Abstract
An Indian electricity system with very high shares of solar photovoltaics seems to be a plausible future given the ever-falling solar photovoltaic (PV) costs, recent Indian auction prices, and governmental support schemes. However, the variability of solar PV electricity, i.e., the seasonal, daily, and other weather-induced variations, could create an economic barrier. In this paper, we analyzed a strategy to overcome this barrier with demand-side management (DSM) by lending flexibility to the rapidly increasing electricity demand for air conditioning through either precooling or chilled water storage. With an open-source power sector model, we estimated the endogenous investments into and the hourly dispatching of these demand-side options for a broad range of potential PV shares in the Indian power system in 2040. We found that both options reduce the challenges of variability by shifting electricity demand from the evening peak to midday, thereby reducing the temporal mismatch of demand and solar PV supply profiles. This increases the economic value of solar PV, especially at shares above 40%, the level at which the economic value roughly doubles through demand flexibility. Consequently, DSM increases the competitive and cost-optimal solar PV generation share from 33–45% (without DSM) to ~45–60% (with DSM). These insights are transferable to most countries with high solar irradiation in warm climate zones, which amounts to a major share of future electricity demand. This suggests that technologies, which give flexibility to air conditioning demand, can be an important contribution toward enabling a solar-centered global electricity supply.
Highlights
Several drivers make the transition of the Indian electricity system toward high shares of solar photovoltaics a plausible future: (i) The falling solar PV capacity costs as reflected in recentIndian renewable electricity auction prices (37 USD per MWh [1]), (ii) government ambitions to ramp up renewable energy generation capacity to 500 GW by 2030 from 175 GW planned by 2022 [2], and (iii) the potential future role indicated by scenario results from global and national energy-economic models [3,4,5,6]
In the noDSM scenario (Figure 2), we estimated that the value of solar (VOS) would decline from ~90 USD/MWh to less than 10 USD/MWh as the solar PV share increased from 1% to 60%
Managing electricity demand from air conditioners with precooling or chilled water storage reduces the impacts of solar PV variability and benefits the further adoption of solar PV generation
Summary
Indian renewable electricity auction prices (37 USD per MWh [1]), (ii) government ambitions to ramp up renewable energy generation capacity to 500 GW by 2030 from 175 GW planned by 2022 [2], and (iii) the potential future role indicated by scenario results from global and national energy-economic models [3,4,5,6]. A potential barrier to the transition to such a sustainable future are challenges related to the variability of solar PV generation [7], i.e., the seasonal, daily, and weather-induced variation of solar PV output. These physical and technical properties translate into mostly adverse economic impacts. The decrease in economic value translates to a decrease of the average price paid for electricity produced by a PV plant— called PV market value or value of solar (VOS)
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