0000000000648661
AUTHOR
Stefano Clò
The Impact of Solar Penetration on Solar and Gas Market Value: An Application to the Italian Power Market
We assess the impact of solar penetration in the Italian wholesale electricity market on the market value of solar with respect to gas sources, measured as the ratio between the relative price they respectively earn and the average daily electricity price (value factor). We find that, on average, an increase of solar generation has a negative impact on the price earned by solar producers, thus causing a marginal departure from the grid parity condition. The relation between solar production and its market value is not constant over the years, while it depends on the degree of solar penetration. It is positive for very low levels of solar production while, as production increases, its margin…
The dark side of the sun: How solar power production affects the market value of solar and gas sources
Abstract Using daily data for the Italian wholesale day-ahead power market over the period 2008–2013, we assess the impact of solar production on the market value of solar and gas sources, defined using the concepts of value factor and unit revenues. We find that, on average, solar generation negatively affects the solar source market value, causing a departure from the grid parity condition and mining their competitiveness once public incentives are removed. This negative relation is not constant over time and becomes stronger for increasing solar penetration in the energy mix. Interestingly, the opposite is found when looking at gas. While the relation between solar production and the gas…