EVALUATION OF SOLAR PHOTOVOLTAIC LEVELIZED COST OF ENERGY FOR PV GRID PARITY ANALYSIS IN MALAYSIA

Abstract

The Malaysian Government, under the Renewable
Energy Act 2011 and the introduction of Feed-in Tariff
(FiT) scheme has identified solar Photovoltaic (PV)
system as one of the promising renewable resources that
could generate ‘green’ electricity for the consumers in
Malaysia. This is to reduce the dependency on fossil
fuels and more importantly, to tackle the climate change
challenge. In this regard, achieving grid parity is the
main priority for the policy makers. When the cost of PV
system generation is equal to or lower than the cost of
conventional fossil fuel generation; grid parity is
achieved. This paper presents the detailed PV grid parity
analysis for a 4kW residential grid-connected PV system
based on the calculation of the Levelized Cost of
Electricity (LCOE). The research is carried out based on
the three key parameters that drive grid parity, namely:
the PV system price, electricity tariff, and discount rate.
The FiT degradation rate of solar PV system has been
taken into consideration. The finding suggests that the
LCOE for a 4.0 kWp system in Malaysia is RM
0.9170/kWh in 2014. This means it may take up to 16
years for Malaysia to achieve PV grid parity. In contrast,
with 1% yearly degradation rate of LCOE, results
suggest that Malaysia will achieve grid parity in 2029. In
addition, various analyses on the sensitivity of the key
drivers to grid parity in Malaysia is carried out.