By Tomás Gómez
Tomás Gómez San Román is PhD in Industrial Engineering. From 1994 to 2000, he worked as director of the Instituto de Investigación Tecnológica (IIT) of the Universidad Pontificia de Comillas ICAI, an institution where he served since 1984. Between 2000 and 2002, he was Vice-Rector for Research, Development, and Innovation at Comillas. He has also worked at the Berkeley National Laboratory’s Energy Analysis Department, in California, and served as Commissioner at the Spanish Energy Commission (CNE in Spanish).
Last fall, the MIT Energy Initiative magazine published an article gathering some of the findings contained in a study conducted by researchers of this U.S. center in collaboration with the Instituto de Investigación Tecnológica (IIT) of Universidad Pontificia Comillas ICAI-ICADE, led by Professor Ignacio Pérez Arriaga.
One of the conclusions in the study is that the development needed in solar photovoltaic energy to fight climate change in upcoming years will pose a series of significant challenges for current electricity systems. Thus, local electricity networks must adapt to carry changing power flows during midday, when photovoltaic energy is at its peak.
This means that consumers will generate energy and sell it through the same electric network, in which electricity will flow in two different ways. Therefore, there will be export power flows moving in the opposite direction they traditionally did, that is, from large generating power plants to consumers.
According to large-scale simulations with models developed by these researchers, costs for said electric networks may increase between 10 and 30 percent, with solar photovoltaic penetration rates 30 percent higher than current levels. These simulations also analyze the beneficial effect of storing energy when, in the future, this technology grows in competitiveness and its costs become lower.
For example, the combination of solar photovoltaic power and storage batteries may reduce the previously stated incrementing costs in networks by one third to a half. And what would happen with prices? This is another interesting analysis in the study regarding the impact of growing levels of electricity generation through solar photovoltaic on market prices.
Market operations are based on the economic principles of the marginalist theory: power generating units with the highest fuel cost in operation each hour are the ones that set the price for all the power delivered at the time. All the power produced and consumed each hour is paid off based on the price set by the market. Fuel cost in solar photovoltaic energy is zero, and thus, as long as there is solar generation, it will displace power plants with higher cost for fuel, typically natural gas or coal-based thermal power plants.
As a consequence, the market price will get reduced during those hours. The study demonstrated through simulation models that, as a consequence of this effect, investment in solar photovoltaic energy under market rules will cease to be profitable for investors as of certain penetration rate of this technology. For example, in a system similar to the electricity market in Texas, with 35 percent penetration rate for solar energy, the market price at the times of highest solar production levels will drop under $25 per megawatt/hour, clearly insufficient to ensure investment return with current costs for this technology.
As previously stated, in this case too, the future contribution of storage technologies can be decisive to keep on incrementing penetration rates of solar photovoltaic power in electric systems, for the purpose of having an emission-free system before 2050. The study shows that combining storage with solar photovoltaic power would significantly increase revenues obtained from selling this type of energy in the market, even considering higher penetration rates than those previously mentioned.
The challenge, in this case, would be that storage batteries continue in this lower price path. In this sense, the future also seems bright. The MIT and IIT joint study concludes that attaining a more reliable, economical, emission-free electric system will require making current networks stronger and more flexible, modifying the market’s ground rules, as well as pricing systems under which consumers make decisions when managing their energy consumption, and developing new low-cost storage technologies on a large scale that allow increasing flexibility in power generated by solar photovoltaic.