A solar panel added to Ontario, today, has a capacity value of less than 6% and the reality is if solar continues to be added peak requirement for new supply will move to winter evenings and instead of new solar’s capacity value being close to nothing it will be absolutely zero.I wrote that yesterday and, inspired by an exchange on Facebook, want to support the statement, add industrial wind to it, and argue the relevance of the statement not only to Ontario, but in California where the claim is a nuclear power plant can be closed and the output replaced with negawatts/efficiency/conservation, solar and wind.
Electricity supply is of value to a system in multiple ways. The two I examine are basically the actual watt-hours of output (I'll call this "energy value", and the ability to produce the output when demand calls for it (this I will call the "capacity value").
The diminishing value energy value of intermittent generation should not be well known. I was excited to write on the decrease three years ago, but a current work from Lion Hirth (and Simon Müller) explains well why now seems obvious:
In hours of high wind speeds, the additional supply of electricity from wind turbines depresses the price below the level it would otherwise have been. This price drop is greater, of course, when larger amounts of wind power are installed, a phenomenon that has been described as the “self cannibalization effect” (a dramatic term for the simple consequence of increased supply). As a consequence, the market value of wind power declines with its market share.This post will deal only with "capacity value".
Additional solar, and wind supply, have lower capacity value today because the operator of Ontario's electricity system, the IESO, released an updated outlook showing the capacity of solar panels connected to the IESO's system grew by 240 megawatts (MW) over the past 12 months, but the IESO expected only 14 MW of production from that capacity during the peak demand for generation. Dividing 14 by 240 gives a measurement for the capacity value, of 6%.
Less notably, but likewise moving lower, industrial wind turbine capacity increased 898 MW, with only 105 MW more output expected at peak demand. That's a capacity value of 10.4%, and as with solar, it's worth stressing those are the IESO's numbers, not mine. I'll address whether those figures are valid in a future post.
The reason for the decline is the expected hour of peak demand has moved later in a summer's day. The reason for the move is not a changing consumption patterns, but changes in the electricity supply mix. While this doesn't change the valuation story, it does require some explanation.