In regions where wind and solar make up a large share of power generation, sunny and windy days lead to a glut of electricity supply, driving down hourly power prices – especially for that same wind and solar generation. While lower prices are good for consumers, this decline in market value is not as good for energy producers and wind investors—and it could potentially limit wind and solar deployment, thus endangering the realization of power-sector decarbonization goals.
A study from Lawrence Berkeley National Laboratory looks at how market value—the value of energy and capacity in regional power markets—changed over time at 2,100 utility-scale power plants across major power markets, with data through 2019. The study concluded that—despite a decline over time—the average market values of wind and solar in 2019 were still higher than their respective average generation costs. The study also identifies ways future market, technology, cost, and deployment trends may affect the value/cost relationship and how to mitigate declining market value. The full article is available in the journal Joule.