The decline in solar’s wholesale market value in California has been matched by reductions in the cost of solar, thus maintaining solar’s overall net-value proposition even in the absence of hybridization with storage. In markets outside California, costs have so far declined faster than market value, often making solar more competitive than ever before.
Berkeley Lab’s new report focuses on the historical contribution to reliability, trends in market value, and impacts on the bulk power system of solar deployed in the U.S. through the end of 2019. The scope of the analysis includes the seven organized wholesale power markets, as well as ten utilities outside of those markets. The analysis is based on high-resolution data, including historical hourly generation profiles for each individual solar plant in the U.S. larger than 1 MW, county-level aggregate profiles for smaller-scale solar installations, and nodal energy prices.
Solar Generation: Solar deployment in the California Independent System Operator (CAISO), where solar generation was equivalent to 18.7% of annual load in 2019, far exceeds the level in other ISOs. The New England Independent System Operator (ISO-NE) has the second-highest penetration, with solar generation equivalent to 4.3% of annual load in 2019. All other ISOs have annual solar generation shares at or below 2%.
Reliability Contribution: Solar’s contribution to the overall resource adequacy of the power system is measured by its “capacity credit”. While calculation methods vary across ISO/RTOs, summer capacity credits for solar in 2019 range 45-76% of a system’s nameplate capacity. Capacity credits have remained largely stable over the past years except in CAISO where solar’s capacity credit steeply declined in 2018.
Market Value: The market value of solar, defined here as the sum of the energy and capacity values, primarily varies across regions and years because of variations in average energy prices and capacity market prices. The energy value, based on the hourly solar generation and real-time power prices at pricing nodes near each solar plant, is the largest component of the market value across ISOs. In 2019, the average energy value spanned from $24/MWh in CAISO to $60/MWh in ERCOT. The capacity value of solar is based on the capacity credit of solar and the capacity price. The capacity value in 2019 was highest in the Southwest Power Pool (SPP; $25/MWh), though capacity prices there are based on estimates of bilateral capacity transactions rather than transparent organized capacity market prices, and lowest in the Midcontinent Independent System Operator (MISO; below $1/MWh).