Arabian Journal for Science and Engineering

https://doi.org/10.1007/s13369-021-06052-1

RESEARCH ARTICLE-ELECTRICAL ENGINEERING

An Assessment of Net Metering and Feed‑in Tariffs for Grid‑Connected

PV Systems in the Kuwaiti Market
Bader N. Alajmi1 · Nabil A. Ahmed1 · Ibrahim Abdelsalam2 · Mostafa I. Marei3

Received: 23 December 2020 / Accepted: 30 July 2021

© King Fahd University of Petroleum & Minerals 2021

Abstract
In this paper, a comparative study assessing net metering and feed-in tariffs is proposed for grid-connected photovoltaic (PV)
systems in the Kuwaiti market. This study measures the impact of the two mechanisms as well as a mechanism combining
both approaches in deploying solar energy systems in residential areas. The advantages and disadvantages of each approach
are inspected to determine the optimal approach for Kuwaiti market conditions. A feasibility study on installing a roof-
mounted PV system in a typical Kuwaiti residential building is utilized to validate the optimum solar electricity mechanism.
The proposed study intends to reduce the peak load demand in Kuwait’s electric grid as a solution to the shortage of electric
production capacity by encouraging investors and house owners to invest in solar energy. PV*Sol premium 2018 (R10) and
RETScreen software packages are utilized to perform the assessment and study analysis.

Keywords Photovoltaics · Residential buildings · Electrical grid · Grid-connected · Feed-in tariff · Net metering

1 Introduction 2010s, the Ministry of Electricity and Water (MEW) has

Considering recent significant population increase, lifestyle
modernization, and the expansion of development projects
in all fields, the State of Kuwait has relatively high per cap-
ita consumption of electrical energy [1, 2]. The peak load
demand causes many problems in the utility grid, especially
in summer due to the use of large numbers of air condition-
ers [3]. Kuwait is seeking practical solutions to reduce waste
and extravagance in energy consumption. The power sec-
tor in Kuwait is not commercially viable due to the current
underpricing policy adopted by the government; neverthe-
less, Kuwait must take action to meet the escalating energy
demand. Moreover, due to the power outage that occurred
in the summer of 2006 and the blackouts throughout the
* Bader N. Alajmi
bna01@hotmail.com
1
Electrical Engineering Technology Department, College
of Technological Studies, The Public Authority for Applied
Education and Training (PAAET), 12064 Kuwait, Kuwait
2
Electrical and Control Department, College of Engineering
& Technology, Arab Academy for Science, Technology &
Maritime Transport, Cairo 2033, Egypt
3
Electrical Power and Machines Department, Faculty
of Engineering, Ain Shams University, Cairo 11517, Egypt
established a contingency strategy to avoid similar disas-
ters in future and meet the growing demand for electricity
[4]. To accomplish this, the MEW plans to add 17.6 GW of
electricity generation capacity to meet a total of 32 GW in
2035. About 84% of the added power generation is expected
to be from oil and gas power plants, while 16% will be from
renewable energy (RE) sources [5]. Despite the varieties of
RE sources used in the generation of electricity on large
and small scales throughout the world, Kuwait depends on
large-scale RE power plants and rooftop photovoltaic (PV)
systems on government buildings for only 16% of its RE
generation [6].
To meet future demand, the residential sector, which
consumes 42.3% of the total generated power, should be
seriously considered [7]. The Kuwaiti government has an
important role in supporting the process of moving toward
sustainability in residential buildings. Homeowners expect
stable, generous, and long-term policy support. Other coun-
tries have utilized various energy strategies to identify the
ideal way of achieving sustainable energy without burdening
either the economy or society [8]. Feed-in tariffs (FIT) and
net metering (NM) are the most dominant schemes that are
widely used to promote RE integration into the electric grid
[9, 10]. The FIT mechanism is a long-term contract that is
utilized to encourage investors to participate in RE through

