Grid-connected photovoltaic power plants: The effect on the electricity market equilibrium

Grid-connected photovoltaic (PV) power plants and distributed PV system installations are becoming a reality. The uptake of such technology is expected to accelerate during the next decade especially in regions such as Southern Europe due to the presence of high solar irradiance and the continuous pressure for the implementation of numerous renewable energy generation technologies. In the tight of the above, the effect of such systems on the electricity market equilibrium needs to be investigated. In this paper, a primal-dual nonlinear interior point algorithm, formulated using an AC network model, for determining the linear Supply Function Equilibrium (SFE) of bid-based pool electricity markets is used, in order to provide insights of the impact of the solar PV power generation on the electricity market equilibrium. Numerical results demonstrate that there is a significant effect on the market outcome due to the installation of large solar generation plants on the grid. The presence of solar power generation affects the bidding strategies of the generating firms with direct impact on the nodal prices and profits.