IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v189y2024ipbs1364032123007736.html
   My bibliography  Save this article

The value of solar forecasts and the cost of their errors: A review

Author

Listed:
  • Gandhi, Oktoviano
  • Zhang, Wenjie
  • Kumar, Dhivya Sampath
  • Rodríguez-Gallegos, Carlos D.
  • Yagli, Gokhan Mert
  • Yang, Dazhi
  • Reindl, Thomas
  • Srinivasan, Dipti

Abstract

Despite the advances in solar forecasting methods, and their ever-increasing accuracy, little is known about their value for real applications, e.g., bidding in the electricity market, power system operations, and household electricity bill reduction. This work comprehensively reviews the value of solar forecasts and the cost of their errors across the different applications available in the literature. Most works analysed the economics of solar forecast at the transmission level, either from the electricity market perspective or the system operations perspective. When compared with the levelised cost of electricity of photovoltaic (PV) systems, the value of solar forecasts and the cost of their errors are considerable. Recommendations on how to minimise and adapt to solar uncertainty and variability are also discussed. The measures will not only help mitigate the cost of forecast errors but also enable better integration of PV and other variable generation. Different system/market operators and regulators can consider the different suggestions based on their unique circumstances.

Suggested Citation

  • Gandhi, Oktoviano & Zhang, Wenjie & Kumar, Dhivya Sampath & Rodríguez-Gallegos, Carlos D. & Yagli, Gokhan Mert & Yang, Dazhi & Reindl, Thomas & Srinivasan, Dipti, 2024. "The value of solar forecasts and the cost of their errors: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 189(PB).
    • Handle: RePEc:eee:rensus:v:189:y:2024:i:pb:s1364032123007736
    DOI: 10.1016/j.rser.2023.113915
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032123007736
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.rser.2023.113915?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. Umut Ugurlu & Oktay Tas & Aycan Kaya & Ilkay Oksuz, 2018. "The Financial Effect of the Electricity Price Forecasts’ Inaccuracy on a Hydro-Based Generation Company," Energies, MDPI, vol. 11(8), pages 1-19, August.
    2. Luoma, Jennifer & Mathiesen, Patrick & Kleissl, Jan, 2014. "Forecast value considering energy pricing in California," Applied Energy, Elsevier, vol. 125(C), pages 230-237.
    3. Gandhi, Oktoviano & Zhang, Wenjie & Rodríguez-Gallegos, Carlos D. & Verbois, Hadrien & Sun, Hongbin & Reindl, Thomas & Srinivasan, Dipti, 2020. "Local reactive power dispatch optimisation minimising global objectives," Applied Energy, Elsevier, vol. 262(C).
    4. Michael G. Pollitt, 2019. "The European Single Market in Electricity: An Economic Assessment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(1), pages 63-87, August.
    5. Hirth, Lion & Ueckerdt, Falko & Edenhofer, Ottmar, 2015. "Integration costs revisited – An economic framework for wind and solar variability," Renewable Energy, Elsevier, vol. 74(C), pages 925-939.
    6. Thomas Schmitt & Tobias Rodemann & Jürgen Adamy, 2021. "The Cost of Photovoltaic Forecasting Errors in Microgrid Control with Peak Pricing," Energies, MDPI, vol. 14(9), pages 1-13, April.
    7. 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).
    8. Erdener, Burcin Cakir & Feng, Cong & Doubleday, Kate & Florita, Anthony & Hodge, Bri-Mathias, 2022. "A review of behind-the-meter solar forecasting," Renewable and Sustainable Energy Reviews, Elsevier, vol. 160(C).
    9. Tao Hong & Pierre Pinson & Yi Wang & Rafal Weron & Dazhi Yang & Hamidreza Zareipour, 2020. "Energy forecasting: A review and outlook," WORking papers in Management Science (WORMS) WORMS/20/08, Department of Operations Research and Business Intelligence, Wroclaw University of Science and Technology.
