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Title: A retrospective analysis of the market price response to distributed photovoltaic generation in California

Abstract

Due to rapid growth of distributed solar photovoltaic (PV) capacity in the U.S., numerous 'value of solar' studies have attempted to quantify avoided costs associated with distributed PV. One such avoided cost that has received little attention is the market price response, or how distributed PV generation reduces utilities' procurement costs and, consequently, consumers' costs through reduced wholesale electricity prices in the short-term. We quantify the reduction in day-ahead wholesale electricity prices to distributed PV generation in California (CA) from 2013 through 2015. Using a database of all distributed PV systems in the three CA investor owned utilities, we estimate historic hourly distributed PV generation using three methods that we validate with metered generation from 205 PV systems. Via multiple linear regression, we then estimate electricity price reductions due to distributed PV generation. Across the three methods used to estimate PV generation, distributed PV generation reduced hourly median (mean) wholesale electricity prices by up to $2.7-3.1/MWh ($2.9-3.2/MWh) ($2015), or by 7-8% (8-9%). Lower wholesale prices reduced utilities' energy procurement costs in the day-ahead market by up to $650-730 million ($2015) from 2013 through 2015. These avoided costs are similar to other avoided costs commonly included in value of solar studies.

Authors:
; ORCiD logo; ; ;
Publication Date:
Research Org.:
National Renewable Energy Lab. (NREL), Golden, CO (United States)
Sponsoring Org.:
USDOE Office of Energy Efficiency and Renewable Energy (EERE)
OSTI Identifier:
1465653
Report Number(s):
NREL/JA-5D00-71677
Journal ID: ISSN 0301-4215
DOE Contract Number:  
AC36-08GO28308
Resource Type:
Journal Article
Journal Name:
Energy Policy
Additional Journal Information:
Journal Volume: 121; Journal Issue: C; Journal ID: ISSN 0301-4215
Publisher:
Elsevier
Country of Publication:
United States
Language:
English
Subject:
14 SOLAR ENERGY; 29 ENERGY PLANNING, POLICY, AND ECONOMY; distributed solar; market price response; merit order effect; value of solar

Citation Formats

Craig, Michael T., Jaramillo, Paulina, Hodge, Bri-Mathias, Williams, Nathaniel J., and Severnini, Edson. A retrospective analysis of the market price response to distributed photovoltaic generation in California. United States: N. p., 2018. Web. doi:10.1016/j.enpol.2018.05.061.
Craig, Michael T., Jaramillo, Paulina, Hodge, Bri-Mathias, Williams, Nathaniel J., & Severnini, Edson. A retrospective analysis of the market price response to distributed photovoltaic generation in California. United States. https://doi.org/10.1016/j.enpol.2018.05.061
Craig, Michael T., Jaramillo, Paulina, Hodge, Bri-Mathias, Williams, Nathaniel J., and Severnini, Edson. 2018. "A retrospective analysis of the market price response to distributed photovoltaic generation in California". United States. https://doi.org/10.1016/j.enpol.2018.05.061.
@article{osti_1465653,
title = {A retrospective analysis of the market price response to distributed photovoltaic generation in California},
author = {Craig, Michael T. and Jaramillo, Paulina and Hodge, Bri-Mathias and Williams, Nathaniel J. and Severnini, Edson},
abstractNote = {Due to rapid growth of distributed solar photovoltaic (PV) capacity in the U.S., numerous 'value of solar' studies have attempted to quantify avoided costs associated with distributed PV. One such avoided cost that has received little attention is the market price response, or how distributed PV generation reduces utilities' procurement costs and, consequently, consumers' costs through reduced wholesale electricity prices in the short-term. We quantify the reduction in day-ahead wholesale electricity prices to distributed PV generation in California (CA) from 2013 through 2015. Using a database of all distributed PV systems in the three CA investor owned utilities, we estimate historic hourly distributed PV generation using three methods that we validate with metered generation from 205 PV systems. Via multiple linear regression, we then estimate electricity price reductions due to distributed PV generation. Across the three methods used to estimate PV generation, distributed PV generation reduced hourly median (mean) wholesale electricity prices by up to $2.7-3.1/MWh ($2.9-3.2/MWh) ($2015), or by 7-8% (8-9%). Lower wholesale prices reduced utilities' energy procurement costs in the day-ahead market by up to $650-730 million ($2015) from 2013 through 2015. These avoided costs are similar to other avoided costs commonly included in value of solar studies.},
doi = {10.1016/j.enpol.2018.05.061},
url = {https://www.osti.gov/biblio/1465653}, journal = {Energy Policy},
issn = {0301-4215},
number = C,
volume = 121,
place = {United States},
year = {Mon Oct 01 00:00:00 EDT 2018},
month = {Mon Oct 01 00:00:00 EDT 2018}
}