Overview
According to an analysis conducted by MIT and IIT-Comillas Universities, the deployment of solar power on the size required to reduce climate change could create serious problems for the current electric power system. For instance, local power grids must manage both the outgoing and inbound flow of electricity. Rapid fluctuations in solar photovoltaic (PV) output as the sun rises and goes will require costly power plants that can react quickly to fluctuations in demand. Costs will rise. However, the market prices paid to those who own PV equipment will fall when more PV units are implemented, making more PV investments not profitable at current market prices. It concludes creating an affordable, sustainable, reliable, and environmentally friendly power system in the near future will require the strengthening of existing equipment, changing pricing and regulations, as well as the development of new technology, such as low-cost, large-scale energy storage systems which can smooth the delivery of electricity generated by PV.
Most experts agree that solar power should be vital to any long-term strategy to combat climate change. By 2050, a large portion of power in the world must come from solar power sources. But, studies conducted during the MIT Future of Solar Energy study have revealed that getting there will be complex. “One of the big messages of the solar study is that the power system has to get ready for very high levels of solar PV generation,” declares Ignacio Perez-Arriaga, an instructor at the MIT Sloan School of Management at IIT-Comillas University Madrid, Spain.
In the absence of the capacity to store energy, PV (and wind) power generators are infrequent power sources. When the sun shines, the electricity generated by PVs enters the power system, and the other power plants are able to be turned down or shut off since the generation of PVs isn’t required. If the sun goes out, these other plants must return to operation to supply the demand. That scenario poses two problems. First, PVs deliver electricity to a system created to provide it and not receive it. In addition, their behavior makes other power plants work in ways that might be a challenge to achieve.
This means that solar PVs can have significant and sometimes unanticipated effects on the operation, future investments costs, prices, and costs of both distribution systems – the local networks that provide electric power to consumers, and bulk power systems, which are the vast interconnected system that consists of transmission and generation facilities. These impacts increase with the increase in solar power.
Local distribution support
To study the effects on distribution networks, researchers used Reference Network Model (RNM), which IIT-Comillas created to study the impact on distribution networks. It simulates the construction and operation of distribution networks that transmit electric power from high-voltage transmission systems to the final consumers. Utilizing the RNM, researchers constructed–through simulations–several prototype networks. They then conducted multiple simulations on different assumptions, including the different PV production levels.
In certain circumstances, it is possible that the use of dispersed PV systems decreases the distance that electricity travels through power lines, meaning less energy is lost during transit, and the cost goes down. However, as PV’s share grows, these benefits are masked by the necessity to spend money on strengthening or altering the system to accommodate two-way power flows. The changes could involve installing more giant transformers, more robust wires, and new voltage regulators or changing the network’s configuration, and the result is a higher cost for the protection of both the equipment and the reliability of services.
The image below provides an example of results that show the impact of solar power on the cost of network services in both the United States and Europe. The results differ due to variations in the country’s electrical voltages, network configurations, and other factors. However, in both instances, the costs rise because the proportion of solar energy increases from 0 to 30 percent, and the effect is higher when the consumers are primarily residential customers rather than industrial or commercial customers.
Costs of network services are changing due to PV penetration growing.
These curves highlight the impact of solar power on the cost of distribution networks in both the United States (blue) and Europe (red). (Results vary due to different configurations of networks as well as voltages.) Costs are compared to the costs of a no-PV equivalent scenario. Energy storage is believed to be non-existent. Solid lines indicate the proportion of residential demand as 80%, followed by 15 percent commercial and five percent industrial demand. Dashed lines indicate 15% residential, 80 commercial, and 5percent industrial market. In all instances, the prices rise because PV energy share increases and the most significant impact is seen when residential customers are the most prevalent.
The effects are also more severe in less sunny regions. In fact, in areas with little or no insolation, costs for distribution could nearly double if the PV contribution exceeds one-third of the annual load. The reason is that when insolation is low, more solar-powered devices need to be put in place to meet an amount of demand, and the network has to be able to handle the entire amount of electricity generated by these devices, even on a sunny day.