13
Vol.:(0123456789)

an attractive, generous incentive. On the other hand, NM
encourages electricity customers to generate electricity from
RE and sell the extra-generated energy to the utility at the
retail price of grid electricity [11].
European countries have utilized different schemes to
deploy RE technologies and achieve 20% of the total gen-
eration capacity from RE [12]. Germany took the lead in
developing the FIT mechanism in 1990 to overcome the
cost barrier of RE technologies and to achieve 80% of total
generation capacity from RE by the year 2050. The Ger-
man approach has achieved great success in the RE field,
as it contributed 22% of Europe’s solar power in 2014
[13]. In 2011, the growth of solar power system installa-
tion was 7 GWp, which was 100% more than the installa-
tion plan. This resulted in adding extra charges to the target
plan. Then, in 2016, the grid was flooded with solar energy,
which resulted in an over-capacity crisis. Currently, Ger-
many encourages the self-consumption scheme, in which the
energy generated from a PV system is consumed locally, to
reduce the aforementioned problems [14]. In 2007, the Span-
ish government decided to boost the installed PV system
capacity through highly generous incentives using the FIT
mechanism. This move resulted in increasing the PV system
installation rate from 512 MW in 2007 to 2700 MW in 2008,
a growth rate of more than 400%. Therefore, to reduce this
large boost in PV system capacity, Spain had to decrease
the FIT incentive, including the old contracts [15]. Other
European countries have experienced similar scenarios. Nev-
ertheless, European countries now contribute 28% of the
world’s total PV systems’ installed capacity [16].
NM is also widely utilized in many countries; it was first
introduced in 1979 in the USA [17]. Currently, 44 states are
utilizing an NM mechanism with a different methodology to
deploy PV technologies. At present, the USA is producing
Fig. 1  Total installed capac-
ity and peak load demand in
Kuwait [21]
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Arabian Journal for Science and Engineering
13% of the world’s installed solar capacity. However, power
utilities in some states impose a fixed charge on NM clients
to reduce the quickly growing PV system installation. Like
Germany, the State of Hawaii faced a situation of excess
power to the grid in 2013, which led to ending NM in 2015
[18]. Nevertheless, the NM scheme grew significantly by
30% from 2010 to 2018, especially in countries with high
electrical costs [19].
In general, the FIT and NM schemes have both played
an important role in deploying PV system technology in the
last two decades. However, it is vital to learn from the lead-
ing solar countries’ experiences to avoid the negative con-
sequences they faced during their quests for the best solar
policy mechanism.
This paper presents a comparative study between FIT and
NM mechanisms for a rooftop PV system on a residential
building, taking into consideration Kuwaiti environmental
conditions and the effect of the low retail cost of electric-
ity adopted by the government. The paper also proposes an
optimum incentive cost for the FIT mechanism.
2 Electricity Production and Consumption
in Kuwait
The total installed capacity of MEW power plants in Kuwait
was 19.42 GW in 2019. Figure 1 shows the development
of the total installed capacity and peak load demand in the
period from 1987 to 2017. Peak load demand increased
from 3.9 GW in 2013 to 13.4 GW in 2019, with an average
growth rate of about 5% per year [20]. The daily minimum
and maximum consumption of electrical energy in 2017 are
illustrated in Fig. 2. The maximum daily electric energy con-
sumption was 279,797 MWh, which occurred on August 15,
Arabian Journal for Science and Engineering

Fig. 2  Daily minimum and 30

maximum consumption of
electrical energy in 2017
25

Daily Consumption in GWh

20

15

10

0
Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec.

Max. Consumption Min. Consumption

and the minimum load consumption on this day was 257,070
MWh. The minimum daily electric energy consumption was
99,546 MWh, which occurred on January 8, and the maxi-
mum consumption on this day was 108,438 MWh. As these
figures illustrate, the rate of electrical consumption is of a
periodic nature, as it grows in the summer, during which
people generally consume the most energy for cooling pur-
poses. Accordingly, the highest daily maximum consump-
tion occurs in summer, and the lowest daily minimum occurs
in winter. Thus, Kuwait is facing great challenges in the
energy sector, especially in summer. First, large investments
are required for building new power plants, and second,
Kuwait needs to take the necessary actions to ration the
use of energy and decrease the rate of electricity demand or
accomplish peak shaving. The share of electrical consump-
tion of different sectors of consumers in Kuwait is given in
Fig. 3, which shows that the residential sector consumes
42.3% of the total energy consumed by all sectors [21]. This
highlights the fact that the residential sector should be sub-
sidized in providing their own needs for electrical energy,
and solar energy gained by building PV panels is an ideal
strategy for this purpose.

