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Quantitative Analysis of the Merit Order Effect from Photovoltaic Production in Italy
M. Carton, N. Gourvitch, H. Gouzerh, G. Masson
Economic Analysis, Photovoltaic Production, Electricity Prices, Merit Order Effect, Energy Mix
Subtopic: PV Globalisation, Policies and Administrative Barriers
Event: 28th European Photovoltaic Solar Energy Conference and Exhibition
Session: 6DO.11.4
4589 - 4594
ISBN: 3-936338-33-7
Paper DOI: 10.4229/28thEUPVSEC2013-6DO.11.4
0,00 EUR
Document(s): paper, presentation


This study proposes a method to quantify the savings incurred by the end consumers in Italy over the past 7 years as a result of the decrease in electricity spot market prices observed when PV plants feed electricity into the grid. The study showed that the total electricity demand retreated by PV production is well correlated to market prices, following a stable exponential curve. Estimating such curve enables to calculate what the additional energy payments would have been had there been no PV production. Such gain, called merit order effect, varied over time. The authors have run Monte Carlo simulations on a large number of irradiation profiles and showed that the merit order effect does not depend much on the PV penetration rate but rather on the electricity demand profile, and therefore on how well it correlates with the PV production profile. The social gain expressed per MWh of PV electricity fed into the grid exceeds 100 €/MWh, and has exceeded € 2 Bn at the country scale in 2012. If that money could be captured by the government, it could be used to finance support schemes and grid infrastructure works for instance.