and economically viable. As for the commercial and industrial activities, PV net metering is technologically viable but not economically viable. The changes in some variables such as dropping of solar PV systems‟ capital and the increase in energy charges to $0.0423 and $0.039 for commercial and industrial customers respectively, can make the systems acceptable. The reasonable Net Present Value (NPV) values are likely to increase the adoption rate of electricity net metering. H o w e v e r , to attract more investment into the net-metering system, the interest rate of the investment should always be greater than the inflation rate. The larger 12 the range between the two, the more attractive the investment can be.