The Economic Value of Solar Photovoltaic Electricity in the US Midwest

Abstract

Economic and environmental effectiveness of solar power is particularly dependent on local weather conditions and energy infrastructure. Study of past performance is vital to planning arrays which maximize their potential. The value of solar electricity is determined by the value of electricity power not purchased from the grid as a result of production. The daily cycle of marginal power cost fluctuations allows the average value of array production, which occurs mainly during daylight hours, to differ from a twenty-four hour energy price average. We here calculate the price of electricity offset by a recently commissioned solar array in central Illinois and find that it exceeds the average price of grid electricity by 16.2%. We also calculate the avoided capacity charge and find that it varies from almost negligible to comparable in size with the price of electricity, depending on the capacity price. The implications of these findings on future installation choices is briefly discussed.