Fig. 3  Distribution of energy

consumption by end-use sectors
[21]

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 Arabian Journal for Science and Engineering

Kuwait has a high annual rate of solar irradiation,
2200 kW/m2, while solar-generated energy comprises only
1% of its total produced energy. The MEW plans to increase
the PV system share of power into the grid to 15% by 2035
[6]. Currently, Kuwait has only one major RE project, the
Shygaya RE park, which is connected to the grid with a
power capacity of 70 MWp. Also, there are some other small
and medium power projects utilizing the self-consumption
mechanism [21]. Figure 4 illustrates the monthly generated
power from the Shygaya RE park.
Figure 5 shows the measured annual solar potential in
one-hour intervals obtained from solar stations in the Sulai-
biya area during the five years from 2007 to 2011 used in
this study. Figure 6 illustrates the comparison between the
monthly average solar irradiation in kW/m2 based on these
five-year measurements and the output of PV*Sol. It is
worth noting that the highest solar potential happens during
the summer months, in which the energy demands, and load
peaks are highest. Therefore, solar energy in Kuwait can be
considered the most effective RE system to manage peak
shaving and utility costs for Kuwait’s power grid and con-
sumers, respectively.
3 Performance of the Proposed On‑Grid PV
System
This paper considers a pilot project of a PV grid-connected
system located on the roof of a residential building that con-
sumes 122 MWh/year. This system applies 36 monocrystal-
line silicon PV modules, each of which is rated at 280 Wp.
One 10 kW DC–AC inverter with two MPPTs is utilized.
The single-line diagram of the proposed system is shown
in Fig. 7.

Fig. 4  Monthly generated power from the Shygaya project [21]

Fig. 5  Annual solar potential in 1200

Kuwait
1000
Solar irradiation (W/m2)

800

600

400

200

0
0 50 100 150 200 250 300 350 400
Day of the year
2007 2008 2009 2010 2011

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Arabian Journal for Science and Engineering

The series and parallel connections of the PV array are
in-line with inverter equipment parameters, as given in
Table 1. The azimuth angle of the PV array in a fixed mount-
ing structure faces the true south. The installation tilt angle
is 26°, the local optimal tilt to utilize the maximum amount
of solar energy. A one-meter passage is reserved around the
PV model system for future surface cleaning and mainte-
nance. Also, the front–rear row spacing is 1.5 m to prevent
shading during the apparent solar time over the entire year.
The PV components in the fixed installation are in-line

Fig. 6  Measured monthly aver- 300

age solar irradiation

250
Solar irriadince (kW/m2)
200

150

100

50

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Month

Measured PV*Sol

Fig. 7  Proposed on-grid PV 1x1 Grid

system

DC-AC
Inverter kWh
1x1

Table 1  PV system parameters Set-of-component composition Component description Monocrystal

Silicon PV com-
ponents
Power Wp 280
Quantity 18

Set-of-string power (kWp/string) 5.04

Peak operating voltage (Vmp) 619.4
Extreme high temperature operating voltage Vmp 456.9
Max. open-circuit voltage (Voc) 763.5
Component installation method Fixed
Inverter parameter Rating 10 kW
No 1
Access string number 2
Component power (kWp) 10.08
Inverter quantity 1
Installed capacity of components (kWp) 10.08

13

arrangements, and the 36 components of the PV power gen-
eration system constitute two parallel strings. Each string
of 18 solar components is connected to the inverter through
a DC cable. The inverter output is connected to the local
distribution system through an AC cable. The total PV gen-
erator surface is 59 ­m2.
As calculated by PV*Sol premium 2018 (R10), the sys-
tem performance ratio (PR) is 82.2%. The annual generated
energy to the AC grid is 15,969 kWh/year, and the specific
annual yield is 1584.25 kWh/kWp, among which shading
loss is 1.5%, incidence angle modifier (IAM) loss is 2.6%,
low irradiation loss is 2.4%, temperature loss is 14%, DC
cable loss is 1.3%, and inverter performance loss is 2.4%.
The simulation results are given in Table 2.
The comparison between the production forecast of
monthly energy yield in kWh based on these five-year meas-
urements and the output of the PV*Sol software is depicted
in Fig. 8. From these results, it is clear that the most gener-
ated power from the proposed grid-connected PV system
occurs during summer, in which power shortages normally
happen in Kuwait. Moreover, the annual energy generated
according to PV*Sol is 15,783 kWh/year, which represents
Table 2  PV*Sol premium 2018 (R10) simulation results
Parameter
PV generator output
Spec. annual yield
Performance ratio
Grid feed-in
CO2 emissions avoided
Fig. 8  The production forecast 2000
for the proposed PV system
1800
1600
Annual energy yield (kWh)
1400
1200
1000
800
600
400
200
0
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Arabian Journal for Science and Engineering
13% of the total consumption of energy. The total production
energy yield of the proposed PV system based on the meas-
ured data given in Figs. 5 and 6 is 16,526 kWh annually.
The electrical tariff in Kuwait is heavily subsidized by the
government, which makes investment in RE not valuable for
homeowners. A report by the World Bank indicated that the
cost of electricity production in Kuwait is the highest in the
world, as it increased by 111% in five years, from 0.0018
KWD per kilowatt in 2006 to 0.038 KWD in 2011, with
expectations of rising to 0.05 KWD per kilowatt in the com-
ing years. The report shows an increase in maximum electri-
cal load reaching 8% annually in Kuwait compared with 2
to 3% in the rest of the world. Briefly, the electrical energy
production cost is about $0.125/kWh depending on the oil
price, and the retail price is $0.007/kWh for households and
$0.0165/kWh for businesses [22, 22].
4 Economic Analysis
This section contains an economic analysis of proposed
rooftop grid-connected systems. The analyses include the
installation cost, payback period, net present value (NPV),
internal rate of return (IRR), and benefit–cost ratio (BCR)
impact. Three policy mechanisms, NM, FIT, and FIT com-
Value bined with NM, are considered in this study to select the
most suitable mechanism in Kuwait.
10.08 kWp
The electrical energy consumption of a household in kWh
1584.25 kWh/kWp
for one month is the sum of the energy demand consumed
82.8%
in a specified time period Tkj and can be expressed via the
15,969 kWh/year
following equation:
9582 kg/year
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month
Measured PV*Sol
Arabian Journal for Science and Engineering

