Economic and Reliability Benefits of Large-Scale Solar Plants

Distributed and large-scale solar resources are expected to expand rapidly in some regional and utility systems over the next few years. As this growth takes place, utilities and regional planners are increasingly using economic valuation methods to determine the net costs of alternative renewable resource additions. The net cost equation is the renewable plant's contracted cost or estimated levelized cost of energy plus its transmission and integration costs, minus its energy, ancillary service, and capacity benefits. There is a large and growing research literature analyzing components of this net cost equation for solar resources on an individual project level and as components of expanding renewable portfolios. A key finding is that because of solar's production shape, there are significant changes in energy and capacity value for marginal solar additions in many regions as aggregate solar penetration increases beyond 5–10% of annual energy. To date, studies have not identified significant constraints on integration into system operations until solar penetrations reach 10–15% and even higher (with a larger renewable portfolio), especially if solar resources are sufficiently spatially distributed. However, there are indications that actual system operations may encounter integration constraints at lower penetrations. These operational limits are leading to an increasing focus on integration solutions, including storage, as a possible long-term requirement for continued solar penetration.