Solar Economic Modeling and Policy Analysis
Economic modeling and policy analysis, within the Systems Integration subprogram, evaluates the potential costs and benefits of high penetrations of solar energy into the electricity grid.
The activities within this area are led by the National Renewable Energy Laboratory (NREL), Sandia National Laboratories (SNL), and Lawrence Berkeley National Laboratory.
Economic Modeling Activities
Within the Systems Integration subprogram, the objective of economic modeling is to provide a common framework for modeling and evaluating all solar technologies. This evaluation entails the cost, financing, and performance modeling of photovoltaics (PV) systems, concentrating solar power (CSP), and other renewable technologies.
NREL, in conjunction with SNL, developed the Solar Advisor Model (SAM) in 2006. SAM evaluates residential to utility-scale financing and various technology-specific cost models for solar technologies. In 2008, a new version of SAM was released.
SAM allows users to investigate the impact of cost and performance parameters on solar power systems. The impacts evaluated include system output, peak and annual system efficiency, levelized cost of energy, and system capital and operating and management costs.
SAM also includes PV component performance databases. The SNL and California Energy Commission (CEC) module and inverter performance models include 421 modules for the SNL model, 128 modules for the CEC model, and 369 inverters. Performance parameters for the inverter database are derived from test data published by the CEC.
Another tool is PVWatts, which calculates solar energy produced by a grid-connected PV system. PVWatts is intended to help nonexperts quickly obtain performance estimates for grid-connected PV systems within the United States and its territories. A simple version of PVWatts that uses a graphical interface is the In My Backyard tool. It estimates how much electricity you can produce with solar and wind power in your backyard.
Market, Value, and Policy Analysis Activities
Three broad types of analysis, coupled with modeling tools, are conducted within the economic policy analysis activities and are summarized below:
- Market analysis—analyzing existing and emerging markets, cost, and performance trends
- Value analysis—developing methods and tools for improving the quantification of the benefits and costs of distributed PV
- Policy analysis—analyzing reliability, security, and time-of-use value of PV, and the potential policy initiatives and proposals at the federal and state levels.
The market, value, and policy analysis activities rely on two main technical approaches. The first approach is to improve existing models and develop new tools that can be used to build long-term market-penetration projections for solar technologies. The emphasis has been on using existing models, such as the Energy Information Administration National Energy Modeling System and MARKAL, to conduct analyses. Examining the structure of various models allows modelors to receive feedback on how to improve the representation of solar technologies in existing models. New models are developed, such as the Solar Deployment Systems (SolarDS) market penetration model, which will help meet the needs of the solar community more broadly.
The second approach is to use a range of policy analysis tools and techniques to evaluate factors that impact the value of PV technologies in a variety of markets. The goal is to use analytical tools to quantify how changing policies, rate structures, system designs, and other factors have impacted or will impact the value of solar technologies to consumers, utilities, governments, and others.
Future economic modeling and policy analysis activities include working with the Office of Electricity to quantify potential benefits of energy storage in PV applications. These activities also include developing analytical tools to guide those who are developing and implementing these energy storage systems.
In addition, economic and policy analysts will work with state agencies and utilities to pilot second-generation business models that illustrate utilities owning some or all of the PV system. Such business models can help to reduce the concerns of utilities about safety, operations, and revenue associated with high penetrations of solar electricity.