Finding Solar Energy’s ‘Sweet Spot’

As solar PV energy growth rates continue to rise, it is essential that we ask ourselves whether or not we are pursuing solar deployment in a prudent manner. In the last decade solar has largely been focused on pace of growth, which was extremely effective in helping to drive down cost. However, as we enter an era when solar energy is cost competitive, finding a solar deployment “sweet spot” is the next logical step — in other words, focusing not only on maximizing financial value, but also the operational and customer value.

Definitions Matter

Currently, solar energy deployment fits within two primary frames of reference. From a project development perspective, solar fits in three market segments: utility-scale, commercial/industrial, and residential. From a policy perspective, the terms central and distributed generation are more commonly employed. To move in a direction of strategic solar deployment, the relative PV system size (magnitude) and the placement of PV systems on the utility grid (location) should be incorporated. If these elements are blended together, the following classifications surface: centralized solar (CS), distributed solar (DS), and super-distributed solar (SDS). 

A Different Perspective — Sand and Rocks

Generation resources have historically been evaluated according to central station analytical models. Solar energy can be made to fit into this construct, but at the expense of deployment optimization. A helpful analogy to explain this is to consider traditional generation sources (e.g., coal, gas, nuclear) as large rocks and solar energy as sand (after all it is made from silica). To most effectively fill up a bucket with both types of resources the large rocks are added and then the remaining gaps are filled in with sand. The point is not to identify which resource is more important or a dispatch order, but rather that the rocks and sand serve different yet complimentary roles. In other words, when we try to make sand look like a rock or vice versa, we lose the value that each resource individually provides. This desire to shape sand into rock becomes apparent in conversations where solar’s limitations are emphasized rather than its strengths. “Intermittency” and “reliability” are typically cited. These are both legitimate concerns that must be resolved, but a more balanced perspective is gained by also considering solar’s advantages.  

Solar’s Advantages

  1. No fuel cost
  2. Zero emissions
  3. Most scalable and geographically deployable generation source
  4. Appealing generation option for consumers (marketable business models)

Solar’s Limitations

  1. Intermittency — Lack of consistent generation profile (especially due to cloud cover)
  2. Generation management — when generation occurs and inability to dispatch

Minimizing Limitation #1

What if intermittency could be reduced by deploying solar energy in a manner that leverages its flexibility of geographic diversity and scalability? Intermittency, especially with reference to large ramp rates caused by cloud cover, is a real concern.

Intermittency caused by cloud cover is amplified as the scale of a solar facility increases. This magnitude effect is clearly shown by the following graph that plots a 100-MW system (CS) alongside a 1-MW (DS) and 10-kW (SDS) systems.

Considering this from the perspective of a grid system operator, which generation profile would you choose? Before answering too quickly, let us not forget to include other important factors, namely cost and ease of deployment. A 1-MW system is far easier to deploy and can be done at a lower cost than a 10-kW system. The 1-MW system is also at a small enough scale to make intermittency management more palatable than a 100-MW system.

Another important factor to consider is that multiple smaller plants can work together to help “smooth” out intermittency effects. The geographic diversity realized from aggregating several PV projects together can help to naturally balance out cloud cover impacts.

This “smoothing” effect has been studied, but still requires further refinement. For instance, a “sweet spot” could be classified by identifying the appropriate number of PV systems to aggregate together, the ideal PV system size, and the minimum amount of geographic distance between the various PV systems. These types of rules of thumb could assist in further quantifying DS benefits and enhance DS deployment scenarios.

Minimizing Limitation #2

What about not being able to control solar generation? This can also be mitigated by scaling and geographic diversity. Operationally, it is harder to dispatch controllable generation (e.g., gas) to balance out 100 MW of “must take power” from one solar facility versus a hundred strategically located 1-MW solar plants. It is also helpful to consider that load levels (i.e., how much energy any individual or business instantaneously consumes) are not 100 percent predictable on a real-time basis. Essentially, the 1 MW solar plants more naturally resemble existing load level deviations, which utilities are already accustomed to managing.


The financial value gap between CS and DS projects will continue to decrease as the overall solar market volume increases and as we progress in our understanding of how to adequately monetize the operational value of DS. DS projects not only strike a balance between the operational characteristics and financial returns discussed, but are also preferable from a customer engagement perspective. CS projects are typically out of reach for the average customer since they are usually located in intentionally remote areas. SDS projects are more cumbersome to deploy and don’t carry the same magnitude of importance on a rooftop when compared to a DS-scale community solar project.

Additional work is needed to define the ideal solar deployment “sweet spot”, however indicators seem to be pointing towards DS as the preferred deployment scale. Similar to the holistic approach taken by many businesses today to pursue a triple bottom line (people, profit, planet), it is time that we move beyond a myopic view of solar energy as a financial-only transaction. When you begin to consider not only the financial implications, but also the operational and deployment characteristics, DS strikes a nice balance between fine grains of sand (SDS) and rock formations (CS).

A longer version of this article was originally published by the author on LinkedIn. This edited version of the article was republished with permission.

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Neil Placer is the Managing Member of Placer Consulting Services (PCS) LLC. Neil has an in-depth understanding and unique perspective of the energy sector, having worked for major corporations in both the solar and electric utility industry. He blends his professional experience, technical background, and strategy development expertise to provide comprehensive solutions of substance and value for his clients. PCS is an independent consulting firm that focuses on front-end strategy development to assist clients in shaping a proactive energy future. PCS niche is to bridge gaps and develop mutually beneficial business partnerships between electric utilities, corporations, governments, and distributed energy resource (DER) solutions providers.

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