Benefit-based cost allocation for residentially distributed photovoltaic systems in China: A cooperative game theory approach

Distributed photovoltaic (PV) systems have constantly been the key to achieve a low-carbon economy in China. However, the development of Chinese distributed PV systems has failed to meet expectations because of their irrational profit and cost allocations. In this study, the methodology for calculating the levelized cost of energy (LCOE) for PV is thoroughly discussed to address this issue. A mixed-integer linear programming model is built to determine the optimal system operation strategy with a benefit analysis. An externality-corrected mathematical model based on Shapley value is established to allocate the cost of distributed PV systems in 15 Chinese cities between the government, utility grid and residents. Results show that (i) an inverse relationship exists between the LCOEs and solar radiation levels; (ii) the government and residents gain extra benefits from the utility grid through net metering policies, and the utility grid should be the highly subsidized participant; (iii) the percentage of cost assigned to the utility grid and government should increase with the expansion of battery bank to weaken the impact of demand response on increasing theoretical subsidies; and (iv) apart from the LCOE, the local residential electricity prices remarkably impact the subsidy calculation results.