 Rethinking solar PV contracts in a world of increasing curtailment riskEric O'Shaughnessy, Jesse Cruce and Kaifeng Xu Energy Economics, 2021, vol. 98, issue C Abstract: Curtailment of solar photovoltaics (PV) could increase significantly as PV composes greater shares of grid capacity. Curtailment risk—the possibility that future curtailment levels exceed projections—poses a challenge to PV project economics. PV industry stakeholders have begun to develop new contract structures that may address curtailment risk more optimally than conventional structures. Using a simplified theoretical framework and modeled results, we analyze PV project economics in the context of increasing curtailment risk under alternative contract structures with fixed and time-of-delivery payments. We show that both alternative structures tend to shift curtailment risk from generators to electricity buyers. Electricity buyers—particularly utilities—may be willing to bear that additional risk in order to reap higher and more diverse project values facilitated by fixed-payment and time-of-delivery contracts. Our results suggest that these alternative structures provide new ways to redistribute curtailment risk in the context of increasing PV curtailment. Keywords: Curtailment; Contract structures; Contract risk; Solar (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:98:y:2021:i:c:s0140988321001699 DOI: 10.1016/j.eneco.2021.105264 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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