Analysis of feed-in tariffs for residental grid connected photovoltaic system in Malaysia

Abstract

Power generation is more demanding in today’s world and green energy is the way of the future for the world to survive climate changes. This form of energy are environmentally friendly and sustainable. Solar photovoltaic can be arranged as a large commercial scale or distributed as domestic usage. Therefore throughout the world governments introduced feed-in tariff (FIT) for grid connected photovoltaic for public participation in implementing large scale residential solar photovoltaic. To many governments the FIT rate are considered high but for the public it is low compared to their invested sum. Therefore need for a right formulation of FIT rate that will please the utilities and public. Levelised cost of energy need to be calculated with annual photovoltaic energy output for the analysis of FIT. Based on this project, cheapest investment for photovoltaic design is without battery storage but higher income will come with battery storage from Homer software simulation. The analysis also show that Malaysia 2016 FIT rate is only financial feasible for above 3 kWp capacity. Financial feasibility is determined with model on ‘minimum internal return rate’ and ‘internal rate of return’. Financial model made shown that for 1.5 kWp capacity its MIRR at 3% and IRR at 1% that is losses incur for the investment. The IRR vs MIRR for 3 kWp and 6 kWp are 6% vs 4% and 8% vs 4%. The new formulated FIT rate shown on financial model for 1.5 kWp its MIRR at 4% and IRR at 5% as well as for other capacities. This show the FIT formulation provide profit to public for all installation capacities and also saving for large capacities for utility companies. The best photovoltaic design is those that are able to export more power to the grid at higher price while importing more power at lower price.