Divergence in merchant value together with complementary wind and solar shapes creates new opportunities for hybrid projects

Research from Cornwall Insight Australia examined the performance of wind and solar technologies against the time-of-day price shape, highlights a clear divergence in the merchant outlook for both technologies. This presents a real opportunity for collaborative and hybrid projects to maximise developers’ value.

Key findings

  • From FY19 to FY20, average prices between 7.30 AM-3 PM have dropped by 15-38%, while prices between 4.30 PM-6 PM have increased by 10-40%.
  • On average, solar delivers its peak volumes (11 AM-1 PM) entirely in the bottom quartile of prices.
  • For every settlement period between 3 PM-8 PM, wind on average delivered over 90% of its peak generation in the top quartile of prices during the day.
  • For every settlement period between 5 PM-7 PM, wind on average delivered over 90% of its peak output in the 90th percentile of price outcomes through the day.
graph showing divergence in merchant values for wind and solar

Lumi Adisa, Lead Consultant – Market Analysis and Business Development at Cornwall Insight Australia, said:

“The merchant market in New South Wales (NSW) – and all mainland states are undergoing significant change; we see a continuing trend of steeper evening peaks, and lower day troughs. Changing demand patterns due to COVID-19 restrictions and impacts are partly complicit in the extremity of this outcome. However, this trend is largely consistent with the previous two financial years (FY18 and FY19).

“These daytime price troughs, while driven by increased (rooftop/grid) solar penetration, are beginning to create a clear divergence in the merchant fortunes of both solar and wind technologies. In fact, Cornwall Insight Australia’s research shows that solar delivers its peak volumes between 11 AM-1 PM in the bottom quartile of prices. In contrast, wind on average delivers its lowest volumes in this quartile. This situation flips towards the evening. This variability in peak generation for both technologies is establishing a different outlook for the technologies, creating new opportunities for developers.

“Given the complementary shapes of the output from these technologies, it is left to be seen how many hybrid projects (with/without storage) will be developed in the announced Renewable Energy Zones (REZ) in NSW. These shapes could also create opportunities for collaborative models through which solar and wind developers can sell their output with reduced firming requirements.”