Photovoltaic Capacity Valuation Methods

As utilities work to meet electricity demand, especially during peak summer days, examining the relationship between demand and solar photovoltaic (PV) output can be of significant value to the utility industry. Over the years, energy researchers have developed different statistical methods for calculating this relationship. However, there is no consensus across the utility or solar industries on a statistical method for calculating the capacity value of PV or its practical use in electricity markets and utility planning.

The new report, Photovoltaic Capacity Valuation Methods, released by the Solar Electric Power Association (SEPA) and funded in part by the U.S. Department of Energy’s Solar America Initiative, examines the variety of capacity calculation methods in use and could help lay the foundation for building consensus within the solar industry, electric utility and research communities.

The report catalogues the different methods in existence and provides case studies to examine their relationship to one another at three locations across the United States: Nevada, New York and Oregon. The more statistically advanced methods at a 5% PV penetration show a capacity value between 60-80% in Nevada, 40-60% in New York and 10-25% in Oregon.

“As the PV industry continues to grow rapidly in the United States, integrating renewable technologies into the utility grid management and economic valuation process is an important step in recognizing the value-added benefits that PV can contribute,” said Mike Taylor, SEPA’s director of research.

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