IER Publishes “The Solar Value Cliff: The Diminishing Value of Solar Power”

WASHINGTON – The popular media is replete with articles heralding the falling costs of solar power. But while solar’s costs may be going down, so too is its value to the electricity grid. Today, as the nation anticipates its first total solar eclipse in nearly 100 years, the Institute for Energy Research released a paper detailing this phenomenon, which it calls the solar value cliff.

The Solar Value Cliff: The Diminishing Value of Solar Power chronicles the following:

• Solar’s intermittent nature results in a lack of dispatchability
• Countries that have more developed solar sectors than the United States—such as Spain and Italy—have seen drastic falls in solar investment
• At low penetration levels into the electricity mix, solar can reduce stress on electricity systems—but that does not hold true as penetration levels increase
• Peak solar generation occurs early in the afternoon while peak demand occurs around twilight; at high penetration levels, this presents system operators with the challenging “duck curve” scenario
• The duck curve solar generation creates amounts to an imposed cost
• When photovoltaic (PV) solar reaches a 6% market share, the capacity value of marginal PV capacity falls to zero

IER President Thomas Pyle issued the following statement:

“As the utility sector prepares for the short-term impact of a solar eclipse, a much larger problem looms for solar advocates—the diminishing value of  intermittent solar as a reliable source of electricity. This new paper, from the Institute for Energy Research, evaluates the constraints and shortcomings of solar energy today.

“Public discourse has hailed solar’s falling costs as of late, but this paper shows that solar’s value to the grid is also falling. The crux of the issue is that solar remains an intermittent electricity resource. Though it can have a useful role on an electrical grid as a supplementary source of energy, at high penetration levels solar energy actually does more harm than good.

“What policymakers need to realize—both federally and at the state level—is that subsidizing solar energy through efforts like tax incentives and net metering makes no sense. More solar penetration in places like California will lead to an outcome no one wants: a less reliable electricity grid.”

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