Uptake of Solar under Solar subsidy

[xavier]

Hello,

I am running a model in which I am trying to vary the value of solar subsidy. In the first case I maintain 18% subsidy between start to end of horizon. I then start to vary the percentage at the end of the horizon starting with 20%, 25%, 35%, 40% to 45%. Beyond the 40%, there is no change in my results regarding electric capacity, emissions, generated electricity. The only change is the total system cost. I am sure the limit to the primary energy supply for solar is not the cause because the total installed capacity under RPS scenario in the same model is 35GW while the maximum I get under solar subsidy is 25GW. Is this normal or might there be something suspicious limiting solar uptake in the subsidy scenario? 

Xavier

[Antti-L]

As long as the technology has costs, I think it is normal that there is a limit to the extent investing into an electricity generating technology would be profitable, unless your model can export electricity in infinite amounts with the marginal revenues remaining positive. But there is no easy way to say how high that limit is. However,  electricity prices getting zero or even negative would be a clear indication of approaching such limits.

Defining a subsidy for a technology will not impose any bound for the technology as such, but it may indirectly do so if you have constrained the total amount of subsidies in the model.

[xavier]

As long as the technology has costs, I think it is normal that there is a limit to the extent investing into an electricity generating technology would be profitable, unless your model can export electricity in infinite amounts with the marginal revenues remaining positive. But there is no easy way to say how high that limit is. However,  electricity prices getting zero or even negative would be a clear indication of approaching such limits.

Defining a subsidy for a technology will not impose any bound for the technology as such, but it may indirectly do so if you have constrained the total amount of subsidies in the model.

Thank you Antti-L for the reply.