Frequency penalties are costing some solar farms millions, but this is the market working

Getting weather forecasts wrong is costing some solar farms a significant sum of cash, a new report finds.

Solar farms paid out 32 per cent of all frequency performance payments (FPP) penalties between June last year and April this year, despite producing only 8.7 per cent of total generation on the east coast.

But this is the system working exactly as it should be, says report author Julian de Hoog, founder of solar forecasting company Solstice AI.

“It does look to me like the whole system is working as intended,” de Hoog told Renew Economy. “Even though it looks like solar is overly penalised, that is just the nature of how solar works.”

De Hoog’s data takes in the start of a new system introduced by the Australian Energy Market Operator, the FPP, which penalises generators that cause destabilising effects on the grid and reward those who stabilise it.