Solar Power’s Merit Order Effect And The Texas Electricity Market

The people of Texas face higher electricity bills and the threat of unstable energy supply again this summer due to peak power demands – issues that rooftop solar power have been proven could address.
Like many parts of Australia, temperatures in Texas skyrocket over the summer and this results in massive demand on the mains grid; primarily through the usage of air conditioners
During such times, the wholesale cost of electricity jumps dramatically due to peak power generation facilities needing to be brought online. Heat also has an impact on a fossil fuel based power plant’s operational abilities.
Electricity demand in Texas was such in the summer of 2011 that the Electric Reliability Council of Texas (ERCOT) issued six conservation alerts.
According to an article published by the Solar Energy Industries Association (SEIA), an analysis of  electricity market data from the summer of 2011 in Texas concluded that adding photovoltaic solar (solar panels) to the Texas electricity grid during that time could have saved customers an average of $155 to $281 per megawatt hour (MWh). Additionally, savings related to fuel, operations and maintenance costs could returned additional $52 per MWh benefit. 
The Brattle Group concluded these aspects would have amounted to more than $520 million in customer benefits.
Solar energy systems produce electricity during peak consumption times and in periods of heavy demand, this electricity is particularly attractive due to its low cost compared to electricity produced by peak power plants – this is called the Merit Order Effect.
“This study shows that not only can solar energy help lower costs for Texans, but that adding solar capacity helps address the state’s more urgent crisis of potential rolling blackouts during the hot summer months,” said Carrie Cullen Hitt, Vice President of State Affairs for the Solar Energy Industries Association. 
“The state’s electricity grid was pushed to the brink of failure last summer. As Texas leaders address ways to mitigate this risk and the state’s energy future, solar should be an important part of their plans.”
Closer to home, the University of Melbourne and Beyond Zero Emissions are continuing in their Merit Order Effect research, which shows that feed in tariffs in Australia are (and can continue to be) better than cost neutral due to the same effect that has been identified in the research into the Texas market.