PV Penetration under Market Environment and with System Constraints

Abstract

The installed capacity of PVs in the distribution grid is affected not only by network constraints, but also by the economic viability of the related investments. Depending on the market participation models, this is determined critically by the Day Ahead Market (DAM) prices. Increasing RES installations in a country usually results in a long term drop in the market prices and, as a consequence, a reduction in the income of the PVs investors and possible market cannibalization. This paper models the effect of large-scale penetration of PVs on the market prices and identifies the optimal penetration level for the viability of PV projects. The optimal penetration is highly related to the installation of new PVs and this is a parameter for the analysis. Therefore, the paper identifies different penetration costs for the different installation cost. Furthermore, the PV network hosing capacity can be increased by distribution network reinforcements. Therefore, in the paper, the investments for enhancement of the distribution grid are assessed with respect to market prices and are analyzed at the macroscopic level. Again, the analysis considers different costs for network reinforcements.