Market Implications on Grid Connection Sizing for Photovoltaic Systems

Abstract

Market simulations conducted by Swissgrid for 2040 show a correlation between solar irradiation and the marginal costs of the price-setting power plants. This paper utilises results from a fundamental power market model simulation to assess the energy losses and the financial value of solar energy due to curtailment as a function of PV production capacity for various PV systems. Two reference scenarios were considered, in which solar energy accounts for 52% and 55% of the Swiss production mix. However, the simulated market can only absorb 85% and 77% of the annual solar energy production, respectively. Assuming excess production is curtailed, the study calculates the amount of energy and financial income lost due to market curtailment. Additionally, further losses resulting from limited grid connection capacity are analysed. The results show that the top 60% of grid-injected power, particularly in combination with self-consumption, represents less than 3% of a PV system’s market-priced financial revenue. Thus, with only 40% of a PV system’s capacity, 97% of its market value can still be realised.