Energy 26 (2001) 431439 www.elsevier.

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Energy and economic evaluation of building-integrated photovoltaics

M. Oliver 1, T. Jackson
Received 19 December 1999
*

Centre for Environmental Strategy, University of Surrey, Guildford, Surrey GU2 7XH, UK

Abstract This paper applies energy analysis and economic analysis in order to assess the application of solar photovoltaics (PVs) in buildings. Comparison is made both to electricity supply from centralised PV plants and to conventional electricity sources. The comparison with conventional sources reveals that there is currently a signicant trade-off between the environmental and economic implications of PVs: there are substantial resource benets to be gained from using PVs to supply electricity, but the economic cost of doing so is signicantly higher than conventional sources. This trade-off is reduced when the benets of building integrated PVs (BiPVs) are considered. By comparison with centralised PV plants, BiPV systems offer the double dividend of reduced economic costs and improved environmental performance. This double dividend is increased if the economic and energy costs of avoided cladding materials are taken into account. 2001 Elsevier Science Ltd. All rights reserved.

1. Introduction When assessing the viability of technologies such as photovoltaics (PVs) it is important to recognise the dynamic nature of technological development. PVs were originally developed for applications in outer space, where the benets of a light weight and reliable energy source outweighed cost considerations. They are currently viable for many remote applications providing electricity to areas and applications remote from any grid, but not yet cost-competitive with conventional electricity generation in grid-connected systems. However, the development of the tech-

* Corresponding author. Fax: +44-1483-876671. E-mail address: t.jackson@surrey.ac.uk (T. Jackson). 1 Now at: Ernst & Young, Broadwalk House, Southernhay West, Exeter EX1 1LF, UK. The views expressed in this paper belong solely to the author in his personal capacity and are not the views of Ernst & Young.

0360-5442/01/$ - see front matter 2001 Elsevier Science Ltd. All rights reserved. PII: S 0 3 6 0 - 5 4 4 2 ( 0 1 ) 0 0 0 0 9 - 3

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nology over time has witnessed a cycle of lower costs leading to larger markets, which in turn leads to lower costs as the industry follows a learning curve [1]. Whilst the improvements in viability have generally been observed in economic cost terms, they have also been noted in environmental terms. Gusdorf [2] points out that there has been a considerable improvement in energy payback times for PVs in the last two decades. Authors in the 1970s suggested that solar energy was not viable in energy terms, arguing that the energy required to produce a PV system was greater than the energy the system would produce over its lifetime [3,4]. More recent studies have revealed energy payback times that are a fraction of the expected lifetime of systems and argued that such energy payback times are likely to continue to fall. Oliver and Jackson [5] present some of the key technological factors that have helped to reduce the cost of PVs in economic and energy terms. Recent efforts to improve the viability of PVs have been widened to include consideration of the way the technology is applied. For example distributed building-integrated PVs (BiPVs) offer the most cost effective application of grid connected PVs and are likely to be the rst grid feeding PV systems to reach widespread commercialisation [6]. Such systems possess three main benets over centralised grid connected PV plant congurations: PV systems integrated into or mounted onto buildings can avoid the cost of land acquisition, fencing, access roads and major support structures for the modules. This is because the building on which the system is placed either provides or avoids the need for these functions at no additional cost it would have been there in any case. A building is also likely to be close to the electricity grid avoiding some cabling costs that would be necessary at a remote PV site. PV systems on buildings produce electricity at or near the point of use avoiding transmission and distribution of electricity and the costs and losses associated with this. This argument is particularly strong for PV systems on commercial buildings where the demand for electricity (9 a.m.5 p.m.) typically coincides with supply of electricity from PV systems. PV systems that are integrated into the building structure can provide the function of protecting the building from the weather, avoiding the use of other building materials. The costs of the system can therefore be split between the functions of electricity provision and weather-proong reducing the net cost of the former. These advantages of BiPV systems will be illustrated in this paper by comparing the cost, in both economic and energy terms, of electricity supply from a BiPV cladding system with a centralised PV plant and a conventional electricity supply mix. This comparative assessment is performed using both energy analysis and economic analysis methods. This combined approach to viability is supported by the idea that a combination of these perspectives allows more informed decisions to be made about the development and implementation of the technology. The results presented in this article give a summary of the ndings of an in depth study of the viability of building integrated photovoltaics (Oliver [7]). 2. Methodology This paper compares costs in energy and economic terms of supplying a kWh of electricity to the point of use. It also uses an avoided cost technique to illustrate the benet of integrating PVs into buildings.

