TODAY’S STUDY: The Many Values Of Solar Power Plants
Investigating the Economic Value of Flexible Solar Power Plant Operation, October 2018
October 2018 (Energy and Environmental Economics)
Solar power is growing rapidly around the world, driven by dramatic cost reductions and increased interest in carbon-free energy sources. Solar is a variable resource, requiring grid operators to increase the available operating range on conventional generators, sometimes by committing additional units to ensure enough grid flexibility to balance the system. At very high levels of penetration, operators may not have enough flexibility on conventional generators to ensure reliable operations.
However, modern solar power plants can be operated flexibly; in fact, they can respond to dispatch instructions much more quickly than conventional generators. Flexible solar not only contributes to solving operating challenges related to solar variability but can also provide essential grid services. This study simulates operations of an actual utility system – Tampa Electric Company (TECO) – and its generation portfolio to investigate the economic value of using solar as a flexible resource. The study explores four solar operating modes: “Must-Take,” “Curtailable,” “Downward Dispatch,” and “Full Flexibility.”
The study finds that for this relatively small utility system, Must-Take solar becomes infeasible once solar penetration exceeds 14% of annual energy supply due to unavoidable oversupply during low demand periods, necessitating a shift to the Curtailable mode of solar operations. As the penetration continues to grow, the operating reserves needed to accommodate solar uncertainty become a significant cost driver, leading to more conservative thermal plant operations and increasingly large amounts of solar curtailment. Flexible solar reduces uncertainty, enabling leaner operations and providing significant economic value. At penetration levels exceeding 20% on the TECO system, solar curtailment can be reduced by more than half by moving from the Curtailable to the Full Flexibility solar operating mode. This results in significant additional value due to reduced fuel costs, operations and maintenance costs, and air emissions.
Finally, the study evaluates the impact of flexible solar in combination with energy storage. We find that flexible solar can provide some of the same grid services as energy storage, thereby reducing the value of storage on a high-solar grid.
Solar electricity is becoming an important part of the electric generation portfolio in many regions due to rapidly declining costs and policies favoring non-emitting renewable generation. The installed capacity of solar has grown exponentially over the past two decades.
Further solar growth is expected in subsequent decades. Policy targets for renewable energy installation and decarbonization of the energy system are driving solar installations around the world. Both India and China have targets to reach more than 100 GW of installed solar capacity by the early 2020s.1 California and Hawaii have passed legislation to reach 100% renewable or zero-carbon electricity by 2045, and it is expected that solar energy will be one of the primary energy sources used meet these ambitious targets. Recent analysis on deep decarbonization pathways in California suggests that solar power could supply a large fraction of the economy-wide demand for energy by 2050.2 Europe is also expected to increase solar energy capacity to meet decarbonization targets…
Description of Case Study… Flexible Solar Production Simulation Results… Areas for Future Research…
When envisioning a power system with large amounts of variable renewable energy, system planners must include information on the least-cost manner of reliably operating that system, in both the present and future. If system operators can control the power output of variable renewable resources, these resources can be viewed as assets that help to maintain reliability rather than liabilities that create operational challenges. Bringing the operational value of dispatching variable renewables into utility resource plans may change the investments made in resources going forward. The flexibility brought by dispatching variable renewable generators could reduce the need for investments in other types of flexible resources. But dispatching renewables helps to retain their value at higher penetrations, which may induce further renewable deployment and, in turn, increase the need for other flexible resources. In either scenario, reducing operational costs and CO2 emissions from the power system is easier when solar power is treated as an active participant in grid balancing rather than an invisible part of the “net load.”