Negative Pricing in California (surplus solar at work)

“The solar excess contributes to electricity rates in California that are the highest in the continental United States. Only Hawaii has higher electricity rates, a function of its isolation and need to import fuels for power generation.”

Has California’s enthusiasm for solar power gone too far? That question is being asked as the state is curtailing large amounts of solar generation and paying other states to take the Golden State’s solar excess.

The Los Angeles Times (November 24, 2024) reported:

In the last 12 months, California’s solar farms have curtailed production of more than 3 million megawatt hours of solar energy, either on the orders of the state’s grid operator or because prices had plummeted because of the glut, according to an analysis of data by The Times.

Data from the state’s grid operator, the California Independent System Operator (CAISO), shows that curtailments of solar generation, because the conventional market for power in the state was less than was being generated and electric storage capacity was full, have doubled compared to 2021.

In addition, the newspaper reported, electric supply is so much greater than demand in some periods that power prices have gone negative. Gary Ackerman, the former executive director of the Western Power Trading Forum, said solar generators are paying brokers to take the power. The brokers, in turn, are selling it out of state, and reaping a substantial profit. “This is all being underwritten by California ratepayers,” Ackerman said.

The CAISO warned of the issue of solar curtailments in 2017, writing, “As more renewables come onto the system, oversupply during the middle of the day, when the sun is brightest, is happening more frequently, and curtailing of solar resources is becoming a common practice.”

The system operator noted, “Curtailments can occur in three ways: economic curtailment, when the market finds a home for low-priced or negative-priced energy; self-scheduled cuts, which reduce generation from self-scheduled bids; and exceptional dispatch, when the ISO orders generators to turn down output.”

In 2017, New York Times Los Angeles correspondent Ivan Penn reported in the LA Times, “On 14 days during March, Arizona utilities got a gift from California: free solar power.

Well, actually better than free. California produced so much solar power on those days that it paid Arizona to take excess electricity its residents weren’t using to avoid overloading its own power lines. It happened on eight days in January and nine in February as well. All told, those transactions helped save Arizona electricity customers millions of dollars this year, though grid operators declined to say exactly how much. And California also has paid other states to take power.

The problem has grown substantially since 2017. Last month’s LA Times article reported, “Arizona’s largest public utility reaped $69 million in savings last year by buying from the market California created to get rid of its excess solar power. The utility returned that money to its customers as a credit on their bills.”

Analysis a year ago by the University of California, Berkeley’s Ecoblock program concluded:

From 2017 to 2022, we have seen a 546% increase in solar and wind curtailment with only a 41% increase in wholesale solar and wind energy generation. This is an alarming growth rate. If we only supply one-third of our energy needs with renewable energy, how much curtailment will we see as we get closer to 100% renewable energy? Can we even get to 100% renewable energy with this growth rate of curtailment?

The graphic illustration of California’s solar problem is seen in the famous “duck curve” that first appeared in 2013 and has grown over the years.

The Rate Problem

The solar excess contributes to electricity rates in California that are the highest in the continental United States. Only Hawaii has higher electricity rates, a function of its isolation and need to import fuels for power generation. California electricity rates are about double the national average.

According to Public Advocates Office at the California Public Utilities Commission, the average electric rate ($/kWh) at the state’s two largest investor-owned electric companies, Pacific Gas & Electric and Southern California Edison, have increased 51% in the last three years. Smaller San Diego Gas and Electric, has seen a 20% rate increase (but are the highest, at $0.383, versus $0.367 for PG&E, and $0.332 for Edison).

Nevertheless, California solar generation continues to expand. Dimension Energy, a California-based independent community solar energy developer, recently completed construction of a 44-MW solar project in Southern California Edison’s service territory, Inyokern in Kern County. According to POWER magazine, it is the “largest third-party-owned community solar project in the U.S.”

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A key to dealing with the temporal vagaries of renewable energy is electricity storage. California utilities have invested heavily in battery electric storage systems, primarily the same lithium ion technology used in electric vehicles.

Li-ion technology has its own share of limitations. The batteries are expensive, scalability is tricky, and there are safety issues, demonstrated by Li-ion battery fires such as the June conflagration in San Diego. There are promising thermal storage technologies but they have yet to gain much traction.

It’s “green” business-as-usual in California. But it is sustainable?

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