Risk management in solar power plants with storage: a comparative study

Fernando S. Oliveira and Carlos Ruiz

International Journal of Production Research, 2025, vol. 63, issue 21, 8074-8090

Abstract: Using risk-averse stochastic programming, we study the management of solar power plants considering trading in the spot and future markets, together with storage systems and a novel weather derivative based on solar radiation. We compare the performance of two main solar-based technologies: a concentrated solar power plant with thermal storage (CSP) and a photovoltaic power plant with electrical batteries (PV). The methodological contribution is the study of the interaction between energy trading, weather derivatives and storage under risk aversion. The managerial contributions are the following. First, we analyze the interaction between optimal trading and storage. Second, we unveiled how the value of the put and call options depends on solar radiation, generation, and storage levels. Moreover, we have shown that the optimal strategy is to sell calls and buy put options and that generators with a storage system sell significantly more call options. Third, we proved that the higher the risk aversion, the more the generator sells in the futures market and the higher the number of purchased put contracts. Finally, by using numerical analysis to compare CSP and PV plants, we show that PVs are more profitable under the considered conditions and that batteries create more value.

Date: 2025
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DOI: 10.1080/00207543.2025.2510455

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