Implications of Future Price Trends and Interannual Resource Uncertainty on Firm Solar Power Delivery With Photovoltaic Overbuilding and Battery Storage

Abstract

Generation from solar is inherently variable. Through a strategic combination of excessive capacity expansion (i.e., overbuilding) and battery storage, the variable solar generation can be cost-effectively firmed up, in that, it is able to meet the required generation target with absolute certainty. Firming up solar generation implies additional cost, which can be quantified through the firm kWh premium. This paper proposes a new model for the optimization of firm kWh premium through either a mixed-integer linear program or a bilinear program, depending on whether a generic or detailed battery model is used. The (bi)linear-program formulation greatly reduces the complexity of the original iterative approach. Additionally, since the firm kWh premium is a function of photovoltaic and battery prices, we show how future price change can affect the economics of firm power delivery and whether true grid parity can be eventually achieved. Lastly, the sensitivity of the firm kWh premium to photovoltaic modeling uncertainty and inter-annual solar resource uncertainty is analyzed.