m n
∑ ∑ m n
∑ ∑ where 𝜆 is the energy consumption retail price in $/kWh and
Ei = Ekj = PDkj Tkj (1) 𝜇 is the PV energy purchasing price in $/kWh, and both are
k=1 j=1 k=1 j=1
assumed to be constants during the billing period in this sim-
where PDkj is the power demand in kW during a specified time ple NM scheme. Equations (7) and (8) can be used in more
period Tkj of one-hour periods, j = 1, 2, 3, ...n is the number advanced NM and FIT schemes, such as time-of-use meter-
of the daily time periods (for one-hour time periods, n = 24), ing or market-rate metering. Time-of-use metering allows
k = 1, 2, 3, ...m is the number of the day of the month, and utility rates and charges to be assessed based on when the
i = 1, 2, 3, … 12 is the month under consideration. electricity was used, i.e., the time of day and the season,
The annual electrical energy consumption can be expressed where the energy consumption retail price (𝜆kj) and the PV
as follows: energy purchasing price (𝜇kj ) are not constants.

12
∑
E= Ei (2) 4.1 Installation Cost of Proposed Rooftop PV
i=1
System
The electrical energy generated by the PV system in kWh
for one month is expressed as follows: The installation cost of a PV grid-connected system var-
m n m n
ies from one country to another; this variation depends on
∑ ∑ ∑ ∑
many factors, such as the maturity of domestic markets,
Gi = Gkj = Skj PPV APV 𝜂PV 𝜂s (3)
k=1 j=1 k=1 j=1 local labor, and solar system equipment. According to the
International Renewable Energy Agency (IRENA), the
where Skj is the is the available solar irradiance in kWh/m2, average installed cost of utility-scale solar PV in 2018 for
PPV is the installed size of the PV system in kWp, APV is the GCC countries was $1267/kW [23]. The cost per watt-
total solar panel area in m­ 2, 𝜂PV is the efficiency of the PV peak for all system components is listed in Table 3, based
panels, and 𝜂s represents the performance ratio (extra losses, on the price of the PV components collected from the local
such as inverter and wire losses). market in Kuwait.
The electrical energy generation by the PV system in kWh The total price of the PV system components given in
for one month can be simplified as follows: Table 3 is $1140/kW, which is close to the price provided
by IRENA. Therefore, the total price of the proposed sys-
Gi = Si PPV APV 𝜂PV 𝜂s (4)
tem that will be considered in this study is $11,491.20 per
where Si is the average monthly solar irradiance in kWh/m2. 10.08 kW PV grid-connected system.
In the same way, the annual electrical energy generated by
the PV system in kWh is expressed as follows:
4.2 Feasibility Study
12
∑
Gi = Gi (5)
i=1
RETScreen software was utilized to calculate the eco-
nomic impact of the NM, FIT, and FIT combined with NM
The net energy consumption in kWh for one month is the methods. To ensure unbiased calculation, several constant
difference between the electrical energy consumption and the factors are considered in this analysis:
PV system energy generation and is expressed as follows:
m n m n m n • The annual degradation of solar power generation is
∑ ∑ ∑ ∑ ∑ ∑
Ni = Ei − Gi = Nkj = Ekj − Gkj (6) 0.7%.
k=1 j=1 k=1 j=1 k=1 j=1

