• search hit 10 of 55
Back to Result List

The Market Value of Solar Power: Is Photovoltaics Cost-Competitive?

  • 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.

Download full text files

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Metadaten
Document Type:Article
Language:English
Author(s):Lion HirthORCiD
Parent Title (English):IET Renewable Power Generation
ISSN:1752-1416
Publication year:2015
Publishing Institution:Hertie School
First Page:37
Last Page:45
DOI:https://doi.org/10.1049/iet-rpg.2014.0101
Release Date:2017/07/24
Tag:photovoltaic power systems; power generation economics; power grids; power markets; pricing; solar power stations
Volume:9
Issue:1
Hertie School Research:Centre for Sustainability
Licence of document (German):Metadaten (öffentlich), post-print
Verstanden ✔
Diese Webseite verwendet technisch erforderliche Session-Cookies. Durch die weitere Nutzung der Webseite stimmen Sie diesem zu. Unsere Datenschutzerklärung finden Sie hier.