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California is making so much solar energy that large commercial operators
are increasingly forced to stop production, raising questions about the
stateÆs costly plan to shift entirely to carbon-free sources of
electricity.
In the last 12 months, CaliforniaÆs solar farms have curtailed production
of more than 3 million megawatt hours of solar energy, either on the
orders of the stateÆs grid operator or because prices had plummeted
because of the glut, according to an analysis of data by The Times.
ThatÆs enough to power 518,000 California homes for a year, based on
average electricity usage.
The amount of curtailed solar power has more than doubled from 1.5 million megawatt hours in 2021, state records show, and is up eight times from
levels in 2017.
The waste would have been even larger if California had not paid utilities
in other states to take the excess solar energy, documents from the
stateÆs grid operator show. That means green energy paid for by California electricity customers is sent away, lowering bills for residents of other states.
ArizonaÆs 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.
Also reaping profits are electricity traders, including banks and hedge
funds.
The increasing oversupply of solar power has created a situation where
energy traders can buy the excess at prices so low they become negative,
said energy consultant Gary Ackerman, the former executive director of the Western Power Trading Forum. That means the solar plant is paying the
traders to take it.
ôThis is all being underwritten by California ratepayers,ö Ackerman said.
California grid officials warned in 2017 that the curtailments were a sign
that the state was overbuilding renewables and ônot financially sound.ö
Since then the problem has grown exponentially. Once the state curtailed
solar power only on sunny mild spring days when there was little need for
air conditioning. Now solar farms must be shut down even on hot summer
days when demand is high.
Solar is the linchpin of CaliforniaÆs plan to generate all its electricity
from carbon-free sources by 2045, but some energy experts question the feasibility of the plan given the stateÆs inability to use its existing
solar capacity.
On some days, more than half the available solar power goes to waste, said Phillippe Phanivong of the California Institute for Energy and Environment located at UC Berkeley.
He calculates that the amount of power curtailed increased by 500% between
2017 and 2022 ù a rise he called ôalarming.ö During that same time, the
stateÆs renewable energy generation increased by 40%.
ôCan we even get to 100% renewable energy with this growth rate of curtailment?ö Phanivong asked.
The solar glut also means higher electricity bills for Californians, since
they are effectively paying to generate the power but not using it.
CaliforniaÆs electric rates are roughly twice the nationÆs average, with
only Hawaii having higher rates. Rates at Southern California Edison and Pacific Gas & Electric increased by 51% over the last three years.
ôRatepayers arenÆt getting the energy theyÆve paid for,ö said Ron Miller,
an energy industry consultant in Denver. He calculates that the retail
value of the solar energy thrown away in a year would be more than $1
billion.
Gov. Gavin NewsomÆs advisors and those who manage the stateÆs electric
grid say they are working to reduce the curtailments, including by
building more industrial-scale battery storage facilities that soak up the excess solar power during the day and then release it at night.
Officials in the governorÆs office declined to be interviewed, but issued
a statement saying the curtailments are often because of congestion on transmission lines, rather than a statewide oversupply of power. The state
has been spending heavily to upgrade transmission lines to ease the
congestion.
ôIt's also important to have extra energy resources available that can
help the state during periods of extreme weather and historic heatwaves
when demand is particularly high, which have happened the past few years,ö
the statement said.
The solar energy glut was one reason the California Public Utilities Commission, whose members are appointed by the governor, voted in late
2022 to slash financial incentives for residential rooftop solar panels.
Homes with rooftop solar have increased the curtailments at the industrial solar farms by decreasing electric demand, said Guillermo Bautista-
Alderete, an official with the California Independent System Operator,
which runs the stateÆs power grid.
Grid operators must match the amount of power being produced to demand to prevent the grid from overloading, he said.
Bautista-Alderete said the state has been able to reduce the amount of curtailed power by creating a broader market where power can be sent to
other states. Because other states may not need the power, California
often has to pay them to take it, he said.
Asked how much the state has paid utilities in other states to take the
excess solar, he said, ôWe donÆt track that number specifically.ö
Reports from the grid operator, which is also known as CAISO, provide
hints of which out-of-state utilities have benefited.
