Techno-economic assessment of a third-party ownership power purchase agreement model for residential rooftop photovoltaics in Egypt

Abstract

Egypt has significant solar energy potential, creating substantial opportunities for residential rooftop photovoltaic (PV) systems. However, their adoption remains challenging due to high upfront costs and subsidised electricity tariffs, highlighting the need for alternative financing models. This study assesses the viability of the third-party ownership (TPO) model via a power purchase agreement (PPA) to promote residential rooftop PV in Egypt. A techno-economic analysis using PV simulation models was performed for a range of residential electricity consumption profiles. System performance was evaluated over a 25-year project lifetime using key indicators, including capital expenditure (CAPEX), operating expenditure (OPEX), levelized cost of electricity (LCOE), net present value (NPV), internal rate of return (IRR), and customer electricity bill savings. The results indicate that the proposed PV systems achieved strong technical and economic performance. However, the financial viability of the PPA model varied significantly across customer segments. The medium-consumption profile was not financially attractive under the prevailing electricity tariff structure, requiring a PPA price above the grid tariff to achieve acceptable investor returns. In contrast, high-consumption households generated positive NPVs and IRRs exceeding the discount rate, while enabling customer savings of up to 19% relative to grid electricity prices. The findings suggest that PPA-based rooftop PV deployment in Egypt is most viable for high-consumption residential customers and could provide an effective pathway for expanding distributed solar generation while reducing barriers associated with upfront investment costs.