Theoretical Economic Potential of the Spanisch Premium Tariff for Solar Thermal Power Plants

Abstract

The Spanish Royal Decree 661/2007 for the regulation of renewable energy allows the plant operators - beside a flat-rate price - to participate directly on the electricity market. This option is called the premium tariff (PT). The motivation of the PT is that the plant operators of renewable energies should act more and more like operators of conventional plants. This means that they sell their electricity at the electricity stock exchange or in bilateral contracts. As a normal market participant, the operator needs to place his bids in advance on the day-ahead market and is obliged to fulfill his bids. Deviations between fed-in energy and contracted energy lead to contract fines reducing the daily profit. The levelized electricity costs of renewables are significantly higher than the market electricity price; therefore the operator gets a premium per kWh additionally. In sum the PT has the potential to exceed the flat-rate price. In order to participate economically in the PT a thermal storage is needed. It allows shifting the harvested energy over the time axis towards high price times and increases flexibility for fulfilling the production schedule. The operation strategy of the storage needs therefore to be based on forecast: price and weather forecast, respectively. The paper will present the theoretical potentials of the premium tariff in comparison to the flat feed-in tariff. The Andasol-1 power plant with 50 MW of electric power serves a reference plant. The influence of the storage size on the yearly revenue is assessed.