Who’s afraid of solar PV?

Capt'n Midnight

Down in Oz the amount of cheap PV energy during peak time means that peak demand for the wholesalers will be at night.

Interestingly the cost of distribution may be more than the cost of generation - remember how nuclear power would be too cheap to meter ?

http://theconversation.edu.au/whos-afraid-of-solar-pv-8987

In fact when we do this, the PV signature is blindingly obvious, especially in the states of South Australia and Queensland where PV penetration is highest. It is also showing itself in the revenues generated by electricity sold on the wholesale market.

In South Australia, midday to early afternoon demand was down over the financial year 2011-12 by about 8% on the average for the period spanning mid- 2007 through mid-2009. That contrasted with a negligible change in demand outside daylight hours.

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And it is the afternoon and early evening when the wholesale market makes its money, because that is when demand is highest. So any decline in demand in the afternoon will take much of the cream out of the market.

In the period prior to significant PV penetration, hourly revenues on the South Australian wholesale market typically peaked at 3-4 pm in the afternoon at 5 times above base revenues. By 2011-12 those peaks were gone. Even though PV generation is tailing off significantly by 4 pm, the demand reduction was still enough to reduce peak hourly revenues by almost 90% between 2007-09 and 2011-12, contributing to a 30% decline in the annual wholesale revenue.

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It will only take several more doublings in capacity, or about 18 months if recent history is any guide, to reduce midday demand to current midnight levels. That would render the midday to early afternoon period akin to the current overnight ‘off-peak’. In such a scenario, the window of opportunity for healthy margin on mains electricity supply will shrink to just a few hours during the evening peak. With that need best supplied by gas “peakers” such a scenario must be making for some anxiety amongst the managers of our base-load coal generation fleet.

In such a scenario, the cost of delivering mains power will have to rise. That is because while the distribution network needs to be scaled to the size of peak demand, it recoups investment over the total amount of electricity supplied through day and night. With solar PV biting into the daytime demand but barely shaving peak demand, the unit cost of distribution will inevitably rise. Distribution is already the major factor in retail electricity prices.

smurra3

Interesting, So the people who buy a PV system could end up costing the people who don't buy one more money.

Macha

smurra3 wrote: »

Interesting, So the people who buy a PV system could end up costing the people who don't buy one more money.

How did you come to that conclusion? If anything PV is helping cut wholesale energy prices. On the energy infrastructure costs, a lot of money has to be spent improving distribution grids anyway and distribution is a whole lot cheaper than transmission.

smurra3

Macha wrote: »

How did you come to that conclusion? If anything PV is helping cut wholesale energy prices. On the energy infrastructure costs, a lot of money has to be spent improving distribution grids anyway and distribution is a whole lot cheaper than transmission.

My understanding of the above article is that if enough people are using PV systems during peak hours (when electric companies make the most money) the income for the electric companies will be lower. The current infrastructure will still have to be maintained at the same cost as if the home PV systems weren't there. So the electric companies will have to charge more for the electricity in order to keep their profits up.
The dearer electricity won't make much of a difference to the people who have the PV systems but the people who don't have them will have to pay more.
To quote the second last line from the first post,
"With solar PV biting into the daytime demand but barely shaving peak demand, the unit cost of distribution will inevitably rise."
I'm no expert in this field and i don't know how true or false it is, i just thought that point was interesting.

Macha

smurra3 wrote: »

My understanding of the above article is that if enough people are using PV systems during peak hours (when electric companies make the most money) the income for the electric companies will be lower. The current infrastructure will still have to be maintained at the same cost as if the home PV systems weren't there. So the electric companies will have to charge more for the electricity in order to keep their profits up.
The dearer electricity won't make much of a difference to the people who have the PV systems but the people who don't have them will have to pay more.
To quote the second last line from the first post,
"With solar PV biting into the daytime demand but barely shaving peak demand, the unit cost of distribution will inevitably rise."
I'm no expert in this field and i don't know how true or false it is, i just thought that point was interesting.

The reduction in wholesale electricity prices to the point where most technologies are uneconomic is happening everywhere, including in Europe. All consumers benefit from much lower wholesale prices. To be honest, the article isn't clear whether even with the increased per unit cost of infrastructure, the final costs would be higher than a system without PV. The infrastructure costs would be a higher share of the overall cost but that is simply because fuel costs are much lower.

This begs the question of whether the current marginal price market system is the best one with more and more shares of technologies with high capital costs and next to zero marginal costs. Basically technologies like PV and wind can bid in at almost zero and still make a profit.