Tuesday, July 02, 2013

Solar Panels to Lower Electricity Prices

Fig. 10. Modeled impact of PV on demand and price in summer 2010. from Retrospective modeling of the merit-order effect on wholesale electricity prices from distributed photovoltaic generation in the Australian National Electricity Market
Greetings from the Downer Community Centre in Canberra, where Dylan McConnell, Senior Research Fellow, Melbourne Energy Institute is discussing "Impact of distributed solar on electricity prices". The event is hosted by SEE-Change.

Dr. McConnell started by displaying a graph showing the rapid take-up in solar energy. He then cited a 2011 Victorian Auditor General's report suggesting that Victorian brown coal generators were worried they would be adversely effected by a reduction in electricity prices. It was not clear to me why researchers at the University of Melbourne would be worried about maintaining the profitability of overseas owned highly polluting brown coal power stations.

Dr. McConnell pointed out that solar power output peaks during the middle of the day, which coincides with the peak period for electricity demand, As a result more solar power will lower the price all generators get for their electricity. There is a very sharp spike in electricity price in the middle of the day. The result is that solar power will adversely black coal generators most, brown coal, gas and hydro electricity.

Dr. McConnell pointed out that the University of Melbourne's model does not include many factors and so does not exactly reflect real prices exactly. In particular the model does not sow the very high mid-day peak. In addition the model does not take into account distribution costs.

What this analysis prompts is the question of what effect solar has on the stability of the network and the amount of reserve generating capacity required. On a cloudy day, alternative generating will be required. More solar power might require more gas generation which can be started at short notice when there is no sun.

Also domestic rooftop generators in Australia are paid based on a fixed amount per KW Hour, not the market price. It would be interesting to see what effect paying based on the market price would be. While individual households might have difficulty selling into this market, the output could be aggregated and sold by an intermediary.

Also if the cost of solar power continues to drop it may be able to provide more of the daytime power. The output from solar power may be useful in supplying the increased demand for home air conditioning.

Dr. McConnell suggested that the reduction in electricity prices caused by solar power might be sufficient to cover the cost of the support schemes currently in place for home solar systems. But if solar power is profitable without a subsidy, then it should be possible to discontinue these schemes and allow home and commercial providers to cover the cost.

Dr. McConnell's paper "Retrospective modeling of the merit-order effect on wholesale electricity prices from distributed photovoltaic generation in the Australian National Electricity Market" with Patrick Hearps, Dominic Eales, Mike Sandiford, Rebecca Dunn, Matthew Wright and Lachlan Bateman in
Energy Policy, July 2013, Pages 17–27.

In 2007, the time frame for increasing the share of Victoria’s electricity consumption from renewable sources to 10 per cent was extended from 2010 to 2016. A range of factors, such as the interests of existing generators, the renewable energy industry and Victorian electricity consumers, were considered in extending the target. However, the extension occurred primarily to alleviate the concerns of brown coal generators that the 10 per cent target would deliver too much renewable energy generation too quickly,
which would reduce wholesale electricity prices and adversely affect existing
generators.  ...

From: "Facilitating Renewable Energy Development", Victorian Auditor-General, April 2011

No comments: