On 14 different days in March, California produced so much solar power that it needed to pay Arizona, Nevada and other states to take the excess electricity to avoid overloading its power lines. The phenomenon also occurred on eight days in January and nine days in February. As a result, California has ordered some of its solar plants to reduce generation. In fact, solar and wind power production was curtailed by about 3 percent in the first quarter of 2017—more than double the same period last year.[i]
California has an ever-increasing glut of power because of the state legislature’s push for renewable energy and state regulators’ push for natural gas. The California legislature has mandated that half of the state’s electricity come from renewable sources by 2030—about double what it is today. At the same time, state regulators have had utility companies build natural gas power plants to provide reliable power and back-up power to the wind and solar units. Utilities are happy to comply because constructing power plants provides new revenue. Once state regulators approve new plants or transmission lines, the cost is included in users’ electricity bills—no matter how much or how little is used. This two-track approach has created the glut and has proved costly for California electricity consumers. Electricity prices in California have increased faster than in the rest of the United States and they are over 40 percent higher than the national average.
Because no one can be sure if the sun will shine or the wind will blow, natural gas generation is needed to ensure electricity is available on demand. And when a glut exists, solar production is often reduced first if it cannot be exported because starting and stopping natural gas plants is costlier than shutting down solar plants. California has so much surplus electricity that existing power plants run, on average, at slightly less than one-third of capacity. And some plants are being shuttered earlier than planned.
While natural gas plant construction has slowed, it is unclear if and when California will be able to rely on renewable power for most or all of its needs, which many of its legislators are striving to achieve. In order to be heavily dependent on wind and solar power, battery storage technology must improve, become more reasonably priced, and store power closer to customers for use when renewable energy is not available. That breakthrough in storage power is probably decades away.
California’s Renewable Energy
In 2010, California generated about 15 percent of its central station electricity from non-hydroelectric renewable sources—mostly wind and geothermal power. Today, renewable energy generates 27 percent, with solar power accounting for 10 percent. Disbursed rooftop solar produces an additional 4 percentage points of power. The rapid expansion of solar power in California is a result of its declining cost, improved efficiencies and substantial subsidies. Southern California Edison produces or buys over 7 percent of its electricity from solar generators, Pacific Gas & Electric 13 percent and San Diego Gas & Electric 22 percent. When a glut occurs, these utilities must either export power or curtail production.
In 2015, solar and wind production was curtailed about 15 percent of the time on average during a 24-hour period. In 2016, the curtailment increased to 21 percent, and in the first few months of this year to 31 percent. Heavy rainfall increased hydroelectric power production in California this year, adding to the surplus of electricity. Either too much electricity generation or too little generation can overload the transmission system and result in power outages. Further complicating the situation, the California Independent System Operator has no control over the state’s solar rooftop installations.
Neighboring States Get Paid to Take Excess Power
If the neighboring states need excess power from California, they pay California for that power. However, if they do not need the power, California pays them to take it because they must curtail their own sources of electricity, which can cost money. In the first two months of this year, the California Independent System Operator paid to send excess power to other states seven times more often than during the same period in 2014. The phenomena of “negative pricing” occurred an average of 18 percent of all sales for the first 2 months of this year, versus about 2.5 percent during the same period in 2014. Prices as high as $25 per megawatt-hour have been paid by California for states to take the excess power.
Most “negative pricing” typically occurs for relatively short periods of time at midday when solar production is highest. In March, however, the periods of “negative pricing” lasted longer — often for six hours at a time, and once for eight hours. During the summer when electricity demand in California is 50 percent higher than in the winter, less curtailments are needed. But, if solar production continues to grow, curtailments and “negative pricing” is likely to occur more often, unless action is taken to better manage the excess electricity.
Rapid expansion of renewable power can cause unexpected problems with electric grid stability. Since too much power is destabilizing, as is too little power, excess power production must be exported or curtailed. California has found that it must pay neighboring states to take the excess power off its hands if those states need to curtail their own power to take it. While consumers in the neighboring states benefit from lower electricity bills, California consumers are paying for the utility generators that produce the power.
This is reminiscent of Denmark and Germany who have had to export heavily subsidized wind and/or solar power to other countries because too much electricity was being generated. As a result, Danish and German consumers are paying some of the highest residential electricity prices in Europe—3 times as high as in the United States—for the “benefit” of having wind and solar power generated in their country irrelevant of whether that power can be used internally.
[i] Los Angeles Times, California invested heavily in solar power. Now there’s so much that other states are sometimes paid to take it, June 22, 2017, http://www.latimes.com/projects/la-fi-electricity-solar/