IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v304y2021ics0306261921010886.html
   My bibliography  Save this article

Project developer options to enhance the value of solar electricity as solar and storage penetrations increase

Author

Listed:
  • Kim, James Hyungkwan
  • Mills, Andrew D.
  • Wiser, Ryan
  • Bolinger, Mark
  • Gorman, Will
  • Crespo Montañes, Cristina
  • O'Shaughnessy, Eric

Abstract

Increasing the penetration of photovoltaics (PV) reduces the marginal grid value of PV electricity. The declining grid value of PV with higher penetration could limit the technology’s economic attractiveness and future demand. Various strategies have been proposed for preserving this value. Using a consistent framework, we analyze the net value (accounting for both cost and grid value) of more than ten strategies in the United States. Here, grid value is estimated from coincident wholesale power market prices and PV generation using observed historical prices or modeled future prices with up to 30% PV penetration. We find that established and emerging strategies designed to shift the timing of standalone PV generation at the expense of total generation—including orienting monofacial PV modules west or bifacial modules vertically—result in minor net-value benefits or penalties. Adding energy storage to such systems magnifies the net-value loss, because configurations that change the timing of PV production become redundant when the energy-shifting capabilities of storage are added. The largest net-value gains come from strategies that maximize generation (solar tracking plus oversized PV arrays) in conjunction with storage, especially at high PV penetrations. PV systems are long-lived assets. Our results suggest that efforts to promote generation-maximizing strategies today may yield increasing net-value benefits as PV and storage deployments continue to accelerate in the United States over the coming decades.

