Determining community solar rates and subsidy payments for a sustainable community shared solar project in Hong Kong

Abstract

Community shared solar (CSS) projects have emerged as a promising solution to harness the benefits of solar energy transitions. However, their attractiveness to both investors (i.e., developers) and customers (i.e., subscribers) in nascent markets (e.g., Hong Kong) remains unexplored. To fill this research gap, this study develops a financial model using life cycle cost analysis to evaluate the economic performance of CSS projects under different scenarios. Specifically, the model is employed to determine the appropriate price of CSS-generated electricity, namely community solar rates (CSRs), the expected payback period, and the necessary subsidies considering the benefits to both developers and subscribers in the current Hong Kong market. The results show that the determined CSRs are generally two to three times higher than retail electricity prices. This indicates that developing a CSS project in Hong Kong faces challenges in achieving grid parity due to its high upfront costs, highlighting the need for further financial support to foster market development. The findings provide insights into designing effective pricing and incentive strategies to promote CSS project adoption. Moreover, the proposed financial model can serve as a robust analytical tool for evaluating the economic feasibility of CSS projects in new markets.