Through the valley: The impact of PV penetration levels on price volatility and resulting revenues for storage plants

Abstract

This study analyzes the effect of electricity generation from photovoltaic on electricity prices and revenues for storage plants. Dispatch models are applied to derive hourly prices for the market region of Austria and Germany for increasing installed capacities of photovoltaic. These prices are used to calculate potential revenues for storage systems. Results show that the effect of increased feed in from photovoltaic depends on the penetration level. For low shares of photovoltaic in total electricity generation decreasing revenues and price variances are observed because of high correlations between demand peaks and solar radiation. The minimum of revenues for storage plants is reached at around 5% PV penetration level. For higher shares revenues start to increase significantly and are expected to be higher than initial revenues for penetration levels >10%.

Considering current shares of photovoltaic in Germany and Austria (year 2016) it is estimated that the effect of photovoltaic on price variance is around the observed minimum and price spreads can be expected to rise again with higher PV penetration.

With respect to investment incentives results show that although storage options can support the integration of high shares of intermittent renewables, short term needs and consequently electricity price signals might be low.