For one month, the NM energy price CNETi and the FIT Table 3  Cost per watt-peak
energy savings SFITi are expressed as follows: Component of the PV system Cost per
m n watt ($)
∑∑
CNETi = Nkj 𝜆kj = 𝜆Ni (7) Photovoltaic panel 0.4
k=1 j=1
Interactive inverter 0.29
Steel mounting structure 0.15
m n
∑ ∑ Others 0.3
SFITi = Gkj 𝜇kj = 𝜇Gi (8) Total 1.14
k=1 j=1

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 Arabian Journal for Science and Engineering

• The operation and maintenance (O&M) cost is $100 The benefit–cost ratio (BCR) is used for the economic
annually [24]. evaluation of large public-sector projects. The BCR is the
• The interest rate (r) is set at 2%, and the inflation rate ratio between the accumulated cash flow and the initial cost,
(i) is assumed to be 2.5%. as shown in the following equation:
• The total initial cost is covered by the investor, so finan- ∑N Cn ×(1+i)n
cial support is not considered in this calculation. (1+r)n
(12)
n=1
• Replacing the power inverter after 13 years (nt) is con- BCR =
Co
sidered.
The decision guidelines for BCR are as follows:
Adding the inverter replacement and the operation and
maintenance costs, the total initial cost is calculated using • If BCR ≥ 1.0, the project is economically acceptable for
the following equation: the estimates and interest rate applied.
[ ( )] • If BCR < 1.0, the project is not economically acceptable.
(1 + r)n − 1
CoT = −Co + O&M_cost x
j × (1 + r)n Payback period is defined as the estimated length of time
[ ( )]
1 that it will take for the estimated revenues and other eco-
+ Inv_cost ×
(1 + r)nt (9) nomic benefits to recover the initial investment at a specified
rate of return. The profitability of a project is directly linked
where CoT is the total PV project cost, n is the time in years, to its payback period. More profitable projects have shorter
Co is the initial or capital cost, O&M_cost is the operation payback periods. The payback period is calculated using the
and maintenance, Inv_cost is the inverter replacement cost, following equation:
nt is the component replacement time in years, and r is the
interest rate. Payback period = A +
B
(13)
Based on these assumptions, NPV, IRR, BCR, and pay- C
back period are the most significant parameters to examine where A is the last year in which the cumulative discount
for determining customers’ economic profit and will be cash flow is negative, B is the value of the cumulative dis-
calculated for the abovementioned mechanisms to investi- count cash flow at year A, and C is the discount cash flow
gate the optimum metering mechanism, either NM or FIT, after year A. However, it is vital to note that the payback
to apply in Kuwait. period should never be used as the main factor of benefit to
Net present value (NPV) is the difference between the evaluate a project economically. It must be determined in
current value of currency flows and the current value of conjunction with the other above parameters. According to
currency discharges over a period of time. NPV is used the abovementioned assumptions and equations, the three
in capital budgets and investment projections to investigate mechanism scenarios are calculated as follows.
the predicted profitability of an investment or project. The
following equation is applied to calculate the NPV:
N 4.3 Net‑metering Mechanism
∑ Cn × (1 + i)n
NPV = −Co + (10)
n=1
(1 + r)n NM allows consumers who generate some or all of their
electricity to use that electricity anytime instead of only
where Cn is the real cash flow at time n, and i is the inflation
when it is generated. NM policies can vary considerably
rate. A positive NPV means the investment or project’s pre-
by country and by state or province. In the NM method,
sent value will go beyond the estimated capital cost, making
the retail price, $0.02/kWh, is considered for 25 years. The
it valuable and attractive.
RETScreen results of NPV, IRR, BCR, payback period, and
Internal rate of return (IRR) or net present worth (NPW)
annual revenue for the input data are listed in Table 4.
is extensively used to conduct investment planning. It can
It is clear from the results presented in Table 4, in which
be used when both positive and negative cash flows exist
the NPV is negative ($− 11,490.80) and the BCR is less than
in the investment. The IRR is calculated by optimizing the
one (0.18), that the NM method is economically unfeasible
absolute value of NPV given in (10), where the IRR is the
and discourages investment. Moreover, if the investor uses
r at which (11) is minimal.
this system for self-consumption, as is currently the case in
(|
∑N |) the State of Kuwait, the annual savings are just $110. There-
| Cn ||
|
min |−Co + (11) fore, the NM support mechanism is inappropriate, unprofit-
(1 + r)n ||
|
| n=1 | able, and unsuitable for Kuwait.

