Volume 42: Energy Transitions toward Carbon Neutrality: Part V

Economic feasibility analysis of community solar projects in Hong Kong Lijie Huang, Minhyun Lee, Ruixiaoxiao Zhang, Geoffrey Qiping Shen

Abstract

Solar initiatives, particularly community solar, have gained increasing traction in urban areas as a means to maximize the advantages of transitioning to clean energy sources. Accordingly, this study aims to assess the economic viability of community solar projects (CSPs) in Hong Kong by evaluating their economic feasibility, analyzing the key factors that influence their economic performance, and exploring the impact of these factors on the performance of CSPs. The findings of this research reveal that, under the current market conditions in Hong Kong, CSPs are deemed unfeasible due to the high upfront installation cost of PV systems. Furthermore, the upfront installation cost and residential payments are identified as the most sensitive variables affecting the overall costs and revenues of such projects. Specifically, a decrease in upfront installation cost or an increase in residential payments can lead to a higher IRR and an improved cumulative cashflow. These empirical findings provide valuable insights into the economic performance of CSPs within the existing market conditions in Hong Kong, as well as their potential variations under different scenarios. Consequently, this study is believed to offer significant guidance in formulating appropriate financial goals and relevant strategies to facilitate the adoption of community solar initiatives, not only in Hong Kong but also in other regions sharing similar local characteristics.

Keywords community solar projects, economic feasibility, sensitivity analysis, scenario analysis