Solar Energy Data for Economic Analysis

Thinking about the changing energy resource mix and how it impacts electricity prices. In pursuit of insights, it’s helpful to think through edge cases. One is a grid powered by 100% #renewableenergy and energy storage. A recent study by the Leibniz Information Centre for Economics looks at 2 markets, Texas (ERCOT) & Germany, and explores if energy-only markets can function with a resource mix of only #wind, #solar, Demand Response (DR) and storage. Will capacity mechanisms be needed in markets after the energy transition? Can a healthy market exist with energy storage as the only firm capacity? Yes, they conclude, energy-only markets remain perfectly viable even when exclusively #windenergy, solar, DR, and #energy storage. Using cost scenarios based on 2020 data and 2050 forecasts, they find average market prices in #ERCOT are reasonable and could become lower. What happens to the merit order (the electricity supply curve of suppliers in order of their marginal cost)? The figure below shows the new merit order for ERCOT and the residual demand / energy storage utilization. The merit order looks like today’s: relatively few hours have zero prices, a vast middle section has positive prices (mostly $40-$50/MWh), and peak price periods still exist and are an essential element for fixed-cost recovery. In the new merit order, storage plays a critical role because it often sets prices on both the buy and sell sides, thus sets the market price for #electricity. Other interesting ERCOT results: ·       Changes in wind and solar costs from 2020 to 2050 would raise the optimal capacity ratio of solar to wind capacity from about 0.6 to 2.0. ·       In 2050, solar’s share of ERCOT’s power output would need to increase from 3% to 61%, while wind output would need to increase from 23% to 39%. ·       The nominal capacity ratio of storage to wind + solar is about 0.28. Some limitations of the modeling: ·       No explicit transmission infrastructure in the model (i.e., no transmission constraints). ·       Ancillary services still need to be priced separately and are not considered. ·       The duration of storage (MWh) is not accounted for, only power capacity (MW). ·       No negative pricing was allowed. Two additional thoughts: In very high renewable, energy-only markets, where fossil fuel plants are not allowed or available, average energy prices should converge on the Levelized Cost of Storage (LCOS, i.e., the cost per cycle of storage needed to cover all costs and investment returns for the life of the project). Lazard’s most recent analysis shows stand-alone storage LCOS at $124/MWh for 100 MW/ 400MWh BESS, and this needs to – and will – come down in the next decade (it’s $60/MWh and $45/MWh respectively, for solar and wind hybrids). Also, curtailment (or negative pricing) is not necessarily a market flaw - it can offset lower and fewer peak pricing events by allowing #energystorage to charge at zero cost (or less).   References in comments.

A new dataset shows financing costs that make or break renewable energy economics globally. Researchers compiled 1,429 cost-of-capital datapoints across 68 countries (2010-2022) for solar PV and wind projects. Capital costs dominate renewable economics—small rate increases disproportionately raise electricity costs compared to fossil fuels. Brazil's solar projects face 13.8% financing costs while Germany's enjoy 1.5%, making identical solar farms nearly uncompetitive in Brazil. Developing nations with strong renewable potential face prohibitive financing. India's solar projects require 9.1% returns, Kenya 9.2%, and South Africa 7.2%—all multiples of Germany's 1.5% or Denmark's 3.3%. These financing premiums can overwhelm natural resource advantages, stressing the need for international climate finance adjustment mechanisms. By Bjarne Steffen, Florian Egli, Anurag Gumber, Mak Dukan, and Paul Waidelich.