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Arabian Journal for Science and Engineering

Table 4  Results of the NM Parameter Value into the RETScreen software, and the results are shown in
scenario Table 5.
NPV $− 11,490.80 As shown in Table 5, the NPV is positive ($32,685.50)
IRR − 8.2% and the BCR is greater than one (3.3). Therefore, such a
BCR 0.18 mechanism is economically profitable and encouraging for
Payback period 100 years investors. It can contribute to encouraging investors to invest
Annual revenue $110 in the RE field in Kuwait.

4.5 Combined Feed‑in Tariff and Net‑Metering

The effect of the retail electricity cost for the NM scheme Mechanism
of the proposed PV system is investigated by varying the
retail cost from $0.007/kWh in steps of $0.002/kWh up to Due to the high investment return of the FIT mechanism,
the generation cost of $0.125/kWh, and the annual revenue many investors and homeowners may be encouraged to enter
is shown in Fig. 9. the investment field in RE. As a result, this might lead in
future to the same problems that were encountered in Ger-
4.4 Feed‑in Tariff Mechanism many, Spain, and other European countries, as discussed
earlier. Therefore, this paper recommends a hybrid mecha-
An FIT is a policy mechanism designed to accelerate invest- nism that uses FIT in combination with NM to align with the
ment in renewable energy technologies. FIT involves inte- current energy situation in Kuwait. Such a mechanism is an
grating the PV system into the grid and selling the generated option whenever the desired number of grid-connected PV
energy to the power company, allowing consumers to be paid
specified amounts of money per kWh, commonly for a spe-
cific contract period. Currently, the government of Kuwait Table 5  Results of feed-in tariff Parameter Value
scenario
provides a generous subsidy of 95% of the cost of electricity.
NPV $32,685.50
Therefore, one of the recommended options under discus-
IRR 14.9%
sion is to make the actual electricity price ($0.125/kWh)
BCR 3.3
an incentive price for the FIT mechanism. To confirm the
Payback period 7.4 years
economic feasibility of this approach, the data were entered
Annual revenue $1877.20

Fig. 9  Annual revenue as a

function of the electricity cost
of NM

13
 Arabian Journal for Science and Engineering

systems is realized. Moreover, this method will reduce the 4.6 Assessment of the Three Scenarios
financial burden on the government. This method is designed
by applying the FIT mechanism during the payback period, The results of the proposed three methods are summarized
and once the investor receives his initial capital investment in Table 8. It is clear from the economic analysis that the
back, the NM mechanism takes over. The incentive is cal- NM method is not an economical option and is unsuitable
culated by the following equation: in Kuwait due to the low price of electricity and the signifi-
{ ( ) cant support provided by the state to the energy sector. Such
FITincentive( $) 0 < n < IRR a system has proven successful in many countries of the
Incenti =
NMincentive $ IRR < n ≥ 25 (14)
world but is unsuitable for Kuwait at present. As for the FIT
method, the economic feasibility includes high profitability
To verify the economic viability of the proposed com-
and would directly contribute to increasing the spread of
bined mechanism, an aggressive calculation of the input data
RE systems, especially PV grid-connected power generation
listed in Table 6 and RETScreen software are utilized. Equa-
tions (7) to (13) are used to calculate the NPV, IRR, BCR,
and payback period, respectively. The results are depicted in Table 7  NM scenario Parameter Value
Tables 6 and 7. It is worth mentioning that (14) can be opti-
mized using any optimization technique to compute the IRR NPV $2892.19
percentage. In this paper, the genetic algorithm (GA), which IRR 7.1%
is a population-based stochastic search technique that works BCR $1.20
in the general framework of evolutionary algorithms (EAs), Payback period 7.4 years
is applied. The result of the GA is illustrated in Fig. 10. Annual revenue $685.50

Table 6  The net profit from the proposed combined FIT and NM mechanism
Year (n) Interest rate Inflation PV degradation Income cash Price adjusted PV cash Cumulative
( r) rate (i) flow ($) cash flow ($) Flow ($) discount cash
flow ($)

