A pathway for firm and dispatchable solar/wind supply through generation and markets splitting

The current mainstream strategy to allow a high share of variable renewable energy feed-in is mainly aimed at enabling new flexibility resources, but at high penetration, these resources are unlikely to be sufficient. On the contrary, the firmness and dispatchability of solar/wind could reduce/eliminate any demand for additional flexibility. In this work, we showed that solar/wind facilities can produce both variable/intermittent and baseload/dispatchable 24/365 energy by installing battery energy storage, grid forming inverters and suitable power plant controller. Then, we propose a new market design more suitable for this generation splitting approach. Using Italy as a case study, we have shown through energy simulations and cost optimization/analysis that the proposed market reform, combined with a firm energy feed-in tariff (always below 100 €/MWh), would make it profitable to reduce variable energy feed-in from large PV/wind power plants and related induced flexibility requirements by 20 %–30 %–40 %, in 2024–2030–2050. This flexibility reduction increases to 50 %–60 %–70 % dealing with the joint generation of an optimal mix of PV/wind farms. In addition, in 2050, for PV and the optimal mix of solar/wind systems, incentives below 100 €/MWh will push producers to generate only dispatchable energy. We also showed that our approach could solve or mitigate the significant misalignments between the current market structure and the techno-economic characteristics of renewables: wholesale market price volatility and cannibalization, growth of balancing prices and system-charges required to increase grid hosting capacity and adequacy.