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Clean Power solar pv production electricity costs

Published on January 12th, 2014 | by Zachary Shahan

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Solar Dropping Wholesale Electricity Prices Like A Bad Habit (Charts)



Originally published on Solar Love.

A reader recently shared some great Fraunhofer reports on renewable energy in Germany with me. One of them I had already written a pretty long article about back in November, but the second I don’t think I’d seen. It’s an extensive look at electricity prices and production data in 2013. It’s got more charts on electricity prices than I care to count. However, a few of these I thought I’d share just to make a point I haven’t made in a while.

The point is that solar PV production comes at times we need it most. When the sun is shining, we also tend to be using a lot of electricity. Historically, due to a limited amount of power capacity on the grid, that increase in demand meant an increase in the wholesale price of electricity bid on the spot market. However, when solar PV penetration really starts to get up there (as it has in Germany), that boost in midday production results in a drop in wholesale power prices — solar bids everyone down.

In the first chart below, you can see how electricity prices trend up with electricity production/demand in the middle of the day (when not much electricity is being produced from solar energy).

germany electricity prices winter

In the next three charts, you can see how solar PV production results in electricity price drops similar to those seen in the middle of the night when electricity demand is really low.

electricity prices solar

solar pv production electricity costs

solar reduces cost of electricity

For more details and analysis on this matter and others related to electricity prices in Germany, check out the full Fraunhofer report.

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About the Author

is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy for the past four years or so. Aside from his work on CleanTechnica and Planetsave, he's the Network Manager for their parent organization – Important Media – and he's the Owner/Founder of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.



  • JBecerril

    It is an interesting effect that renewables have in the utility prices. I did a graph about the current electricity prices in Mexico (in jbecerril.com), looking forward how they may change with renewables in the next years, following the patterns of Germany and some USA states.

  • Senlac

    0.05327 Distribution
    0.00986 Transition
    0.01434 Transmission
    0.00051 Renewable Energy
    0.00252 Energy Conservation
    0.07724 Generation
    0.15774 Total

    Question: above is the break down for my NSTAR bill. The two largest are Distribution .05327 and Generation .07724 = .13051 What kind of offset would solar array be credited for, one or both or all the charges. And then there is the peek verse off peek generation charge. Since solar is saving at peek, how does that get credited or valued? Peek wholesale can 4x great than off peek. Would it be 4 x .07724 (or is this price an average). Or is .07724 an average rate, of which peek might be in the teens at less than 4x.

    Last, since they are charging me for Renewable Energy and Energy Conservation, how does that fit in.

    A lot to consider.

    • Bob_Wallace

      (Peak, not peek)

      Looking at what has happened in Germany and what seems to be happening in California is that prior to solar there was a large midday peak demand and supplying that peak was often very expensive for utilities.

      End-user solar was a great gift to the web. They could offset expensive peak purchases and pay it back with much cheaper off-peak power.

      But once enough solar came on line the peak was destroyed and wholesale prices fell to late night levels. At that point utilities would be taking in low value power at noon and having to pay it back with expensive power at 8 am and 7 pm.

      • Senlac

        Nevertheless, the peak or midday solar supply has dropped prices and would appear to have benefited the Utility Industry. One would hope this would also reduce over all average costs, or conversely increase profits for the Utilities. The morning demand looks higher, are they complaining about that?

        • Matt

          I think the utilities are upset that the total demand is down, they lost their mid-day peak when coal/nuclear made it’s money in the past.

          • Bob_Wallace

            Well, if utilities have money invested in coal and nuclear plants that are no longer needed or locked into long term purchase agreements for power they no longer need then one can understand why they would be upset.

            The utility business is getting turned on its ear. Some companies and investors are going to lose money from stranded assets. Expect utilities to try to minimize their loses and hang on to profits.

            It will probably take a few years to get past this phase in the transition off fossil fuels and come up with a cost/payment plan that is fair to all.

    • Matt

      Your bill likely has fixed portions and per kwh portions. You will still pay all the fixed portions. Your solar panels will drive down the number of kwhs, so those portions drop. If I look at my electric bill from late summer I see (2307 kwh usage, wife can Not stand the heat)
      Duke
      a) Distribution-Customer charge – $6.00
      Delivery Charges
      b) Distr charge/kwh (0.25342) – 58.46
      c) Delivery riders – 37.88
      d) Generation Riders – 19.67
      Dominion Energy
      e) Supplier charge (0.0678/kwh) – 156.41

      So (a) right to be connected, (c) Flat “wires” fee, (d) is Duke charge me right to has some generate power for me. (b) is the fee to distribute the power I used, and (e) the fee from generator for power I used. Now if you live in Az then you now (or soon will have) a extra fixed fee if you add PV. Ever area bills differently. In Ohio there is not yet time of day pricing for individuals. Where you live they may or may not.

      So even I switch off my main on the power box (used no power) I would pay the first (a,c,d) $66.55. As the fixed fees raise and storage cost drop, at some point down the line going off grid starts to sound like a good idea.

  • heinbloed
  • John Clinton

    The world has to take notice,we sustain the energy needed,from the SUN….