    10. Cirés, E. & Marcos, J. & de la Parra, I. & García, M. & Marroyo, L., 2019. "The potential of forecasting in reducing the LCOE in PV plants under ramp-rate restrictions," Energy, Elsevier, vol. 188(C).
    11. Gandhi, Oktoviano & Rodríguez-Gallegos, Carlos D. & Zhang, Wenjie & Reindl, Thomas & Srinivasan, Dipti, 2022. "Levelised cost of PV integration for distribution networks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 169(C).
    12. Rodríguez-Gallegos, Carlos D. & Gandhi, Oktoviano & Bieri, Monika & Reindl, Thomas & Panda, S.K., 2018. "A diesel replacement strategy for off-grid systems based on progressive introduction of PV and batteries: An Indonesian case study," Applied Energy, Elsevier, vol. 229(C), pages 1218-1232.
    13. Rodilla, Pablo & Batlle, Carlos, 2015. "Empirics of Intraday and Real-time Markets in Europe: Spain," EconStor Research Reports 111923, ZBW - Leibniz Information Centre for Economics.
    14. Walawalkar, Rahul & Fernands, Stephen & Thakur, Netra & Chevva, Konda Reddy, 2010. "Evolution and current status of demand response (DR) in electricity markets: Insights from PJM and NYISO," Energy, Elsevier, vol. 35(4), pages 1553-1560.
    15. Kaur, Amanpreet & Nonnenmacher, Lukas & Pedro, Hugo T.C. & Coimbra, Carlos F.M., 2016. "Benefits of solar forecasting for energy imbalance markets," Renewable Energy, Elsevier, vol. 86(C), pages 819-830.
    16. Vu, Ba Hau & Chung, Il-Yop, 2022. "Optimal generation scheduling and operating reserve management for PV generation using RNN-based forecasting models for stand-alone microgrids," Renewable Energy, Elsevier, vol. 195(C), pages 1137-1154.
    17. Yang, Dazhi & Wang, Wenting & Gueymard, Christian A. & Hong, Tao & Kleissl, Jan & Huang, Jing & Perez, Marc J. & Perez, Richard & Bright, Jamie M. & Xia, Xiang’ao & van der Meer, Dennis & Peters, Ian , 2022. "A review of solar forecasting, its dependence on atmospheric sciences and implications for grid integration: Towards carbon neutrality," Renewable and Sustainable Energy Reviews, Elsevier, vol. 161(C).
    18. Athanasopoulos, George & Ahmed, Roman A. & Hyndman, Rob J., 2009. "Hierarchical forecasts for Australian domestic tourism," International Journal of Forecasting, Elsevier, vol. 25(1), pages 146-166.
    19. Hong, Tao & Pinson, Pierre & Fan, Shu & Zareipour, Hamidreza & Troccoli, Alberto & Hyndman, Rob J., 2016. "Probabilistic energy forecasting: Global Energy Forecasting Competition 2014 and beyond," International Journal of Forecasting, Elsevier, vol. 32(3), pages 896-913.
    20. Gandhi, Oktoviano & Rodríguez-Gallegos, Carlos D. & Zhang, Wenjie & Srinivasan, Dipti & Reindl, Thomas, 2018. "Economic and technical analysis of reactive power provision from distributed energy resources in microgrids," Applied Energy, Elsevier, vol. 210(C), pages 827-841.
    21. Goodarzi, Shadi & Perera, H. Niles & Bunn, Derek, 2019. "The impact of renewable energy forecast errors on imbalance volumes and electricity spot prices," Energy Policy, Elsevier, vol. 134(C).
    22. Ruhnau, Oliver & Hennig, Patrick & Madlener, Reinhard, 2015. "Economic Implications of Enhanced Forecast Accuracy: The Case of Photovoltaic Feed-In Forecasts," FCN Working Papers 6/2015, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    23. René Aïd & P. Gruet & H. Pham, 2016. "An optimal trading problem in intraday electricity markets," Post-Print hal-01609481, HAL.
    24. Gautam Gowrisankaran & Stanley S. Reynolds & Mario Samano, 2016. "Intermittency and the Value of Renewable Energy," Journal of Political Economy, University of Chicago Press, vol. 124(4), pages 1187-1234.
