5
   

Solar Power will change the economics of Electricity Generation

 
 
Reply Wed 22 Aug, 2012 05:46 pm
Source: http://theconversation.edu.au/whos-afraid-of-solar-pv-8987
The source has links to bigger graphs, references to other items and the author's credentials/institutional affiliation.

Reproduced roughly here so you see what you'll get:

21 August 2012, 8.18pm AEST
Who’s afraid of solar PV?
The recent take-up of domestic solar photo-voltaic (PV) panels in Australia has been quite phenomenal. Across 2010 and 2011, the installed capacity increased seven fold to about 1.4 gigawatts, doubling every 9 months.

By the end of this year we will probably have in excess of 2 gigawatts of solar PV capacity installed. All fired up at the same time it is enough to produce about 8% of the average daytime electricity demand.

https://c479107.ssl.cf2.rackcdn.com/files/14504/width668/4zjrtmm5-1345542766.jpg
Take up of solar PV in Australia in gigawatts, circles show total installed capacity while rectangles show the new capacity installed in a given year. Data from DataMarket (http://data.is/naKtrl), image by Mike Sandiford.

Of course, a characteristic of solar PV is that it doesn’t fire up for much of the time at all. With a capacity factor of about 18%, 2 gigawatts capacity would be expected to output an average of no more than 360 megawatts or about 1.5% of our average demand. At those levels you might ask if solar PV is having any impact on our demand for mains electricity.

Judging by the numbers, the answer is a definitive “yes”. In fact, so much so that it wouldn’t surprise if it is beginning to worry some utility managers.

Since solar PV production rises and falls in a characteristic pattern through the daylight hours, any substantive impact should be evident in a distinct reduction in demand for mains electricity in the middle of the day. With PV penetration having risen so dramatically since 2009, that pattern should be apparent in comparisons of demand over the last 12 months with equivalent periods prior to 2009.

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.
https://c479107.ssl.cf2.rackcdn.com/files/14506/width668/zvx28bkc-1345549796.jpg
Average demand for mains electricity in South Australia as a function of hour of day. Red line is the average for the two financial years from July 2007 to June 2009. Blue line is for financial year 2011-12. Left panel shows absolute demand, right pane shows demand changes referenced to 2007-09 averages as a percentage. Data from AEMO, figure by Mike Sandiford

In Queensland the story is very similar, although the proportional impact is lower with midday 2011-12 demand down only about 4% on 2007-09 levels.
https://c479107.ssl.cf2.rackcdn.com/files/14508/width668/dyz36hcc-1345549835.jpg
Average demand for mains electricity in Queensland as a function of hour of day. Red line is the average for the two financial years from July 2007 to June 2009. Blue line is for financial year 2011-12. Left panel shows absolute demand, right pane shows demand changes referenced to 2007-09 averages as a percentage. Data from AEMO, figure by Mike Sandiford.
Click to enlarge
Given the extent to which PV has been rolled out in the last few years, the characteristic signature of demand reduction in the middle of the day is not particularly surprising. What is more interesting is the signature of PV penetration in the wholesale electricity market.

As pointed out in this column a few weeks back, demand reduction is creating oversupply in the wholesale electricity market and causing prices to collapse.

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.
https://c479107.ssl.cf2.rackcdn.com/files/14505/width668/tsvxq9hp-1345549796.jpg
Average wholesale market revenue for mains electricity in South Australia as a function of hour of day. Red line is the average for the two financial years from July 2007 to June 2009. Blue line is for financial year 2011-12. Left panel shows absolute revenues in millions of dollars per hour. Right panel shows demand changes referenced against 2007-09 averages as a percentage. Data from AEMO, figure by Mike Sandiford.
In Queensland, 2011-12 midday revenues were down 50% on 2007-09 averages, contributing to an annual revenue fall of about 18%.
https://c479107.ssl.cf2.rackcdn.com/files/14507/width668/m8cq3423-1345549834.jpg
Average wholesale market revenue for mains electricity in Queensland as a function of hour of day. Red line is the average for the two financial years from July 2007 to June 2009. Blue line is for financial year 2011-12. Left panel shows absolute revenues in millions of dollars per hour. Right panel shows demand changes referenced to 2007-09 averages as a percentage. Data from AEMO, figure by Mike Sandiford.

Across the National Electricity Market, 2011-12 revenues were down 35%, or some $3.3 billion, on the annual $9.6 billion for the two years prior to mid-2009.

