Comparison of solar power plant interaction with different market structures

In recent years, many nations have invested in renewable energy in an effort to improve sustainability and to reduce CO2 emissions. At present, most renewable resources are subsidized or paid a feed-in tariff. As renewable resource construction increases, subsidies will become unsustainable. The issue then will be how these renewable energy plants would interact with the electricity market in fair competition with other suppliers. Currently, there are two major electricity market pricing schemes worldwide the Marginal Pricing (MP) scheme with Local Marginal Pricing (LMP) for congestion management (e.g. PJM), and the Pay-as-Bid scheme, with adjustment bidding for congestion management (e.g. UK market). This paper explores the effect of solar plant interaction under both of these schemes. A five-bus system was used to examine the effects of a congested transmission line. These effects exam includes the solar plant revenue, generator profit, and change in social welfare. This paper shows that a Solar Power Plant would benefit more in a MP scheme rather than PAB scheme, as the revenue is more, and also, MP encourages constructing solar plants in congested areas which will make the grid more efficient.