The Value of PV Power Forecast and the Paradox of the "Single Pricing" Scheme: The Italian Case Study

One of the major problem of photovoltaic grid integration is limiting the solar-induced imbalances since these can undermine the security and stability of the electrical system. Improving the forecast accuracy of photovoltaic generation is becoming essential to allow a massive solar penetration. In particular, improving the forecast accuracy of large solar farms' generation is important both for the producers/traders to minimize the imbalance costs and for the transmission system operators to ensure stability. In this article, we provide a benchmark for the day-ahead forecast accuracy of utility scale photovoltaic (PV) plants in 1325 locations spanning the country of Italy. We then use these benchmarked forecasts and real energy prices to compute the economic value of the forecast accuracy and accuracy improvement in the context of the Italian energy market's regulatory framework. Through this study, we further point out several important criticisms of the Italian "single pricing" system that brings paradoxical and counterproductive effects regarding the need to reduce the imbalance volumes. Finally, we propose a new market-pricing rule and innovative actions to overcome the undesired effects of the current dispatching regulations.