Adding local energy storage capabilities is one way to lessen the distribution infrastructure load. Based on the situation and storage capacity with 30 percent of PV, storage could cut costs by a third of Europe and cut these costs down by half for the United States. “That doesn’t mean that deployment of storage is economically viable now,” Perez-Arriaga says. “Current storage technology is expensive, but one of the services with economic value that it can provide is to bring down the cost of deploying solar PV.”
Another cause of concern is the method used to calculate consumer bills – procedures that certain distribution companies and customers feel are unfair. The majority of US states utilize a technique known as net meters. Every PV owner is fitted with a meter which is turned in one direction when the home is bringing electricity into the grid and the other side when it’s sending out excess electricity. Each month, the meter’s reading will consequently give the net usage and (possibly) net generation, and the owner is then billed or reimbursed accordingly.
Most electricity bills comprise an unimportant fixed component and an undetermined component proportional to how much energy was consumed in the period being considered. Net metering could have the effect of decreasing or canceling and even making the variable part negative values. This means that users with PV panels don’t have to pay the majority of network charges, even when they’re using the network, and (as previously explained) could push the costs of network usage up. “The cost of the network has to be recovered, so people who don’t own solar PV panels on their rooftops have to pay what the PV owners don’t pay,” Perez-Arriaga explains. In essence, PV owners receive the subsidy paid for by non-owners of PV.
If how network charges are altered, the current debate about the cost of electricity will get worse as the percentage of solar energy used by residential customers rises. Thus, Perez-Arriaga and his colleagues are preparing suggestions to “completely overhauling the way in which the network tariffs are designed so that network costs are allocated to the entities that cause them,” Perez-Arriaga says.
Effects on power systems for bulk consumption
In addition, the researchers looked at the effect of PV energy penetration on larger-scale electric systems. Using an analysis tool called the Low Emissions Electricity Market Analysis model, another tool developed by IIT-Comillas, they looked at how the operations of bulk power systems, future generation mix, and prices in wholesale electricity markets could change as PV’s share increases.
Unlike the traditional power plant, putting in solar PV systems requires no lengthy approval or process of construction. “If the regulator gives some attractive incentive to solar, you can just remove the potatoes in your potato field and put in solar panels,” Perez-Arriaga explains. In the end, sizeable solar energy can appear on a power grid within a few months. In the absence of time to adapt the system, operators have to keep using the existing equipment and techniques of using this equipment to accommodate the demands of their customers.
The typical power plant comprises several plants, each with cost and attributes. Conventional nuclear and coal plants cost little to operate (though they are expensive to build). However, they can’t instantly switch off or on or adjust their power levels rapidly. Natural gas-powered plants are more costly to operate (and cheaper to construct) but more flexible. The demands are generally fulfilled by deploying the most affordable and expensive plant before moving to more costly and flexible plants when needed.
For a particular series of experiments, researchers analyzed the power system that was like the one that serves the majority of Texas. The results below demonstrate how PV generation impacts the system’s demand during an average summer day. In every diagram, yellow areas represent demand that is met through PV generation, and areas of brown represent “net demand,” that is, demands that must be fulfilled through other energy sources. From left to right, diagrams illustrate the increasing penetration of PV. At first, PV production decreases demand at midday. When the PV energy share is 58%, solar energy production reduces the net need to the point that once the sun goes down, other generators have to go from low output to high within a short time. Because low-cost coal and nuclear plants can only ramp up quickly and are more costly, gas-fired plants will be required to take over the task.
Demand changes when PV penetration increases.
These diagrams demonstrate how PV generation influences the amount of demand that has to be fulfilled by other generating units during a hot summer day in a similar power system to Texas. Yellow areas are the demand that is met by PV generation. The brown areas represent “net demand” that must be satisfied by other power stations. If PV utilization is lower, the net demand lowers at midday. As the PV energy share increases, the net market will be down during the sunniest portion of the day. Demand will increase rapidly after sunset–a fast change that can only be managed by costly gas-fired power plants. Incredibly, as PV penetration increases and the peak of net demand fluctuates in the course of time but does not decrease significantly. In the end, meeting the height of the net market requires the exact capacity not generated by PV in every instance. However, that capacity will be utilized less when PV generation increases.
