Abstract
This study aims at introducing a new metric to evaluate the production costs of photovoltaic plants that includes the impacts of adding them in the existing energy system. In other words, the levelized cost of electricity concept is enlarged to incorporate the so‐called integration costs. They consider the costs of reinforcing the grid infrastructure to accept the increase of variable renewable sources production and the effects on the operating conditions of the existing fossil fuel power plants. These costs are applied to the utility‐scale photovoltaic plants to analyse how their market parity and profitability would change in the future if a more systematic approach is used to evaluate their production costs. Moreover, a bottom‐up energy system model performing an operational optimization is introduced and coupled with a genetic algorithm to perform the expansion capacity optimization. This model is used to study the effects on the utility‐scale photovoltaic plants' dispatchability if the integration costs are included. The Italian energy system and photovoltaic market projected to the year 2030 are taken as reference. The results of the market parity highlight that its achievement will not be compromised when the integration costs are considered, mainly thanks to the strong decrease of the investment costs expected in the future years. The results of the optimization underline that the future role of photovoltaic plants in the energy mix with low CO2 emissions will not be significantly affected, even when these additional costs are applied as annual costs.