"Why generators are terrified of solar"
That's the title of a story in reneweconomy on the impact of solar power generation on electrical grids. It's kind of interesting to look at their figures showing the price of electricity throughout the course of the day on Germany electrical markets both 5 years ago (before) and now with greater amounts of solar energy (after).
The first graph, from 2008, shows peaking power prices rising to around €60/MWh and staying there for most of the day, with some visible peaks around noon and the early evening – the size of which would depend on the temperature and the usage.
The second graph shows a brief leap to €65/MWh around 9am, before the impact of solar PV takes hold – erasing the midday peak entirely and leaving only a smaller one in the evening. The huge bite out of day-prices is also a bite out of fossil fuel generators’ earnings and profits.
This is quite interesting for it's future implications as the price of solar panels seems to be improving steadily, but at the moment the graphs hide the impact of feed-in tariffs, paying premium rates for green energy, and how they distort the electrical markets. Typically power markets rates are set based on the marginal cost of the next unit of generation, which tends to go up at a fairly steep rate with increasing use. Thus, a small amount of solar might have a disproportionate impact. This solar also bypasses the electrical markets through Germany's feed-in tariffs - how expensive is that solar energy?
The average level of feed-in tariff was €0.0953 per kWh in 2005 (compared to an average cost of displaced energy of €0.047 kWh).
So, still fairly heavily subsidized. If the price of solar continues to decline though and energy storage continues to improve electrical markets could look quite a bit different in years to come.