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Energy analysis, also referred to as energy budgeting, energy accounting or energy costing, is a method for calculating the total amount of primary energy required to provide a good or service analogous to the methods accountants use to establish the prot and loss accounts of an enterprise [8]. A set of conventions and a core methodology were formulated by the IFIAS 2 in the mid 1970s. These enabled energy analysis to become a well established practice which has provided a valuable input in support of decision makers in the energy eld [9]. Economic viability is determined by the protability of an investment decision or the cash ow implications of a project. Put simply, to be economically viable an investment must promise a rate of return greater than the cost of capital needed to nance it. This involves taking into account all costs and revenues of a project and allowing for the different timing of these ows and the potential interest charged on the funds involved [10]. The latter is achieved by converting cash ows into equivalent present values using an appropriate discount rate. If the present value of the revenues of a project exceeds that of the costs when both are discounted then the net present value of the project is positive and the project viable. The economic viability of any electricity supply technology is determined by its ability to produce electricity at a cost that can compete with other sources to make adoption of the technology worthwhile. Electricity costs are usually measured on a unit cost basis (e.g. p/kWh). This unit cost can be calculated by dividing the total annuitised costs of generation by the amount of electricity generated by the system in a year. The formula for the calculation of unit electricity costs is shown in Eq. (1) [11]. P [CT[R/1 (1 R)]t] ACO&M /QA (1) where: P=unit electricity cost, CT=total capital costs, R=discount rate, t=lifetime of the system, ACO&M=annual costs of operation and maintenance, and QA=annual output of the system. A BiPV cladding system provides two functions: rstly it produces electricity that replaces conventional sources of electricity and secondly it performs weatherproong functions in the place of a conventional cladding system. In comparing BiPV systems to the alternatives, the function of both weather protection and electricity provision should be taken into account. Employing a BiPV cladding system avoids the use of other kinds of cladding materials. It also avoids both the energy inputs and the economic costs associated with these other cladding materials. Thus, a comparison of energy and economic costs of BiPV with other electricity supply options should take account of (i.e. subtract) the energy and economic costs associated with the avoided cladding materials. In this paper, we demonstrate this avoided cost methodology (and its impact on the viability of BiPVs) using the avoided energy and economic costs associated with a conventional glass cladding system. 3. Data and assumptions The data used for the energy analysis results are based on a life cycle inventory database compiled by ETH Zurich and the Paul Scherrer Institute [12] which are converted to primary

International Federation of Institutes of Advanced Studies.

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energy equivalents using energy conversion coefcients [13,14]. The data used for the economic analysis results are taken from a variety of sources [1518]. All the data used have been updated to account for technological advances in the industry so that they are representative of the technology being installed today. The data presented for PVs are for poly-crystalline silicon (p-Si) frameless modules of 1 m2. Data for mono-crystalline modules were also available but the difference between the technologies was negligible and within the range of uncertainty in the results. This technology was chosen as crystalline silicon technologies are the most widely used for grid connected PV systems [19]. The technology is assumed to be applied in a European location. The BiPV systems are assumed to produce an average of 850 kWh/kWp/year which is an average of a range of system outputs given for PV systems in European locations [2022]. Assumptions of angle of orientation, local temperature and insolation levels, system availability and inverter efciency are some of the important factors along with the efciency of the modules that determine the output of a system. It is beyond the scope of this article to consider the effect of each in detail, but it is assumed that the end result is a system output of 850 kWh/kWp/year. The modules are assumed to be mounted vertically on aluminium support frames. The inverters (which provide a range of functions including power conditioning, control and protection, maximum power point tracking as well as converting the direct current electricity produced by the modules into alternating current suitable for mains supply) are assumed to be a number of small 3 MWp inverters (depending on the size of the system) rather than a single central inverter. It is assumed that the electricity produced by the BiPV system is consumed within the building on which the system is placed. This is only a realistic assumption for buildings that have a high base load demand for electricity such as universities or hospitals. Consideration of the effects of exporting electricity to the grid on the cost (both energy and economic) is beyond the scope of this study. In this article it is assumed that the BiPV systems are applied to buildings with a high base load electricity demand and therefore does not export any electricity to the grid. It is also assumed that the BiPV cladding systems substitute for the use of a conventional glass cladding system. The costs in both economic and energy terms of a conventional glass cladding system can therefore be deducted as an avoided cost. The glass cladding is assumed to be 10 mm thick and supported on similar supports to the BiPV systems. For the centralised PV plant an output of 1200 kWh/kWp/year is assumed which is based on data from a 500 kWp system in the Swiss Jura Alps and represents a more optimal location in Europe [12]. The central plant is assumed to be installed on a green eld site. It therefore has a centralised inverter that is housed in purpose built housing, it has a perimeter fence for security purposes, foundations are laid on which to support the modules and 200 m of cabling is assumed to be required to connect it to the grid. The modules are assumed to be 12% efcient and produced in a production plant with annual production of 25 MWp per annum [12]. The life of the systems is assumed to be 25 years. 4. Results Fig. 1 shows the total primary energy input in MJ per kWh of electricity produced and distributed to the point of use for BiPV cladding systems compared with a centralised PV plant and