These represent massive impacts on the business of electricity. With PV being a major causal factor, things are are only likely to get worse if solar PV deployment continues at the recent frenetic pace.

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.

The problematic feedback is evident. Rising retail prices will further incentivise take up of domestic PV, which in turn drives retail prices even higher. Meanwhile, further deployment of PV helps reduce its costs making it even more attractive, and so on ad infinitum, at least until most household roofs are covered.

A potential nightmare facing the mains electricity industry has recently been acknowledged by the AGL economists Paul Simshauser and Tim Nelson in their paper “The Energy Market Death Spiral – Rethinking Customer Hardship”. In that paper the “death spiral" scenario for the Australian power industry is framed by a quote from a US study by Craig Severance.

‘The unspoken fear of all utility managers is the “Death Spiral Scenario”. In this nightmare, a utility commits to build new equipment. However, when electric rates are raised to pay for the new plant, the rate shock moves customers to cut their kWh use. The utility then raises its rates even higher – causing a further spiral as customers cut their use even more… In the final stages of that death spiral, the more affluent customers drastically cut purchases by implementing efficiency and on-site power, but the poorest customers have been unable to finance such measures…’

It is not hard to imagine how utility managers here in Australia are worrying about just how PV is going to impact their business.
  • Topic Stats
  • Top Replies
  • Link to this Topic
Type: Discussion • Score: 5 • Views: 2,687 • Replies: 8
No top replies

 
ossobuco
 
  1  
Reply Wed 22 Aug, 2012 05:58 pm
Not in the mood now, but will be back.
0 Replies
 
hingehead
 
  1  
Reply Mon 24 Feb, 2014 04:07 am
Big discussion in Oz - as more people (1 in 8 private dwellings) have solar power, demand goes down so prices, counterintuitively, go up, because the infrastructure costs of power distribution are largely the same no matter how much they are used. Current government is arguing that solar power disadvantages the poor. They can't afford solar panels, and they have to pay higher electricity prices.
roger
 
  1  
Reply Mon 24 Feb, 2014 04:10 pm
@hingehead,
In the US, hospital accounting works the same way. After all, unused beds and equipment have substantially the same costs as if they were used.
hingehead
 
  1  
Reply Mon 24 Feb, 2014 04:38 pm
@roger,
It sort of shits all over supply/demand economics doesn't it?
Romeo Fabulini
 
  1  
Reply Mon 24 Feb, 2014 04:50 pm
What happens when the suns not out on cloudy days and at night?
0 Replies
 
roger
 
  1  
Reply Mon 24 Feb, 2014 05:31 pm
@hingehead,
Yeah, kind of like dinner choices before I left home. Always two choices of entrée: take it, or leave it.
0 Replies
 
Shyam Modi
 
  -1  
Reply Thu 23 May, 2019 01:44 am
Yes, it will play a big role in bring down the electricity bill. Only the initial investment is high but in terms of long term it is worth to install setup. The cost of the setup is paid in five to six years and after that 15-20 years the consumer enjoys really paying the electric bill.
hingehead
 
  1  
Reply Thu 23 May, 2019 04:54 pm
@Shyam Modi,
Hi Shyam - you missed the point. It wasn't about individual costs for installing solar PV, it's about the cost of 'dispatchable' (my preferred word over 'baseload') power, for when the sun goes down. Batteries still don't pay for themselves.

You're right that generally a home install (when done right, and power using behaviours are adjusted) pays for itself in 5-6 years. The downside is solar cells, when you don't skimp on quality, have a lifespan of 25 years - much less if you go cheap.

The power companies won't lose out (in Australia). If only Australia hadn't privatised power supply and infrastructure - then we could seriously look at community based solutions, with everyone's solar contributing to the local battery, and AI/Tech handling load issues and pricing accordingly.
0 Replies
 
 

Related Topics

Solar Powered Trees - Question by Joe Nation
Solar Power Confusion - Question by Ceili
Solar Power Starter Kit - Discussion by maporsche
Mad Hatter - Question by dalehileman
NEW ENERGY TECHNOLOGIES - Question by farmerman
Cheap Chinese Panels Spark Solar Power Trade War - Discussion by BumbleBeeBoogie
 
  1. Forums
  2. » Solar Power will change the economics of Electricity Generation
Copyright © 2021 MadLab, LLC :: Terms of Service :: Privacy Policy :: Page generated in 0.03 seconds on 09/22/2021 at 06:29:07