    25. Russo, Marianna & Kraft, Emil & Bertsch, Valentin & Keles, Dogan, 2022. "Short-term risk management of electricity retailers under rising shares of decentralized solar generation," Energy Economics, Elsevier, vol. 109(C).
    26. Hodge, Bri-Mathias & Brancucci Martinez-Anido, Carlo & Wang, Qin & Chartan, Erol & Florita, Anthony & Kiviluoma, Juha, 2018. "The combined value of wind and solar power forecasting improvements and electricity storage," Applied Energy, Elsevier, vol. 214(C), pages 1-15.
    27. Rodríguez-Gallegos, Carlos D. & Vinayagam, Lokesh & Gandhi, Oktoviano & Yagli, Gokhan Mert & Alvarez-Alvarado, Manuel S. & Srinivasan, Dipti & Reindl, Thomas & Panda, S.K., 2021. "Novel forecast-based dispatch strategy optimization for PV hybrid systems in real time," Energy, Elsevier, vol. 222(C).
    28. Aguiar, L. Mazorra & Pereira, B. & Lauret, P. & Díaz, F. & David, M., 2016. "Combining solar irradiance measurements, satellite-derived data and a numerical weather prediction model to improve intra-day solar forecasting," Renewable Energy, Elsevier, vol. 97(C), pages 599-610.
    29. Neves, Diana & Brito, Miguel C. & Silva, Carlos A., 2016. "Impact of solar and wind forecast uncertainties on demand response of isolated microgrids," Renewable Energy, Elsevier, vol. 87(P2), pages 1003-1015.
    30. Yang, Dazhi & van der Meer, Dennis, 2021. "Post-processing in solar forecasting: Ten overarching thinking tools," Renewable and Sustainable Energy Reviews, Elsevier, vol. 140(C).
    31. Pierro, Marco & Perez, Richard & Perez, Marc & Moser, David & Cornaro, Cristina, 2020. "Italian protocol for massive solar integration: Imbalance mitigation strategies," Renewable Energy, Elsevier, vol. 153(C), pages 725-739.
    32. Edmunds, Calum & Martín-Martínez, Sergio & Browell, Jethro & Gómez-Lázaro, Emilio & Galloway, Stuart, 2019. "On the participation of wind energy in response and reserve markets in Great Britain and Spain," Renewable and Sustainable Energy Reviews, Elsevier, vol. 115(C).
    33. Mazzola, Simone & Vergara, Claudio & Astolfi, Marco & Li, Vivian & Perez-Arriaga, Ignacio & Macchi, Ennio, 2017. "Assessing the value of forecast-based dispatch in the operation of off-grid rural microgrids," Renewable Energy, Elsevier, vol. 108(C), pages 116-125.
    34. Li, Tianyu & Gao, Ciwei & Chen, Tao & Jiang, Yu & Feng, Yingchun, 2022. "Medium and long-term electricity market trading strategy considering renewable portfolio standard in the transitional period of electricity market reform in Jiangsu, China," Energy Economics, Elsevier, vol. 107(C).
    35. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-242, September.
    36. Thomas Kuppelwieser & David Wozabal, 2023. "Intraday power trading: toward an arms race in weather forecasting?," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 45(1), pages 57-83, March.
    37. Yang, Dazhi & Wu, Elynn & Kleissl, Jan, 2019. "Operational solar forecasting for the real-time market," International Journal of Forecasting, Elsevier, vol. 35(4), pages 1499-1519.
    38. Tawn, R. & Browell, J., 2022. "A review of very short-term wind and solar power forecasting," Renewable and Sustainable Energy Reviews, Elsevier, vol. 153(C).
    39. Pierro, Marco & De Felice, Matteo & Maggioni, Enrico & Moser, David & Perotto, Alessandro & Spada, Francesco & Cornaro, Cristina, 2020. "Residual load probabilistic forecast for reserve assessment: A real case study," Renewable Energy, Elsevier, vol. 149(C), pages 508-522.
    40. Pierro, Marco & Perez, Richard & Perez, Marc & Moser, David & Cornaro, Cristina, 2021. "Imbalance mitigation strategy via flexible PV ancillary services: The Italian case study," Renewable Energy, Elsevier, vol. 179(C), pages 1694-1705.