    • heinbloed

      Tell that Robert Murdoch :)

  • Dave R

    Got any data on California wholesale prices? There’s enough solar on the California grid (~3GW utility scale, ~2GW distributed) that we should be seeing a similar effect there as well.

    • agelbert

      I would be interested in that too. California has double whammy going on in favor of solar and wind because the new surcharge on dirty energy is raising the cost of fossil fuels as the renewable energy cost goes down. Good!

      • Bob_Wallace

        Here’s one site that looked at the data.

        “During the midday hours from 2:30 to 5:30 p.m., it was true that solar power was producing from 6.77 to 8.15 percent of demand,”

        The really interesting thing about the paper is that they focus on the fact that solar doesn’t reduce demand once the Sun goes down.

        “The problem is that, in California, the peak demand for electricity comes late in the day, from 6 p.m. to 9 p.m., especially on cold winter nights such as Dec. 11. During those hours, solar energy only contributed 5.07 percent at 6:30 pm, 1.48 percent at 7:30 pm, and zero percent from 8:30 pm onward, as shown below.”

        And they criticize solar for producing only 1.6% of total electricity on a day in December.

        “During the entire 24-hour day of Dec. 11, solar energy contributed only 1.6 percent to the state power grid.”
        http://calwatchdog.com/2013/12/13/solar-power-no-help-during-cas-late-peak-winter-hours/
        This article deserves the Golden Raspberry. But it does tell us that solar is starting to impact California’s grid.

        • Dave R

          Yeah, in the winter, solar without storage is not much help for the evening peak.

          But keep in mind that California’s peak demand happens in the summer – usually between 3-4 PM and solar is still going strong then.

          • Bob_Wallace

            I dropped CaISO a note inquiring if they had any data showing solar cutting the use of gas peakers and/or cutting wholesale prices.

            With the loss of SONGS the input of solar might be disguised by the need to replace those two reactors.

        • agelbert

          Thank you.

        • Kyle Field

          Solar + EVs has me excited. I like that EVs can be made into smart grid batteries and effectively store up the sun’s (GREEN) energy then feed it back to the grid over the peak hours of the day. Seems like such a great way to maximize the benefits of solar and EVs…especially in cali. I love two-fers :)

          • Bob_Wallace

            Give wind and EVs some love as well.

            Since most EVs are going to get charged at night while parked and since EVs, on average, will need to be charged in about three hours (using a 240 vac outlet) EVs become a great dispatchable load.

            With smart charging EVs can soak up supply peaks and stop charging when supply is strained. And EVs will create a new market for late night wind production.

            This will bring a lot more wind generation to the grid and help lower peak hour electricity prices.

    • Bob_Wallace

      Not prices, but here’s today’s demand curve.

      Looks to be that we’re getting the same double peak of Germany, just not as extreme. The ‘sunny hour’ peak is destroyed with the big demand after the Sun goes off line.

      eta: Being Sunday the morning peak may be weekend-low – offices and stuff not opening in the morning.

      • Dave R

        Not too long ago the PDFs of previous demand/generation started getting updated with a “Net Load – Wind/Solar” which is pretty interesting.

        Go to http://www.caiso.com/Pages/TodaysOutlook.aspx under “Renewables Watch” for historical data.

      • Kyle Field

        LoL…”after the sun goes offline” :)

  • SecularAnimist

    The utility company alarmism about “integrating solar into the grid” was always a bit of a red herring. That may be a relevant issue if you are talking about integrating utility-scale solar power plants into the grid. But it is mostly irrelevant with regard to distributed end-user solar power, which doesn’t really have to be “integrated” into the grid. As far as the grid is concerned, it just looks like demand reduction. Which, as is becoming apparent, is what the utilities were really worried about all along.

    • http://zacharyshahan.com/ Zachary Shahan

      Well summarized.

    • RobS

      This is key, To the grid there is ZERO difference between a 2kw solar array going into the shade of clouds and a 2kw Air con unit cycling on. Similarly a PV unit starting to generate as it comes out from under cloud cover looks IDENTICAL to a load like an A/C unit cycling off. Anyone who tells you the grid cant handle both with identical levels of “disruption” is ignorant or lying.

  • Adam Devereaux

    Isn’t it incredible how solar went from a technology that could never generate an appreciable amount of power to a technology that is bad because it steals profits away from utilities and disrupts the standard revenue pattern?

    • http://zacharyshahan.com/ Zachary Shahan

      Haha, so incredible and cool. (And also from a power source that “couldn’t be integrated into the grid at more than ~5% of the power supply” :P Funny how that claim turned out. :D)

      • Matt

        People still try to use the “can’t be integrated” line. Its like living in Oz. But instead of “Ignore the man be hid the curtain” it is “Ignore those countries in Europe”

        • http://zacharyshahan.com/ Zachary Shahan

          True.

        • Stan Hlegeris

          Here in Australia life is far too much like living in Oz. We have a government which blames solar for increasing electricity prices and has just announced an enquiry into the health effects of wind turbines. If only we could click our heels together.

          • Bob_Wallace

            I don’t clicking your rubies together is the answer.

            Perhaps someone should throw a bucket of water on Tony and see if he melts….

  • Jouni Valkonen

    And soon batteries will eliminate that evening spike and little bit later also morning spike will be eliminated.

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