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

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  • Mwampashi, Muthe Mathias
  • Nikitopoulos, Christina Sklibosios
  • Rai, Alan
  • Konstandatos, Otto

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.

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  • Mwampashi, Muthe Mathias & Nikitopoulos, Christina Sklibosios & Rai, Alan & Konstandatos, Otto, 2022. "Large-scale and rooftop solar generation in the NEM: A tale of two renewables strategies," Energy Economics, Elsevier, vol. 115(C).
    • Handle: RePEc:eee:eneeco:v:115:y:2022:i:c:s0140988322005011
    DOI: 10.1016/j.eneco.2022.106372
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    More about this item

    Keywords

    Large-scale solar generation; Rooftop solar generation; Electricity spot price volatility; Merit order effect;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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