    41. Sánchez de la Nieta, Agustín A. & Paterakis, Nikolaos G. & Gibescu, Madeleine, 2020. "Participation of photovoltaic power producers in short-term electricity markets based on rescheduling and risk-hedging mapping," Applied Energy, Elsevier, vol. 266(C).
    42. Visser, Lennard & AlSkaif, Tarek & van Sark, Wilfried, 2022. "Operational day-ahead solar power forecasting for aggregated PV systems with a varying spatial distribution," Renewable Energy, Elsevier, vol. 183(C), pages 267-282.
    43. Möller, Christoph & Rachev, Svetlozar T. & Fabozzi, Frank J., 2011. "Balancing energy strategies in electricity portfolio management," Energy Economics, Elsevier, vol. 33(1), pages 2-11, January.
    44. Weber, Christoph, 2010. "Adequate intraday market design to enable the integration of wind energy into the European power systems," Energy Policy, Elsevier, vol. 38(7), pages 3155-3163, July.
    45. Larson, David P. & Nonnenmacher, Lukas & Coimbra, Carlos F.M., 2016. "Day-ahead forecasting of solar power output from photovoltaic plants in the American Southwest," Renewable Energy, Elsevier, vol. 91(C), pages 11-20.
    46. Ricardo J. Bessa & Corinna Möhrlen & Vanessa Fundel & Malte Siefert & Jethro Browell & Sebastian Haglund El Gaidi & Bri-Mathias Hodge & Umit Cali & George Kariniotakis, 2017. "Towards Improved Understanding of the Applicability of Uncertainty Forecasts in the Electric Power Industry," Energies, MDPI, vol. 10(9), pages 1-48, September.
    47. Wu, Jing & Botterud, Audun & Mills, Andrew & Zhou, Zhi & Hodge, Bri-Mathias & Heaney, Mike, 2015. "Integrating solar PV (photovoltaics) in utility system operations: Analytical framework and Arizona case study," Energy, Elsevier, vol. 85(C), pages 1-9.
    48. Clò, Stefano & Fumagalli, Elena, 2019. "The effect of price regulation on energy imbalances: A Difference in Differences design," Energy Economics, Elsevier, vol. 81(C), pages 754-764.
    49. Gürtler, Marc & Paulsen, Thomas, 2018. "The effect of wind and solar power forecasts on day-ahead and intraday electricity prices in Germany," Energy Economics, Elsevier, vol. 75(C), pages 150-162.
    50. Tilmann Gneiting & Fadoua Balabdaoui & Adrian E. Raftery, 2007. "Probabilistic forecasts, calibration and sharpness," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 69(2), pages 243-268, April.
    51. Woo, C.K. & Moore, J. & Schneiderman, B. & Ho, T. & Olson, A. & Alagappan, L. & Chawla, K. & Toyama, N. & Zarnikau, J., 2016. "Merit-order effects of renewable energy and price divergence in California’s day-ahead and real-time electricity markets," Energy Policy, Elsevier, vol. 92(C), pages 299-312.
    52. Luerssen, Christoph & Gandhi, Oktoviano & Reindl, Thomas & Sekhar, Chandra & Cheong, David, 2020. "Life cycle cost analysis (LCCA) of PV-powered cooling systems with thermal energy and battery storage for off-grid applications," Applied Energy, Elsevier, vol. 273(C).
    53. Märkle-Huß, Joscha & Feuerriegel, Stefan & Neumann, Dirk, 2018. "Contract durations in the electricity market: Causal impact of 15min trading on the EPEX SPOT market," Energy Economics, Elsevier, vol. 69(C), pages 367-378.
    54. Pape, Christian & Hagemann, Simon & Weber, Christoph, 2016. "Are fundamentals enough? Explaining price variations in the German day-ahead and intraday power market," Energy Economics, Elsevier, vol. 54(C), pages 376-387.
    55. Karakatsani, Nektaria V. & Bunn, Derek W., 2008. "Intra-day and regime-switching dynamics in electricity price formation," Energy Economics, Elsevier, vol. 30(4), pages 1776-1797, July.
    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. Perera, Maneesha & De Hoog, Julian & Bandara, Kasun & Senanayake, Damith & Halgamuge, Saman, 2024. "Day-ahead regional solar power forecasting with hierarchical temporal convolutional neural networks using historical power generation and weather data," Applied Energy, Elsevier, vol. 361(C).

