TY - JOUR A1 - Hirth, Lion T1 - The Market Value of Solar Power: Is Photovoltaics Cost-Competitive? JF - IET Renewable Power Generation N2 - This paper reviews the economics of solar power as a source of grid-connected electricity generation. It is widely acknowledged that costs of solar power have declined, but there is disagreement how its economic value should be calculated. ‘Grid parity’, comparing generation costs to the retail price, is an often used yet flawed metric for economic assessment, as it ignores grid fees, levies, and taxes. It also fails to account for the fact that electricity is more valuable at some points in time and at some locations than that at others. A better yardstick than the retail price is solar power's ‘market value’. This paper explains why, and provides empirical estimates of the solar market value from a literature review, German spot market analysis, and the numerical electricity market model EMMA. At low penetration rates (<2–5%) solar power's market value turns out to be higher than the average wholesale electricity price – mainly, because the sun tends to shine when electricity demand is high. With increasing penetration, the market value declines – the solar premium turns into a solar penalty. In Germany, the value of solar power has fallen from 133% of the average electricity price to 98% as solar penetration increased from zero to 4.7%. This value drop is steeper than wind power's value drop, because solar generation is more concentrated in time. As a consequence, large-scale solar deployment without subsidies will be more difficult to accomplish than many observers have anticipated. KW - power markets KW - pricing KW - power grids KW - solar power stations KW - photovoltaic power systems KW - power generation economics Y1 - 2015 UR - https://opus4.kobv.de/opus4-hsog/frontdoor/index/index/docId/2284 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-22844 SN - 1752-1416 VL - 9 IS - 1 SP - 37 EP - 45 ER -