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Measuring scale efficiency and returns to scale on large commercial rooftop photovoltaic systems in California

Toshiyuki Sueyoshi and Derek Wang

Energy Economics, 2017, vol. 65, issue C, 389-398

Abstract: Electricity generated by solar Photovoltaic (PV) power systems is emerging as one of the most promising cleaner alternatives to replace conventional energy sources, such as coal, oil, and natural gas. This study examines managerial sources of operational efficiency or inefficiency on 855 large commercial rooftop PV power systems in California by examining both scale efficiency and Returns to Scale (RTS). For the research purpose, this study utilizes Data Envelopment Analysis (DEA) as a methodology to assess the scale measures. A difficulty in applying DEA to the performance analysis of PV power systems is that it contains uncontrollable variables such as ambient temperature and solar irradiation, all of which are influenced by weather. It is also widely known that PV power systems cannot produce electricity during night, so being unable to serve as a base load. Thus, these uncontrollable factors often influence the performance of PV power systems. Paying attention to the effects of those uncontrollable factors, this study discusses how to measure scale efficiency and RTS within the framework of DEA. Then, as an application of the proposed approach, this study examines the performance of large commercial rooftop PV power systems in California. This study finds that they belong to increasing (48), constant (807) and decreasing (0) RTS, implying that most of the PV power systems in California have been operating in their appropriate sizes. This further indicates that the operational inefficiency of PV power systems is due to managerial inappropriateness, not their sizes for generation. Thus, there is a space to improve operational efficiency of rooftop PV systems under constant RTS, through managerial efforts such as increase in transmission capacity and operational flexibility to improve solar penetration, and routine maintenance to minimize detrimental effects of dust deposition.

Keywords: Solar photovoltaic power systems; Returns to scale; Scale efficiency (search for similar items in EconPapers)
JEL-codes: C18 C61 Q54 Q56 (search for similar items in EconPapers)
Date: 2017
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