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Fig. 1. Embodied primary energy in supplying 1 kWh of electricity to the point of use.

the average European electricity mix. The rst bar shows that for each kWh of electricity supplied from the average European electricity mix a total of 13.2 MJ of primary energy is used, 11.4 MJ in generation and 1.8 MJ in transmission and distribution. The second bar shows that for a centralised PV plant 4.15 MJ of primary energy is embodied in each kWh of electricity supplied to the point of use. 3.4 MJ is embodied in each kWh produced by the PV system divided 55:45 modules to balance of system. However a further 0.7 MJ is embodied in transmitting the electricity to the point of use. The third bar shows that 2.9 MJ of primary energy is required to supply each kWh of electricity from a BiPV cladding system to the point of use within the building on which it is placed. Because it is assumed that the electricity is consumed within the building upon which the building is placed there is no energy input for transmission and distribution of electricity to the point of use for such systems. The fourth bar shows that this embodied energy is reduced to 2.6 MJ per kWh supplied if the energy embodied in a conventional glass cladding system is deducted from the BiPV system as an avoided burden. This is based on the assumption that a conventional glass cladding system has an embodied energy of 904 MJ/m2 with around of half this being used in the manufacture of the glass panel and the rest to balance of system elements (see Oliver [7] for the calculation of this embodied energy requirement). At 12% efciency each kWp of system would be 8.33 m2 in size. The embodied energy of a glass cladding system of the same size would therefore be (904 MJ multiplied by 8.33) 7530 MJ. Over its 25 year lifetime each kWp (8.33 m2) of the PV system will produce 21,250 kWh of electricity assuming it produces 850 kWh/kWp/year. By spreading the 7530 MJ of avoided energy over the 21,250 kWh of output we have an avoided energy of 0.35 MJ/kWh as illustrated in Fig. 1. Fig. 1 clearly shows the three benets of BiPV systems. Comparing the central PV plant with the BiPV system reveals that, despite the higher output performance of a central PV plant, less embodied energy is required per kWh of electricity generated by the BiPV system. This is due to the signicant amount of energy embodied in the balance of system component of a central PV plant compared to a BiPV system. In addition there is no embodied energy required for transmission and distribution of the electricity from a BiPV system to the point of use as it is

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assumed that the electricity is consumed within the building. Finally, if the energy embodied in a conventional glass cladding system is deducted as an avoided cost (shown by Net BiPV) the benet of BiPVs over central PV plants, and conventional sources, is increased. Conventional electricity sources use signicantly more primary energy to produce electricity and to transmit and distribute it to the point of use when compared with PV systems. This is mainly due to the low conversion efciencies of converting thermal energy into electricity (typically around 35%). The overall benet of BiPV systems over central PV plants can be demonstrated by using the data illustrated in Fig. 1 to calculate energy returns on investment, energy payback times and net energy balances. The results of this analysis are shown in Table 1. It is appropriate to assume that the electricity produced by a PV system in Europe will replace the average European electricity mix. Therefore for every kWh supplied by a PV system 13.2 MJ of primary energy is saved at a cost of 4.2 MJ of primary energy for a centralised PV plant, 2.9 MJ of primary energy for BiPV systems and 2.5 MJ for a Net BiPV cladding system. Centralised PV plants therefore save around 3.2 times as much energy as they use in supplying electricity to the point of use in place of the average European electricity mix. This energy return on investment increases to 4.5 for a BiPV cladding system and 5.2 if the energy from a conventional glass cladding system is deducted as an avoided cost. With these ratios in mind, and assuming a 25 year lifetime for the system, a central PV plant will save the energy used in its manufacture and operation in around 8 years. This energy payback time is reduced to around 5.5 years for a BiPV system and 4.75 years if the embodied energy of a glass cladding system is deducted as an avoided burden. Put another way, around 68% of the electricity a central PV system will produce over its lifetime is net of the energy embodied in it. This net energy balance increases to 78% for a BiPV system and 81% for a BiPV system net of a conventional glass cladding system. For economic costs similar benets for BiPV systems can be illustrated. Although large centralised PV systems gain from economies of scale, the fact that the cost of land, much of the structural support, access roads and perimeter fencing are saved with BiPV systems is considered to reduce their capital costs. The European Renewable Energy Study [18] found costs of BiPV systems to be around 25% cheaper than central PV plants. Table 2 shows the calculation of the economic unit electricity cost of PV systems using Eq. (1). Using average capital cost data of systems installed in the United States cost estimates of 8610/kWp for a central PV plant and 6160/kWp for a BiPV cladding system are used for total
Table 1 Energy analysis factors for PV systems Central PV Energy embodied (MJ) Energy saved (MJ) Energy return on invesment (ratio) System lifetime (years) Energy payback time (years) Net energy balance (%) 4.2 13.2 3.2 25 7.9 68 BiPV 2.9 13.2 4.5 25 5.5 78 Net BiPV 2.5 13.2 5.2 25 4.8 81

