One of the most important aspects of the solar power revolution is how it is making daytime electricity cheaper, and thus lowering wholesale electricity prices more broadly. This becomes evident when electricity utilities project no new thermal electricity as the ‘lowest cost option‘. More evidence of this are contracts being signed today at 2.3¢/kWh, for delivery in just a few years. And this is before we note that distributed solar is saving billions in grid upgrades.
Researchers from Carnegie Mellon and the National Renewable Energy Laboratory (NREL) have come together to present a new report which puts numbers on these savings. A retrospective analysis of the market price response to distributed photovoltaic generation in California focuses on the wholesale electricity market in California governed by the California Independent System Operator (CAISO) that represents about 80% of the electricity usage in the state.
The research found that distributed PV reduced the ‘hourly mean whole electricity price’ by up to 2.9-3.2¢/kWh, 8-9%, during the peak period of 12-1 PM. This extrapolated to mean that throughout the day, utilities spent between $650-730 million less procuring electricity to provide to their customers.
The analysis looked at 15-minute solar electricity production estimates, as this is the interval that generators bid for in the day-ahead market.
The researchers looked across many system sizes and many regions of the state to make sure their data was accurately depicting a broad cross-section of distributed solar power in the state.
The end argument put forth by the authors is that not only will utility scale solar power lower the price of electricity, but so will the many gigawatts of solar power distributed on homes and businesses. This is something we in the field have always known, but now our industry has been around long enough to show it in hard numbers, based on actual data.