Solar Economic Modeling and Policy Analysis

Solar system modeling 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.

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. The Department of Energy supports several tools that calculate photovoltaic (PV) and concentrating solar power (CSP) system performance as well as the resulting economic metrics, such as payback and the levelized cost of energy.

Systems modeling activities include:

Refining and strengthening the Solar Advisor Model (SAM)
Robustly incorporating reliability and O&M costs in SAM
Evaluating and improving solar component and system performance models, including those used in the SAM
Analyzing the impact of technology options on system performance to provide decision support to the Solar Program
Collecting systems performance data for diverse technologies in diverse climates to support model evaluation and improvement
Improving our understanding and modeling of key system data and performance factors, such as shading, PV module operating temperature, and the impact of module- and string-level maximum power point tracking
Modeling storage in solar systems
Estimating model uncertainty as a function of technology, system size, and the frequency of input data, e.g., hourly- averaged vs. subhourly.

Solar Advisor Model

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. A new version of SAM is released typically twice a year and reflects ongoing model development. 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 hundreds of models and inverters.

Photo of solar photovoltaic panels lined in four rows on a flat roof. The ledge and railing are in the background.

SAM is intended for a more advanced solar analyst and requires some time investment to get outputs, especially for more advanced features such as stochastic modeling, scripting, and financial analysis.

PVWatts

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. PVWatts is intended for a beginning level of analysis and only provides hourly, monthly, and annual performance data.

In My Backyard

The In My Back Yard (IMBY) provides performance data integrated with high-level cost and incentive data to calculate the payback period for a solar system. IMBY interacts with Google Maps to estimate how much electricity a PV system located on a specific house or business can produce. This tool is intended for a nonexpert audience with more interest in economics.

Industry Partners

The Solar Program is collaborating with industry partners SunPower, BP Solar, First Solar, and Hudson Clean Energy Partners on a standardized process to evaluate and improve PV performance models.

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 modelers 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 Delivery and Energy Reliability 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.