- A snapshot of a recent report on the shift of economic value of Solar energy at high grid penetration
Is more always better? And if not, why?
The questions is: when a lot of the population uses solar, how do economical values of such renewable energies change?
The Lawrence Berkeley National Laboratory recently released a new report: “Changes in the Economic Value of Variable Generation at High Penetration Levels: A Pilot Case Study of California.” In this report, we evaluate how a subset of the benefits and costs of variable renewable generation changes with increasing penetrations on the electric grid.
And surprise surprise without energy storage options, high solar adoption will have adverse effects: that is, increasing solar penetration shifts peak residual demand into low sun hours.
Here is a presentation of the report:
Comments from the authors:
We use a unique investment and dispatch model that simulates long-run investment decisions while also incorporating detailed operational constraints and hourly time resolution over a full year. The model is applied to a case study that is loosely based on California in 2030. Increasing amounts of wind, single-axis tracking photovoltaics (PV), and concentrating solar power (CSP) with and without thermal energy storage (TES) are each added in isolation. For each technology and penetration level, the marginal economic value of the variable renewable generation resource is calculated and decomposed into capacity value, energy value, day-ahead forecast error cost, and ancillary services costs. This marginal economic value at each penetration level represents the change in benefits for a small change in the amount of variable renewable generation at that penetration level, as opposed to the average economic value of all variable generation up to that penetration level.
Important to note is that the analysis focuses on a subset of the benefits and costs of variable renewable generation. The benefits examined include the avoided capital investment, fuel, and operations and maintenance costs of other (fossil-fuel-based) power plants. The model calculates these avoided costs while accounting for operational constraints on conventional generators and the increased need for ancillary services with higher penetrations of variable renewable generation. The analysis, however, does not consider other costs and benefits that may be important, including: the capital cost of building the variable renewable generation, environmental impacts, transmission and distribution costs or benefits, effects related to the lumpiness and irreversibility of investment decisions, and uncertainty in future fuel and capital investment costs. Notwithstanding these limitations, the analysis conducted here provides important insights that can inform long-term decisions about renewable procurement and supporting infrastructure.
The primary findings of the analysis are as follows. The marginal economic value of all three solar options (PV, CSP without TES, and CSP with TES) is relatively high at low penetration levels, exceeding both the value of a flat-block of power and the marginal value of wind energy, largely due to the high capacity value of solar at low penetrations. The value of PV and CSP without TES, however, drops considerably as penetration increases toward 30% on an energy basis -- initially due to a decline in capacity value (as increasing solar penetration shifts peak residual demand into low sun hours), followed by a decrease in energy value. In contrast, the value of CSP with TES drops much less as penetration increases. As a result, at solar penetration levels above 10% of total energy generation, the CSP with TES is found to be considerably more valuable relative to PV and CSP without TES. The value of wind is largely driven by energy value and is lower than solar at low penetration. The value of wind is found to drop with increasing penetration, but at a slower rate than the drop in value of PV and CSP without thermal storage. Hence, at high penetration, the value of wind can exceed the value of PV and CSP without thermal storage.
Though some of these results may be somewhat unique to the specific case study examined here, and the model only captures a subset of the benefits and costs of renewable energy, the findings nevertheless provide unique insight into how the value of variable renewable generation changes with technology and penetration level. The findings also show the importance of an analysis framework that accounts for long-term investment decisions as well as short-term dispatch and operational constraints, and point to areas where future research is warranted. As one example, a forthcoming LBNL report will examine the impact of several ‘mitigation strategies' that may help to stem the decline in the economic value of variable renewable generation at high penetration. These mitigation strategies include technological diversity, where multiple variable renewable generation technologies are added to the system simultaneously as opposed to one technology at a time, more-flexible thermal generation, low-cost bulk power storage, and price-responsive demand.
