Study documents impacts of large-scale entry of rooftop solar panels on competition

Fossil-fuel plants are increasingly being forced to stop and start production in response to changes in output from renewables. In a new study, researchers developed a dynamic competitive benchmark that accounts for start-up costs and other unit-level operating constraints. They apply their framework to Western Australia, a setting where rooftop solar capacity more than doubled between 2014 to 2018 to world-leading rooftop solar penetration rates. The study found that the large-scale expansion of rooftop solar capacity can lead to increases in the collective profitability of fossil fuel plants because competition softens at sunset--- plants displaced by solar during the day must incur start-up costs to compete in the evening.