In this report, which appeared in PV Tech's May 2016 Power Magazine, Amit Ronen and Josh Harmon of the GW Solar Institute analyze how the value of solar generation tends to decline as it becomes an increasingly greater share of any one region's energy mix. The article also discusses ways to mitigate solar devaluation including enhancing market signals and integration of affordable storage options.
Higher penetration rates of solar PV will result in value deflation; this has already been observed in more mature solar markets.
Unless action is taken, the reduction of solar's value to the energy grid may outpace reductions in the technology's cost, making future projects less economic.
On the demand side, real-time pricing or time-of-use pricing would help shift demand to solar's generation profile.
On the supply side, low-cost storage and larger balancing areas would help maximize solar's value.