Suggested Citation

  • Kim, James Hyungkwan & Mills, Andrew D. & Wiser, Ryan & Bolinger, Mark & Gorman, Will & Crespo Montañes, Cristina & O'Shaughnessy, Eric, 2021. "Project developer options to enhance the value of solar electricity as solar and storage penetrations increase," Applied Energy, Elsevier, vol. 304(C).
    • Handle: RePEc:eee:appene:v:304:y:2021:i:c:s0306261921010886
    DOI: 10.1016/j.apenergy.2021.117742
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261921010886
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2021.117742?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rudolf, Viktor & Papastergiou, Konstantinos D., 2013. "Financial analysis of utility scale photovoltaic plants with battery energy storage," Energy Policy, Elsevier, vol. 63(C), pages 139-146.
    2. Mills, Andrew D. & Rodriguez, Pía, 2020. "A simple and fast algorithm for estimating the capacity credit of solar and storage," Energy, Elsevier, vol. 210(C).
    3. Sun, Xingshu & Khan, Mohammad Ryyan & Deline, Chris & Alam, Muhammad Ashraful, 2018. "Optimization and performance of bifacial solar modules: A global perspective," Applied Energy, Elsevier, vol. 212(C), pages 1601-1610.
    4. Richardson, David B. & Harvey, L.D.D., 2015. "Strategies for correlating solar PV array production with electricity demand," Renewable Energy, Elsevier, vol. 76(C), pages 432-440.
    5. Sengupta, Manajit & Xie, Yu & Lopez, Anthony & Habte, Aron & Maclaurin, Galen & Shelby, James, 2018. "The National Solar Radiation Data Base (NSRDB)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 89(C), pages 51-60.
    6. Bahrami, Arian & Okoye, Chiemeka Onyeka & Atikol, Ugur, 2016. "The effect of latitude on the performance of different solar trackers in Europe and Africa," Applied Energy, Elsevier, vol. 177(C), pages 896-906.
    7. Bistline, John E., 2017. "Economic and technical challenges of flexible operations under large-scale variable renewable deployment," Energy Economics, Elsevier, vol. 64(C), pages 363-372.
    8. Swift, Kenton D., 2013. "A comparison of the cost and financial returns for solar photovoltaic systems installed by businesses in different locations across the United States," Renewable Energy, Elsevier, vol. 57(C), pages 137-143.
    9. Guannan He & Qixin Chen & Panayiotis Moutis & Soummya Kar & Jay F. Whitacre, 2018. "An intertemporal decision framework for electrochemical energy storage management," Nature Energy, Nature, vol. 3(5), pages 404-412, May.
    10. Yang, Dazhi, 2018. "A correct validation of the National Solar Radiation Data Base (NSRDB)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 97(C), pages 152-155.
    11. Bahrami, Arian & Okoye, Chiemeka Onyeka & Atikol, Ugur, 2017. "Technical and economic assessment of fixed, single and dual-axis tracking PV panels in low latitude countries," Renewable Energy, Elsevier, vol. 113(C), pages 563-579.
    12. Hirth, Lion, 2013. "The market value of variable renewables," Energy Economics, Elsevier, vol. 38(C), pages 218-236.
    13. Zipp, Alexander, 2015. "Revenue prospects of photovoltaic in Germany—Influence opportunities by variation of the plant orientation," Energy Policy, Elsevier, vol. 81(C), pages 86-97.
    14. Lamont, Alan D., 2008. "Assessing the long-term system value of intermittent electric generation technologies," Energy Economics, Elsevier, vol. 30(3), pages 1208-1231, May.
    15. Mondol, Jayanta Deb & Yohanis, Yigzaw G. & Norton, Brian, 2007. "The impact of array inclination and orientation on the performance of a grid-connected photovoltaic system," Renewable Energy, Elsevier, vol. 32(1), pages 118-140.
    16. Chudinzow, Dimitrij & Nagel, Sylvio & Güsewell, Joshua & Eltrop, Ludger, 2020. "Vertical bifacial photovoltaics – A complementary technology for the European electricity supply?," Applied Energy, Elsevier, vol. 264(C).
    17. Brown, Patrick R. & O'Sullivan, Francis M., 2020. "Spatial and temporal variation in the value of solar power across United States electricity markets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 121(C).
    18. Gorman, Will & Mills, Andrew & Wiser, Ryan, 2019. "Improving estimates of transmission capital costs for utility-scale wind and solar projects to inform renewable energy policy," Energy Policy, Elsevier, vol. 135(C).
    19. Hartner, Michael & Ortner, André & Hiesl, Albert & Haas, Reinhard, 2015. "East to west – The optimal tilt angle and orientation of photovoltaic panels from an electricity system perspective," Applied Energy, Elsevier, vol. 160(C), pages 94-107.
    20. Brown, Patrick R. & O’Sullivan, Francis M., 2019. "Shaping photovoltaic array output to align with changing wholesale electricity price profiles," Applied Energy, Elsevier, vol. 256(C).
    21. Good, Jeremy & Johnson, Jeremiah X., 2016. "Impact of inverter loading ratio on solar photovoltaic system performance," Applied Energy, Elsevier, vol. 177(C), pages 475-486.
    22. Mills, Andrew D. & Wiser, Ryan H., 2015. "Strategies to mitigate declines in the economic value of wind and solar at high penetration in California," Applied Energy, Elsevier, vol. 147(C), pages 269-278.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dujardin, Jérôme & Schillinger, Moritz & Kahl, Annelen & Savelsberg, Jonas & Schlecht, Ingmar & Lordan-Perret, Rebecca, 2022. "Optimized market value of alpine solar photovoltaic installations," Renewable Energy, Elsevier, vol. 186(C), pages 878-888.