This change will have a significant effect on prices in the market for wholesale electric power. Every owner who puts an amount of electricity into the power system for bulk at the same time is compensated the same amount – the price of producing electricity at the most recent plant switched on and, thus, the most costly. As PVs become operational and expensive gas-fired power plants go offline, they close, and the cost paid to all users decreases. When the sun goes down, and PV production ceases abruptly, the gas-fired plants turn back on, and the cost rises dramatically.
In the end, whenever PV systems are in operation, and penetrations of PV are high, costs are lower. When they stop operating the system, prices rise. People who own PV systems are rewarded with low expenses and rarely the premium. Furthermore, their reimbursement decreases when more solar power is generated, as evident by the blue curve’s downward slope.
The impact of solar PV on the prices generators pay
These curves represent average prices per day on the wholesale market when the proportion of solar energy increases to 36% of the total peak demand. The red curve represents the market prices as averages–the price viewed by a generator operating continuously constantly. The blue curve depicts the price perceived by owners of PV systems. The market average doesn’t change dramatically with the increase in PV utilization because PV systems cut prices when operating and raise prices when they’re not. However, the cost paid to PV owners decreases significantly. Once PV systems reach a certain level of penetration, any additional investment in PV systems won’t longer yield a profit.
In the current situation, as more PV systems become operational and solar owners are reimbursed, the amount they pay will decrease to the point where investing in solar isn’t economically viable at the current market price. “So people may think that if solar power becomes very inexpensive, then everything will become solar,” says Perez-Arriaga. “But we’ve found that this isn’t the case. There’s a limit on solar penetration following which investing in additional solar isn’t economically feasible.”
But, if targets and incentives are established for specific levels of penetration into solar in the decades ahead, The PV investment will be continued, and the power system, in general, will be able to adapt. If there is no storage of energy and storage, the power plants that accompany solar will, in the majority, be gas-powered systems that can respond to rapid shifts in demand. Conventional nuclear and coal plants will likely lose their significance if new modern, less flexible models of these technologies are created and implemented (along with carbon storage and capture for coal-fired plants). If large subsidies are given to PV generators or PV costs, decrease significantly, traditional nuclear and coal power plants will be demolished to the extent that gas plants that are more flexible will be needed to fill the gap, resulting in an alternative generator mix well-suited to coexist with solar.
One effective way to reduce operational and cost issues associated with PVs installed on large power systems – such as those on distribution networks- is to add energy storage. Technology that can provide numerous hours of storage — such as grid-scale batteries or hydroelectric plants with large reservoirs will enhance solar PV’s value. “Storage helps solar PVs have more value because it is able to bring solar-generated electricity to times when sunshine is not there, so to times when prices are high,” Perez-Arriaga explains.
The illustration below shows that storage makes investment in PV generation more profitable regardless of solar penetration. Also, in general, the more storage capability, the more the pressure to increase revenues paid to the owners.
The trade-off of solar PV penetration PV earnings, as well as storage capacity
This graph shows the results of a simulation of what happens to a Texas-style power source with three different variables being changed The penetration of PV as a percentage of demand peak, the amount of income per watt of installed power that PV system owners see systems, and the storage capacity in the system. Without storage, when PV penetration rises, the owners of PV systems earn less. At every stage in solar PV penetration, storage boosts this income. In general, the more storage that is added, the more dramatic the upward shift.
Energy storage, therefore, plays a vital role in providing that prospective buyers receive financial rewards for PV systems so that the proportion of generation generated by PVs will increase without serious consequences regarding operations and economics. Research results show that the development of low-cost energy storage can be a major factor in the effective implementation of solar power on the scale required to tackle the effects of climate change in the coming years.