Increasing the use of grid-flexibility options (improved grid management, demand response, and energy storage) could enable 25% or higher penetration of PV at low costs (see Denholm et al. 2016). Considering the large-scale integration of solar into electric-power systems complicates the calculation of the value of solar. In fact a comprehensive examination reveals that the value of solar technologies—or any other power-system technology or operating strategy—can only be understood in the context of the generation system as a whole. This is well illustrated by analysis of curtailment at high PV penetrations within the bulk power and transmission systems. As the deployment of PV increases, it is possible that during some sunny midday periods due to limited flexibility of conventional generators, system operators would need to reduce (curtail) PV output in order to maintain the crucial balance between electric supply and demand. As a result, PV’s value and cost competitiveness would degrade. For example, for utility-scale PV with a baseline SunShot LCOE of 6¢/kWh, increasing the annual energy demand met by solar energy from 10% to 20% would increase the marginal LCOE of PV from 6¢/kWh to almost 11¢/kWh in a California grid system with limited flexibility. However, this loss of value could be stemmed by increasing system flexibility via enhanced control of variable-generation resources, added energy storage, and the ability to motivate more electricity consumers to shift consumption to lower-demand periods. The combination of these measures would minimize solar curtailment and keep PV cost-competitive at penetrations at least as high as 25%. Efficient deployment of the grid-flexibility options needed to maintain solar’s value will require various innovations, from the development of communication, control, and energy storage technologies to the implementation of new market rules and operating procedures.

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