How Solar PV Market Value Declines as Capacity Grows in the Netherlands Excited to share my latest analysis on the relationship between installed solar PV capacity and its market value in the Netherlands! ☀️ Key Findings: 📉 Strong negative correlation between installed capacity and PV profile factor (the ratio of solar-weighted average price to overall day-ahead price) Linear decline rate: -2.1% per GWp of installed capacity Will it go down linearly? Or smoother? that's why i added the exp fit, since solar PV will keep on providing diminishing returns that are probably non-zero in morning and evening hours Current trajectory: At current growth rates, PV profile factor could go down to only 22% at 55 GWp installed capacity (simple exp fit) Outlier year 2022 (and a bit in 2023): Gas crisis created temporary price spikes, masking the underlying trend What This Means: As more solar comes online, the "solar duck curve" effect intensifies - solar production increasingly occurs during low-price periods, reducing its market value per MWh. This has critical implications for: - Investment decisions in new solar projects - Grid planning and storage needs - Market design and pricing mechanisms Methodology: Analyzed 7+ years of hourly EPEX day-ahead prices and NED.nl PV production data Used linear and exponential regression models to project future trends Accounted for capacity growth from 2.9 GWp (end of 2017) to projected 28.6 GWp (end of 2024), and the addition in 2025: exptected to only be 1.6 GWp The data shows that while solar will always retain some market value (asymptotic behavior), the economic case for new installations becomes increasingly challenging as capacity grows. Interactive dashboards available showing both solar and wind market value trends over time. What are your thoughts on this trend? How much will additional electricity demand make up for this? How will BESS play a role in the coming 10 years? How should we adapt our energy market design to address the declining value of variable renewables? #RenewableEnergy #SolarPV #EnergyMarkets #DataAnalysis #Netherlands #EnergyTransition #GridIntegration

💡 Most Important Economic Metrics in Solar PV Projects 1️⃣ Core Financial Performance Metrics • Levelized Cost of Energy (LCOE) - Average cost per kWh generated over the project’s lifetime. - The lower the LCOE, the more competitive the project. • Internal Rate of Return (IRR) - Discount rate that makes NPV = 0 - a key profitability metric for investors. - Utility-scale: 10–14% | C&I: 12–20% | Residential: 18–25%. • Net Present Value (NPV) - Difference between discounted inflows and outflows. - NPV > 0 → the project is financially viable. • Payback Period - Time required to recover initial investment. - Typical PV payback: 4–7 years (C&I) 💰 2️⃣ Cost Structure Metrics • CAPEX (Capital Expenditure) - Modules, inverters, BOS, land, construction. • OPEX (Operating Expenditure) - O&M, cleaning, insurance, admin. • Debt-to-Equity Ratio - Defines your financial leverage — typically 70% debt / 30% equity. • DSCR (Debt Service Coverage Ratio) - Cash available for debt service ÷ total debt service. 3️⃣ Revenue & Production Metrics • Annual Energy Yield (MWh/MWp/year) - Energy produced per installed MWp. • Performance Ratio (PR) - Actual vs. theoretical output efficiency. - Typical: 75–85%. • Capacity Utilization Factor (CUF) - Actual generation ÷ (Installed Capacity × 8760h). - Typical: 18–25%. • Tariff or PPA Price - Defines your revenue - fixed or escalating (1–2%/year common in Africa). • Policy & Market Factors - Local content requirements & incentives - Import tariffs / VAT exemptions - Grid connection costs - Currency & inflation risk - Offtaker creditworthiness - National regulations (e.g., SERA’s self-consumption framework in KSA) 💡 Pro Tip: Mastering these metrics turns a technical project into a bankable investment case.

CAISO March YTD 2025: Record Solar Energy Production! Record Solar Capacity! Record Battery Capacity! Record Curtailment! ... wait what? Figure below grabs curtailment data from here https://lnkd.in/eg6Nbqvm, energy data from https://lnkd.in/evkr5qXU, peak demand data from here https://lnkd.in/e9DcWKk and capacity data from here https://lnkd.in/gaxU2JAd Top left graphic is CAISO March 31 YTD data for renewable curtailment (which is nearly all solar), solar capacity, and battery capacity for 2017-2025. Top right graphic is the peak demand for March YTD for each year and along with the solar and battery capacity again, and two metrics, the percent of peak demand the solar capacity represents, and a little trickier one. The second one actually does the same ratio but this time lessens the solar capacity by battery* - which is the battery MW capacity divided by a ratio of solar daily output (assumed 12 hours) divided by the average hourly capacity of the battery fleet in CAISO (the EIA860m file has MWh and MW capacity information). In 2017 this was about 2 hours, in 2025 it is closer 3.4 hours. This is an effort to capture how the presence of batteries is reducing the potential for curtailment. Anyways ... Bottom left is the peak penetration of solar capacity versus curtailment for 2017 to 2021 (before there were alot of batteries). Bottom right is the curtailment again but this time also with two predictions. First one is assuming the relationship of % solar capacity of peak holds throughout (regression from the left graph). Second uses the modified battery* with the relationship from the bottom left regression. Clearly all those batteries have an impact. For CAISO in Q1s it looks like when solar installed capacity hits 45% of the peak demand batteries are needed to bend the curve (but not stop) curtailment. Understanding the relationship between solar capacity and peak demand is probably important for others as they scale solar resources.

