Large-scale and rooftop solar generation in the NEM: A tale of two renewables strategies

Muthe Mathias Mwampashi, Christina Nikitopoulos-Sklibosios (), Alan Rai and Otto Konstandatos

Energy Economics, 2022, vol. 115, issue C

Abstract: Solar generation has set a world record by supplying 100% of electricity demand in (a region of) Australia’s National Electricity Market. Solar output variability coupled with the impact of rooftop solar on demand as a behind-the-meter resource poses challenges to electricity price stability. Using 30-minute intraday data from 2015 to 2021, we find that, on average, large-scale and rooftop solar generation depress the level of spot prices and positively impact volatility. Further, solar generation increases electricity prices in the early morning and in the evening due to the high cost of fossil fuel generators used during off-peak solar generation periods. While large-scale solar generation typically smooths volatility, rooftop solar tends to increase it, reflecting the dominance of axis-tracking systems in the former and north-facing systems in the latter. Solar generation’s impact on electricity prices differs substantially across seasons. These results stress the need for policy adjustment to increase the correlation between solar output and electricity demand through small-scale renewable energy schemes and state-based policies, rooftop solar curtailment, dynamic feed-in tariffs, and two-sided market reform.

Keywords: Large-scale solar generation; Rooftop solar generation; Electricity spot price volatility; Merit order effect (search for similar items in EconPapers)
JEL-codes: C22 C58 Q40 Q42 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:115:y:2022:i:c:s0140988322005011

DOI: 10.1016/j.eneco.2022.106372

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