    2. Song, Shaojian & Xiong, Hao & Lin, Yuzhang & Huang, Manyun & Wei, Zhinong & Fang, Zhi, 2022. "Robust three-phase state estimation for PV-Integrated unbalanced distribution systems," Applied Energy, Elsevier, vol. 322(C).
    3. Arsalis, Alexandros & Papanastasiou, Panos & Georghiou, George E., 2022. "A comparative review of lithium-ion battery and regenerative hydrogen fuel cell technologies for integration with photovoltaic applications," Renewable Energy, Elsevier, vol. 191(C), pages 943-960.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eising, Manuel & Hobbie, Hannes & Möst, Dominik, 2020. "Future wind and solar power market values in Germany — Evidence of spatial and technological dependencies?," Energy Economics, Elsevier, vol. 86(C).
    2. Brown, Patrick R. & O'Sullivan, Francis M., 2020. "Spatial and temporal variation in the value of solar power across United States electricity markets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 121(C).
    3. Bernath, Christiane & Deac, Gerda & Sensfuß, Frank, 2021. "Impact of sector coupling on the market value of renewable energies – A model-based scenario analysis," Applied Energy, Elsevier, vol. 281(C).
    4. Bistline, John & Blanford, Geoffrey & Mai, Trieu & Merrick, James, 2021. "Modeling variable renewable energy and storage in the power sector," Energy Policy, Elsevier, vol. 156(C).
    5. Ruhnau, Oliver & Hirth, Lion & Praktiknjo, Aaron, 2020. "Heating with wind: Economics of heat pumps and variable renewables," Energy Economics, Elsevier, vol. 92(C).
    6. Mills, Andrew D. & Rodriguez, Pía, 2020. "A simple and fast algorithm for estimating the capacity credit of solar and storage," Energy, Elsevier, vol. 210(C).
    7. Ruhnau, Oliver, 2020. "Market-based renewables: How flexible hydrogen electrolyzers stabilize wind and solar market values," EconStor Preprints 227075, ZBW - Leibniz Information Centre for Economics.
    8. Ruhnau, Oliver, 2022. "How flexible electricity demand stabilizes wind and solar market values: The case of hydrogen electrolyzers," Applied Energy, Elsevier, vol. 307(C).
    9. Mowers, Matthew & Mignone, Bryan K. & Steinberg, Daniel C., 2023. "Quantifying value and representing competitiveness of electricity system technologies in economic models," Applied Energy, Elsevier, vol. 329(C).
    10. Gorman, Will & Montañés, Cristina Crespo & Mills, Andrew & Kim, James Hyungkwan & Millstein, Dev & Wiser, Ryan, 2022. "Are coupled renewable-battery power plants more valuable than independently sited installations?," Energy Economics, Elsevier, vol. 107(C).
    11. Hua, Zhengcao & Ma, Chao & Lian, Jijian & Pang, Xiulan & Yang, Weichao, 2019. "Optimal capacity allocation of multiple solar trackers and storage capacity for utility-scale photovoltaic plants considering output characteristics and complementary demand," Applied Energy, Elsevier, vol. 238(C), pages 721-733.
    12. Pahle, Michael & Schill, Wolf-Peter & Gambardella, Christian & Tietjen, Oliver, 2016. "Renewable Energy Support, Negative Prices, and Real-time Pricing," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 37, pages 147-169.
    13. Dujardin, Jérôme & Schillinger, Moritz & Kahl, Annelen & Savelsberg, Jonas & Schlecht, Ingmar & Lordan-Perret, Rebecca, 2022. "Optimized market value of alpine solar photovoltaic installations," Renewable Energy, Elsevier, vol. 186(C), pages 878-888.
    14. Brown, T. & Reichenberg, L., 2021. "Decreasing market value of variable renewables can be avoided by policy action," Energy Economics, Elsevier, vol. 100(C).
    15. Philip Tafarte & Marcus Eichhorn & Daniela Thrän, 2019. "Capacity Expansion Pathways for a Wind and Solar Based Power Supply and the Impact of Advanced Technology—A Case Study for Germany," Energies, MDPI, vol. 12(2), pages 1-23, January.
    16. Hirth, Lion & Müller, Simon, 2016. "System-friendly wind power," Energy Economics, Elsevier, vol. 56(C), pages 51-63.
    17. Schleifer, Anna H. & Murphy, Caitlin A. & Cole, Wesley J. & Denholm, Paul, 2022. "Exploring the design space of PV-plus-battery system configurations under evolving grid conditions," Applied Energy, Elsevier, vol. 308(C).
    18. Philipp Beiter & Aubryn Cooperman & Eric Lantz & Tyler Stehly & Matt Shields & Ryan Wiser & Thomas Telsnig & Lena Kitzing & Volker Berkhout & Yuka Kikuchi, 2021. "Wind power costs driven by innovation and experience with further reductions on the horizon," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 10(5), September.
    19. Ahmad Murtaza Ershad & Robert Pietzcker & Falko Ueckerdt & Gunnar Luderer, 2020. "Managing Power Demand from Air Conditioning Benefits Solar PV in India Scenarios for 2040," Energies, MDPI, vol. 13(9), pages 1-19, May.
    20. Brown, Patrick R. & O’Sullivan, Francis M., 2019. "Shaping photovoltaic array output to align with changing wholesale electricity price profiles," Applied Energy, Elsevier, vol. 256(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:304:y:2021:i:c:s0306261921010886. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.