Spatial and temporal variation in the value of solar power across United States electricity markets

Abstract

The cost of utility-scale photovoltaics (PV) has declined rapidly over the past decade. Yet increased renewable electricity generation, decreased natural gas prices, and deployment of emissions-control technology across the United States have led to concurrent changes in electricity prices and power system emissions rates, each of which influence the value of PV electricity. An ongoing assessment of the economic competitiveness of PV is therefore necessary as PV cost and value continue to evolve. Here, we use historical nodal electricity prices, capacity market prices, marginal power system emissions rates of CO2 and air pollutants, and weather data to model the energy, capacity, health, and climate value of PV electricity at over 10 000 locations across six U.S. Independent System Operators (ISOs) from 2010 to 2017. On the energy and capacity markets, transmission congestion in some locations and years results in PV revenues that are more than double the median across the relevant ISO. While the marginal public health benefits from avoided SO2, NOx, and PM2.5 emissions have declined over time in most ISOs, monetizing the health benefits of PV generation in 2017 would increase median PV energy revenues by 70% in MISO and NYISO and 100% in PJM. Given 2017 PV costs, electricity prices, and grid conditions, PV breaks even at 30% of modeled locations on the basis of energy, capacity, and health benefits, at 75% of modeled locations with the addition of a 50 $/ton CO2 price, and at 100% of modeled locations with a 100 $/ton CO2 price. These results suggest that PV cost decline has outpaced value decline over the past decade, such that in 2017 the net benefits of utility-scale PV outweigh the cost at the majority of modeled locations.