The energy transition is in full swing. The goal is to get as much power out of renewable energy sources such as solar power as possible. On that basis, how can it make sense to curtail solar power? To produce less solar power than is potentially available at any given time might sound strange at first. But if you take a closer look, solar curtailment can be not only necessary but even profitable for large solar PV parks. We thought we’d show you why and how in our latest blog.
The rise of solar power in the Netherlands
There are a lot of large solar parks in the Netherlands. The Photovoltaic barometer 2020 shows that the Netherlands was the most active country in the European Union by population (17.3 million) for installing new solar PV in 2019, increasing its capacity by 53%, or 6.9GW. After Germany, the Netherlands also has the second-best ratio of 400Wp per inhabitant. Both these factors lead to a high supply of solar power, which can often leave the grid out of balance. When this happens, prices for solar electricity decrease immensely and even become negative. This scenario has occurred more often in the Netherlands this year than ever before. During the height of the COVID-19 crisis and associated lockdowns, more electricity was being generated by the country’s increasing number of solar PV parks than was needed. If we look to the future with the anticipated further expansion of solar systems, negative prices will probably be even more common.
The influence of subsidy
When electricity is not needed and prices become negative, either the owners of solar parks or the power purchase agreement buyer have to pay money for every MWh they produce, depending on the financing structure of the park. The majority of solar plants then still keep on producing. But why? Because of the grant, they receive for every MWh they provide. Solar parks in the Netherlands receive a subsidy called (Stimulering Duurzame Energieproductie (SDE+), which translates in English to Encouraging Sustainable Energy Production. SDE+ is set between €70-110 per MWh for 15 years, usually capped at 950 hours per year. For the SDE+ hours, a solar park will get the SDE+ price, minus a yearly correction index price. The yearly correction index differs for solar production used for own consumption compared to solar production that is delivered to the grid.
How curtailment becomes necessary
In most countries, the focus of solar parks up to now has been on maximising production. Solar curtailment has only been performed for security reasons such as maintenance or when required by distribution system operators, such as when network capacity is not sufficient to transport the total amount of electricity generated. However, the regulations of the SDE+ can become another good reason for introducing solar curtailment in the Netherlands. The rules of SDE+ state that no subsidy will be given for electricity produced after six consecutive hours when day-ahead prices are negative for installations larger than 500kW. So, unless solar parks stop production, they will be no benefit of producing electricity during those hours. This shows that there is the opportunity to implement solar curtailment during these times.
How solar plants can profit from solar curtailment
If Dutch solar plants curtail power during times of high production when no SDE+ is given, they can avoid negative day-ahead prices. Additionally, parks can bid down their production in the country’s automatic frequency restoration reserve (aFRR) market. aFRR is activated automatically to restore frequency in response to power activation signals sent by the transmission system operator Tennet. If solar parks implement curtailment during hours which are not subsidised by SDE+ via aFRR with a positive bid price, they will be compensated for the curtailment. On top of that, as solar parks are active in the day-ahead market they should also get paid for the electricity sold for that hour on the day-ahead market. Another trigger for solar curtailment can be congestion in a specific region caused by lower production or increased consumption.
The smart management of solar power, including curtailment, is the only solution for the problem of congestion.
So, while it might seem strange at first solar curtailment can be a vital and necessary tool for providing a stabilised, balanced grid. Furthermore, solar parks can even profit from curtailment by avoiding negative prices, managing congestion and using solar prices to create extra revenue.