The value of solar forecasts and the cost of their errors: A review

Despite the advances in solar forecasting methods, and their ever-increasing accuracy, little is known about their value for real applications, e.g., bidding in the electricity market, power system operations, and household electricity bill reduction. This work comprehensively reviews the value of solar forecasts and the cost of their errors across the different applications available in the literature. Most works analysed the economics of solar forecast at the transmission level, either from the electricity market perspective or the system operations perspective. When compared with the levelised cost of electricity of photovoltaic (PV) systems, the value of solar forecasts and the cost of their errors are considerable. Recommendations on how to minimise and adapt to solar uncertainty and variability are also discussed. The measures will not only help mitigate the cost of forecast errors but also enable better integration of PV and other variable generation. Different system/market operators and regulators can consider the different suggestions based on their unique circumstances.