1 0.02 0.025 15,969.00 1916.28 1964.19 1925.67 − 12,318.65

2 0.02 0.025 15.857.22 1902.87 1999.20 1921.57 − 10,397.08
3 0.02 0.025 15.746.22 1889.55 2034.83 1917.47 − 8,479.61
4 0.02 0.025 15.635.99 1876.32 2071.11 1913.38 − 6,566.23
5 0.02 0.025 15.526.54 1863.18 2108.02 1909.30 − 4656.93
6 0.02 0.025 15.417.86 1850.14 2145.60 1905.23 − 2751.70
7 0.02 0.025 15.309.93 1837.19 2183.84 1901.17 − 850.53
8 0.02 0.025 15.202.76 1824.33 2222.77 1897.11 1046.58
9 0.02 0.025 15.096.34 105.67 131.97 110.43 1157.01
10 0.02 0.025 14.990.67 104.93 134.33 110.19 1267.21
11 0.02 0.025 14.885.73 104.20 136.72 109.96 1377.17
12 0.02 0.025 14.781.53 103.47 139.16 109.72 1486.89
13 0.02 0.025 14.678.06 102.75 141.64 109.49 1596.38
14 0.02 0.025 14.575.32 102.03 144.16 109.26 1705.64
15 0.02 0.025 14.473.29 101.31 146.73 109.02 1814.66
16 0.02 0.025 14.371.97 100.60 149.35 108.79 1923.45
17 0.02 0.025 14.271.37 99.90 152.01 108.56 2032.01
18 0.02 0.025 14.171.47 99.20 154.72 108.33 2140.34
19 0.02 0.025 14.072.27 98.51 157.48 108.10 2248.43
20 0.02 0.025 13.973.77 97.82 160.28 107.87 2356.30
21 0.02 0.025 13.875.95 97.13 163.14 107.64 2463.94
22 0.02 0.025 13.778.82 96.45 166.05 107.41 2571.34
23 0.02 0.025 13.682.37 95.78 169.01 107.18 2678.52
24 0.02 0.025 13.586.59 95.11 172.02 106.95 2785.47
25 0.02 0.025 13.491.48 94.44 175.09 106.72 2892.19

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(a) (b)

Fig. 10  GA optimization to compute IRR: a Objective function value, b Current best individual

Table 8  Comparison of the three proposed scenarios The annual results for household electricity demand,
NM FIT FIT & NM
electricity generation, NM profit, FIT profit, C
­ O2 emissions
avoided, and barrels of crude oil not consumed were inves-
NPV $− 11,490.80 $32,685.50 $2,892.19 tigated for different capacity ranges of rooftop PV systems
IRR − 8.2% 14.9% 7.1% and are given in Table 9. To estimate the annual C ­ O2 emis-
BCR $0.18 $3.30 $1.20 sions avoided through the operation of the PV system, a
Payback period 100 years 7.4 years 7.4 years ­CO2 environmental indicator of 7.07 × ­10–4 metric tons ­CO2/
kWh was used [24, 25]. Barrels of crude oil not consumed
per carbon dioxide emissions were determined by multi-
systems in the residential sector. Since the retail price of plying heat content times the carbon coefficient times the
electricity in Kuwait is much lower than the wholesale price, fraction oxidized times the ratio of the molecular weight of
there will be no significant financial burden on the govern- carbon dioxide to that of carbon, which yielded 0.43 metric
ment under the current conditions. In future, whenever the tons ­CO2/barrel. The annual PV electricity generation was
PV grid-connected system reaches a significant value and multiplied by the carbon dioxide emission rate (per unit of
the residents more fully embrace solar energy technology, electricity delivered) to determine annual carbon dioxide
the mechanism can be changed to the proposed method. FIT emissions, in metric tons per home, after using PV genera-
combined with NM is a good strategy for keeping the same tion. The latter was divided by 0.43 metric tons ­CO2/barrel
solar energy growth rate in the residential sector. to give the number of barrels of crude oil not consumed, and
the results are given in Table 9. Also, the table shows the

Table 9  Simulation of annual Parameter PV system capacity

results
5 kWp 10 kWp 15 kWp 20 kWp

Load demand (kWh) 45,000 45,000 45,000 45,000

PV generation (kWh) 7,984.59 15,969 23,953.5 31,938
Maximum demand 37,015 29,031 21,047 13,062
Annual revenue ($)
Net metering 55.07 110.14 165.21 220.28
Feed-in tariff 944.07 1,888.13 2,832.12 3,776.26
FIT &NM 318.32 636.63 954.95 1,273.26
CO2 emissions avoided (metric tons) 5.655 11.29 16.94 22.58
Barrels of crude oil not consumed (bbl) 13.13 26.26 39.38 52.51