M. Oliver, T. Jackson / Energy 26 (2001) 431439 Table 2 Calculating unit electricity costs for PV systems Central PV Capital cost (/kWp) Interest rate (%) Project life-time (years) Capital cost repayment p.a. (/kWp) Annual system output (kWh) Buy back price (p/kWh) 8610 8 25 807 1200 67 BiPV 6780 8 25 635 850 75 Net BiPV 3240 8 25 304 850 36

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system costs [15]. Whilst many systems have been installed at costs cheaper than this, these estimates are within the range of costs found in the literature. Conventional glass cladding systems cost in the range of 350500/m2 [23] which is supported by [24,21]. Using a median price of 425/m2 for a conventional glass cladding, each kWp of PV cladding would displace the need for 3540 worth of conventional cladding system given that each kWp of the PV system is 8.33 m2 in size. This means that the net cost of a BiPV cladding system is around 3240/kWp. Table 2 shows the calculation of unit electricity costs using the above-mentioned capital cost gures and Eq. (1). A discount rate of 8% is applied to the cash ows involved [25,26] and a lifetime of 25 years is assumed. The Table shows that despite higher capital costs a central PV plant in an optimal European location will have lower generating costs than a BiPV system in a typical European location due to the superior output performance of a centralised plant. However if the costs of a median priced glass cladding system are deducted as an avoided cost, unit electricity costs for a BiPV system drop sharply, by over 50%. Fig. 2 compares the unit electricity costs of PV systems calculated in Table 2 with average European unit electricity costs [27]. It also includes transmission and distribution costs. As was found with the environmental burdens, the economic costs of BiPVs also benet from the avoided

Fig. 2.

Economic costs of supplying 1 kWh of electricity to the point of use.

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costs of transmission and distribution losses: for a centralised PV plant unit costs become 18% higher due to losses in transmission and distribution and other costs. Unit electricity prices from generators are usually several pence lower than customer tariffs. Hence a PV system has more value if placed at the demand side of the electricity meter in a location where it can be used without exporting to the grid.

5. Discussion and conclusion When comparing PV systems with conventional electricity supply, in Europe, there is a tradeoff between energy and economic viabilities. PV systems offer the potential to supply electricity in a manner that uses signicantly less primary energy than conventional electricity mixes. The associated resource use savings and emission reductions provide a strong argument for the adoption of PVs. However, PVs applied in European locations are currently signicantly more expensive than conventional electricity sources; most systems installed today are heavily subsidised or not considered to be economically viable. BiPVs represent a clean technology approach to the application of PVs. Building-integrated systems offer cost reductions in both energy and economic terms over centralised PV plants, especially if the costs of avoided building materials are taken into account. This nding supports the focus of policy support that is currently being placed on BiPVs. Given the dynamic nature of the PV industry and the expectation of future cost reductions, the economic benet of BiPV systems will bring forward the date at which grid connected PV electricity supply in Europe is considered viable.

Acknowledgements We thank the Engineering and Physical Sciences Research Council and the Royal Academy of Engineering for their nancial support. We are also grateful to several people for contributing invaluable input and advice during the preparation of this paper, in particular: Bob Hill, Nigel Mortimer, Nicola Pearsall, and Anne-Marie Tilmann.

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