Value chain · CLM-0311
In plain terms
As more wind or solar power is added to a grid, each additional unit of it earns a lower price on average, because it increasingly arrives when everyone else is also generating.
The claim as recorded
Hirth defines the value factor of a variable generation technology as the ratio of its output-weighted average market price to the average market price, and finds that wind's value factor falls "from 110% of the average power price to 50-80% as wind penetration increases from zero to 30% of total electricity consumption," with solar reaching "similarly low value levels... already at 15% penetration."
Scope and limits
A market-price mechanism specific to variable generators whose own output is correlated across a fleet; it does not directly establish what price a firm generator like SBSP would earn, only what a variable generator's price disadvantage looks like at various penetrations.
What it assumes
No assumptions are recorded against this claim.
Where it comes from
PSRC-07, abstract, verbatim: "We find the value of wind power to fall from 110% of the average power price to 50-80% as wind penetration increases from zero to 30% of total electricity consumption. For solar power, similarly low value levels are reached already at 15% penetration."
Related records
- Answers question
- QST-021 not published in this release
Cite this
energyaperture.com/c/clm-0311
CLM-0311, Energy Aperture, as of 2013-02.