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annual revenue rate for the three mechanisms, which shows cost of PV-generated electricity by about 75% between
that the NM mechanism is unsuitable for the Kuwaiti market. 2010 and 2020 [26, 27]. During 2019, we observed the
The effect of the retail electricity cost on the total refund price reduction of all main types of PV modules, with
for the three mechanisms for the proposed PV system some units decreasing more than 10% in price since Janu-
(10 kWp) was investigated by varying the retail electric- ary 2019. The decreasing price of the system will lead to
ity cost from $0.007/kWh in steps of $0.0236/kWh up to decreasing the initial capital cost and increasing the invest-
$0.125/kWh, as expected. The total refunds after the 25-year ment benefits and will therefore be more enticing from the
estimated life of the PV system are shown in Table 10. In consumers’ point of view.
addition, the effect of the retail electricity cost on NPV, IRR,
BCR, and payback period is shown in Table 11.
It is clear from Tables 10 and 11 that the total refund
of the NM mechanism is $2,500 after 25 years, which is 5 Conclusion
not comparable with the initial capital cost, meaning that
the NM mechanism is unsuitable for the Kuwaiti market. This paper proposed a grid-connected PV system on the
However, an increase in retail electricity costs leads to an rooftop of a residential building as a solution to accel-
increase in the total refund. When the retail electricity cost erate the use of solar energy technology in the Kuwaiti
reaches the generation cost, NM, FIT, and the proposed market. A fixed mounted rooftop PV system with 10 kWp
mechanism are all similar options. However, the total refund was simulated utilizing PV*Sol and RETScreen software.
of the proposed mechanism is convenient for both the gov- The simulation results exhibit an 82.2% performance ratio
ernment and the consumers. (PR) with an annual generated energy of 15,969 kWh/
In the last few years, the solar industry has shown a year compared with 16,526 kWh/year generated annu-
reduction in the cost of solar PV modules and solar PV ally using the measured data with an accuracy of 96.63%.
systems. As reported in the literature, PV cell prices have A feasibility study of the proposed system under three
come down by a factor of 100 over the last 38. The US different billing mechanisms, net metering, feed-in tar-
Department of Energy’s SunShot Initiative aims to make iffs, and net metering combined with feed-in tariffs,
PV costs competitive without incentives by reducing the was attempted. The obtained results show that the NM
mechanism is not economically viable and is therefore
unsuitable in the State of Kuwait due to the extremely low
Table 10  Effect of the retail electricity and generation costs on the retail price of electricity that results from the underpric-
total refund ing policy adopted by the government. Among the three
Retail electricity/Gen- NM FIT FIT & NM mechanisms, FIT provides the best investment scenario in
eration cost rooftop PV systems. However, due to its high economic
profitability, it may directly contribute to increasing the
.007 2753.5 46,929.9 17,136.5
spread of RE systems, especially PV grid-connected
0.0306 12,036.8 46,929.9 23,358.8
power generation systems in residential areas, and thus
0.0542 21,320.1 46,929.9 29,581.2
place a financial burden on the government. Therefore, a
0.0778 16,359.1 46,929.9 35,803.5
hybrid mechanism that combines FIT with NM is an alter-
0.1014 25,642.4 46,929.9 42,025.8
native option whenever PV systems and RE penetration
0.1250 46,929.9 46,929.9 46,929.9
into the electric grid become more widespread.

Table 11  Effect of retail electricity and generation costs on NPV, IRR, BCR, and payback period
Retail electricity/ NM FIT FIT & NM
generation costs
NPV IRR (%) BCR Payback (year) NPV IRR BCR Payback NPV IRR BCR Payback
($)

.007 − 11,490 − 9.3 0.18 100 32,685.5 14.9% 3.3 7.4 2892.1 7.1 1.2 7.4
0.0306 − 2207.5 0.71 0.85 29 32,685.5 14.9% 3.3 7.4 9114.5 8.9 1.6 7.4
0.0542 7075.8 5.4 1.5 16 32,685.5 14.9% 3.3 7.4 15,337 11.1 2.07 7.4
0.0778 16,359 9.2 2.14 11 32,685.5 14.9% 3.3 7.4 21,559 12.7 2.5 7.4
0.1014 25,642 12.5 2.8 8.8 32,685.5 14.9% 3.3 7.4 27,782 14.03 2.95 7.4
0.1250 32,685.5 14.9% 3.3 7.4 32,685.5 14.9% 3.3 7.4 32,685.5 14.9% 3.3 7.4

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