    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. Yang, Dazhi & van der Meer, Dennis, 2021. "Post-processing in solar forecasting: Ten overarching thinking tools," Renewable and Sustainable Energy Reviews, Elsevier, vol. 140(C).
    2. Yang, Dazhi & Wang, Wenting & Gueymard, Christian A. & Hong, Tao & Kleissl, Jan & Huang, Jing & Perez, Marc J. & Perez, Richard & Bright, Jamie M. & Xia, Xiang’ao & van der Meer, Dennis & Peters, Ian , 2022. "A review of solar forecasting, its dependence on atmospheric sciences and implications for grid integration: Towards carbon neutrality," Renewable and Sustainable Energy Reviews, Elsevier, vol. 161(C).
    3. Gandhi, Oktoviano & Rodríguez-Gallegos, Carlos D. & Zhang, Wenjie & Reindl, Thomas & Srinivasan, Dipti, 2022. "Levelised cost of PV integration for distribution networks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 169(C).
    4. Goodarzi, Shadi & Perera, H. Niles & Bunn, Derek, 2019. "The impact of renewable energy forecast errors on imbalance volumes and electricity spot prices," Energy Policy, Elsevier, vol. 134(C).
    5. Visser, L.R. & AlSkaif, T.A. & Khurram, A. & Kleissl, J. & van Sark, W.G.H.J.M., 2024. "Probabilistic solar power forecasting: An economic and technical evaluation of an optimal market bidding strategy," Applied Energy, Elsevier, vol. 370(C).
    6. Petropoulos, Fotios & Apiletti, Daniele & Assimakopoulos, Vassilios & Babai, Mohamed Zied & Barrow, Devon K. & Ben Taieb, Souhaib & Bergmeir, Christoph & Bessa, Ricardo J. & Bijak, Jakub & Boylan, Joh, 2022. "Forecasting: theory and practice," International Journal of Forecasting, Elsevier, vol. 38(3), pages 705-871.
      • Fotios Petropoulos & Daniele Apiletti & Vassilios Assimakopoulos & Mohamed Zied Babai & Devon K. Barrow & Souhaib Ben Taieb & Christoph Bergmeir & Ricardo J. Bessa & Jakub Bijak & John E. Boylan & Jet, 2020. "Forecasting: theory and practice," Papers 2012.03854, arXiv.org, revised Jan 2022.
    7. Yang, Dazhi & Yang, Guoming & Liu, Bai, 2023. "Combining quantiles of calibrated solar forecasts from ensemble numerical weather prediction," Renewable Energy, Elsevier, vol. 215(C).
    8. Markovics, Dávid & Mayer, Martin János, 2022. "Comparison of machine learning methods for photovoltaic power forecasting based on numerical weather prediction," Renewable and Sustainable Energy Reviews, Elsevier, vol. 161(C).
    9. Marco Pierro & David Moser & Richard Perez & Cristina Cornaro, 2020. "The Value of PV Power Forecast and the Paradox of the “Single Pricing” Scheme: The Italian Case Study," Energies, MDPI, vol. 13(15), pages 1-27, August.
    10. Mayer, Martin János, 2022. "Benefits of physical and machine learning hybridization for photovoltaic power forecasting," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    11. Marcel Kremer & Rüdiger Kiesel & Florentina Paraschiv, 2020. "Intraday Electricity Pricing of Night Contracts," Energies, MDPI, vol. 13(17), pages 1-14, September.
    12. Mayer, Martin János & Yang, Dazhi, 2022. "Probabilistic photovoltaic power forecasting using a calibrated ensemble of model chains," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    13. Mayer, Martin János & Yang, Dazhi, 2023. "Calibration of deterministic NWP forecasts and its impact on verification," International Journal of Forecasting, Elsevier, vol. 39(2), pages 981-991.
    14. Micha{l} Narajewski & Florian Ziel, 2020. "Ensemble Forecasting for Intraday Electricity Prices: Simulating Trajectories," Papers 2005.01365, arXiv.org, revised Aug 2020.
    15. Koch, Christopher & Hirth, Lion, 2019. "Short-term electricity trading for system balancing: An empirical analysis of the role of intraday trading in balancing Germany's electricity system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 113(C), pages 1-1.
    16. Cheng, Lilin & Zang, Haixiang & Wei, Zhinong & Zhang, Fengchun & Sun, Guoqiang, 2022. "Evaluation of opaque deep-learning solar power forecast models towards power-grid applications," Renewable Energy, Elsevier, vol. 198(C), pages 960-972.
    17. Rainer Baule & Michael Naumann, 2021. "Volatility and Dispersion of Hourly Electricity Contracts on the German Continuous Intraday Market," Energies, MDPI, vol. 14(22), pages 1-24, November.
    18. Janczura, Joanna & Wójcik, Edyta, 2022. "Dynamic short-term risk management strategies for the choice of electricity market based on probabilistic forecasts of profit and risk measures. The German and the Polish market case study," Energy Economics, Elsevier, vol. 110(C).
    19. Hirth, Lion & Ueckerdt, Falko & Edenhofer, Ottmar, 2015. "Integration costs revisited – An economic framework for wind and solar variability," Renewable Energy, Elsevier, vol. 74(C), pages 925-939.
    20. Chen, Xiaoyang & Du, Yang & Lim, Enggee & Fang, Lurui & Yan, Ke, 2022. "Towards the applicability of solar nowcasting: A practice on predictive PV power ramp-rate control," Renewable Energy, Elsevier, vol. 195(C), pages 147-166.

    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:rensus:v:189:y:2024:i:pb:s1364032123007736. 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/600126/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.