Marginal Effect of Variation in Photovoltaic System Configuration's Generation Profiles on Price Stabilization in the Netherlands Compared with Deployment of Flexible Demand and Supply

Solar electricity is gaining market share and becoming a significant player in the electricity market. The long‐term business case effects for various utility‐scale photovoltaic (PV) configurations in their interaction with other developments in the electricity market, including battery storage and flexible assets, like electrolyzers, are investigated. For both wind and solar energy, the cost to produce one more unit of energy is very low, near zero, and therefore these renewable power plants deliver electricity at any positive price in the market. These so‐called marginal costs are much higher for fuel‐based power plants. The amount of wind and solar energy, which is offered on the electricity market, is also rather variable, literally, by nature. The impact of increased PV capacity at near‐zero marginal cost in the context of the Dutch electricity market is looked at. It is shown that growth of utility‐scale PV parks to a total capacity of 40–100 GW results in 30%–80% lower electricity prices in the next 20 years. It is also shown that variation in PV system configurations only has marginal effect on the electricity price. In contrast, large deployment of hydrogen electrolyzers (flexible demand) or local battery storage (delayed supply) increases the electricity price. The future clearing price development of the electricity market in the Netherlands is investigated in a scenario based on the National Climate Agreement, involving a significant growth of installed photovoltaic capacity and flexible assets. In the postsubsidy era, the stabilization of the electricity market (prices) with sufficient flexible assets becomes an irrevocable condition for viable renewable energy projects.