Grid Parity and Defection Studies in Major Philippine Cities Using Solar Photovoltaic-Plus-Storage Configuration

Due to the rapidly declining costs of solar photovoltaic (solar PV) modules and batteries, the possibility of defecting from the grid is starting to become an alternative for some consumers. Should many consumers defect from the grid, given the current rate structures, electricity prices would increase even faster which will further encourage more people to defect from the grid. This positive feedback loop has been called the “utility death spiral”. Previous grid defection studies were conducted in the United States, Australia, as well as some countries in Europe. In this work, the technical feasibility and economic viability of grid parity and defection were determined for residential customers in the major cities of the Philippines (Manila, Cebu and Davao) based on the franchise areas of Manila Electric Company, Visayan Electric Company, and Davao Light and Power Company. The grid defection analysis was divided into customer clustering, levelized cost of electricity (LCOE) calculation, and finally grid parity comparison. Three main clusters were identified based on the k-means clustering by utilizing 18 different features in order to get a more detailed overview on how many customers of each type are more likely to defect based on the representative load profiles from MERALCO. Average silhouette widths of 0.657, 0.587 and 0.585 were obtained for the three clusters. Based on the clusters, the LCOE of optimally sized solar PV-battery systems were calculated using Hybrid Optimization Model for Multiple Energy Resources Software, from 2018 up to 2050. The LCOE data were then compared to the projected retail electricity prices based on the actual data from the mentioned distribution utilities to find the economic viability of grid defection per customer cluster. Results show that grid parity and defection would be possible for residential customers starting in the next 30 y, with customers from Cebu more likely to defect first followed by Manila and then Davao. Based on the clustering, it was observed that the grid parity occurred earliest in Cluster C, followed by Cluster B, and then Cluster A. Different scenarios were also explored depending on the rate of decrease of local prices of photovoltaics, lithium-ion batteries, and a combination of both. Results show that decreasing battery prices play a bigger role achieving grid parity in the country.