A diversity of energy sources has been a huge benefit to California’s energy markets. In this chart I have overlapped two highly related topics onto a single slide. The data is from April 21, 2024, and is chosen as a point in time. The demand curve shows power consumption in the state of California, while the other curves show the amount of electricity generated by solar and wind. What you can see is that during the roughly 10 hours when the sun was shining, most of the state’s power was provided by solar. Also plotted on the same timescale is the average marginal price of energy, which is set by the California Independent System Operator (CAISO www.caiso.com), and is based on the bids of sellers (power generators) and buyers in a real-time wholesale electricity market. For my current purposes, marginal pricing shows the impact that solar has on the cost of energy when managed in a commoditized market. On April 21, 2024, nearly 40% of California’s energy was provided by solar, and during the day, the marginal price of energy dropped substantially, by as much as $80/MWh or about $0.07-$0.08/kWh. Added up over a ten hour period, this is a substantial reduction in the overall cost of wholesale energy. Net/net, solar is a major supplier of electricity in the state of California and it has dramatically reduced the energy costs for our state. This reinforces the fact that the most critical element in reducing wholesale energy prices is the operation of broad energy markets with a diversity of energy sources. I am also very optimistic about the development of various energy storage technologies and the impact they can make in pricing, as they can ensure a highly competitive market across 24 hours a day. 📊 Data sources: • https://lnkd.in/etYBcH8U  • https://lnkd.in/em2ByTqq  • https://lnkd.in/eqS55aQn

All electricity is equal, but some electricity is more equal than other. When it’s available matters a lot! Solar is a prime example because its generation is highly correlated. Everyone produces when the sun shines ☀️ This floods the grid during midday hours, tanks prices, and leads to what we call the cannibalization effect. Capture rates are the metric that reveal this. It’s the ratio of the average price solar producers earn to the average market price. A capture rate less than 100% means production at hours with prices lower than the market average. The graph below shows capture rates for Germany 👇 When everyone sells at the same time, the price you capture sinks. That’s exactly what’s happened in Germany over the past few years where capture rates keep decreasing 📉 The first months of 2025 are record low for capture rates. In April, solar producers got slightly over 40% the average market price for their production 💸 This is important because capture rates are vital for assessing the economic viability of solar PV projects. A declining capture rate can signal reduced profitability. At the same time, low capture rates also signal opportunities for: 🔋 Storage ⚡ Hybrid assets 📈 Smarter dispatch As markets evolve, so must producers. We can’t do much about the weather, but we can control how to respond! (Capture rates calculated by KYOS Energy Consulting)

Last week, Lazard released their annual Levelized Cost of Energy Plus (LCOE+) report which contains the latest economics on the cost competitiveness of various energy generation technologies. What stood out to me is the fact that unsubsidized solar, wind and battery energy storage systems (BESS) projects remain cost competitive with other forms of generation like conventional power plants. For developers building the next wave of renewable and BESS projects, this report provides validation—and urgency! Congress is currently deliberating whether to gradually phase out our industry's investment and production tax credits (ITCs and PTCs) or to eliminate them completely and abruptly. However, even without these critical incentives, utility-scale solar, wind and BESS will remain the lowest-cost sources of new generation in the United States. Unsubsidized LCOEs for solar are as low as $38/MWh and $37/MWh for wind projects. Solar + Storage hybrids are competitive with new combined cycle gas turbine (CCGT) power plants, especially when you factor in long lead times and rising construction costs. BESS projects are also becoming more economical, even without IRA benefits, due to: declining cell prices, technological gains in density and efficiency as well as oversupply from slower EV adoption. This makes hybrid and standalone BESS projects increasingly viable in merchant or lightly contracted structures - especially in regions with peak pricing volatility and growing capacity needs. Source: https://lnkd.in/ghPA7C-3 #Renewables #SolarPower #WindPower #EnergyStorage #LCOE #BESS #LCOE+ #Lazard2025 #GridTransformation #BatteryStorage #transmission #planning #generation #interconnection #lazard