In 2022, the Public Service Company of New Mexico paid an average of $14
less per megawatt hour when CaliforniaÆs grid became clogged with solar, according to a CAISO report. That year, the New Mexico utility said it
saved $34 million by participating in the market California created to get
rid of its excess power.
Other utilities that benefited in 2022 from reduced prices, according to
the report, were PacifiCorp and the Bonneville Power Administration, which
both have headquarters in Portland, Ore., as well as Avista Corp., based
in Spokane, Wash., and Tacoma Power.
CAISO, a nonprofit company, is overseen by a board nominated by the
governor and confirmed by the state Senate.
The commercial solar industry contends that the expansion of storage
capacity to bank solar power will eventually eliminate the glut.
ôSuccessfully increasing storage and solar together will reduce our
reliance on natural gas power plants, helping to meet CaliforniaÆs clean
energy goals,ö said Shannon Eddy, executive director of the Large-Scale
Solar Assn., a trade group.
Eddy acknowledged that curtailments deprive Californians of cheap energy.
ôOther states do benefit, which helps reduce carbon emissions more
regionally,ö she said.
Some experts are skeptical that battery storage capacity can be expanded quickly enough to eliminate the glut.
Most industrial-sized batteries can store power for just four hours, not
long enough to last through the night. And when batteries are added to
solar facilities, the cost is twice as expensive as solar alone, said
Andrew Chien, a computer science professor at the University of Chicago.
ôThey tried all these things, there are all these programs in place, yet curtailment continues to increase,ö said Chien, who has led studies of the curtailments, including one published in January.
Economics upended
California already produces more solar than any other state. Newsom administration officials say the state must triple the rate of the
construction of industrial-scale solar installations over the next two
decades to get to a carbon-free electrical grid by 2045.
To create incentives for companies to build that much solar power, a 2018
law known as Senate Bill 100 requires utilities and locally run
electricity providers to purchase an increasing amount of renewable
energy, which then becomes part of the electrical mix delivered to
customers.
By 2030, 60% of the stateÆs electricity must be from renewable sources.
The stateÆs utilities buy most of that energy in advance at a fixed price
set by long-term contracts negotiated with the solar farms and other
renewable energy producers.
Eddy at the solar association said these contracts protect ratepayers from price hikes during times of high demand. But the contracts can also
require electric customers to pay the fixed prices even if they must stop producing because the state has too much electricity.
The Los Angeles Department of Water and Power says that many of its
contracts contain such terms.
ôCurtailed energy is energy that has already been paid for but cannot be
used,ö LADWP explained in its 2022 strategic plan, which emphasized it was trying to minimize the curtailments.
To stop the solar farms from sending energy to the grid, CAISO sometimes
calls the operator and orders it to shut down, Bautista-Alderete said.
More frequently, however, the software that operates CAISOÆs electricity
market automatically sends prices plummeting when too much energy is
flowing onto the grid, he said. The operator then decides to shut down to
avoid losing money.
In the last two years, experts say, a strange thing has happened. When
prices fall to $0 on the market, the solar farms keep producing. Some keep generating even when prices plummet to deeply negative prices, where they
then have to pay heavily to put their power on the grid.
Ackerman said energy producers are willing to pay to put their power on
the grid because they are making money elsewhere.
Among solar farms' revenues are federal tax credits. Miller, the energy industry consultant, estimated that federal taxpayers paid $54 million to subsidize the 2.6 million megawatt hours that California curtailed in the
12 months ending in October 2023.
An even bigger source of revenue for solar farms is the so-called
renewable energy credit, or REC, Ackerman and others say.
Producers of renewable energy get one REC for each megawatt hour they put
on the grid. Companies buy the RECs, allowing them to take credit for the environmental benefits of that megawatt hour of solar. A utility or an
airline can buy the RECs and then say it burned less fossil fuels than it actually consumed, a practice some criticize as greenwashing.
As California and other states have required utilities to buy more
renewable power, demand for the RECs has skyrocketed. So has their price,
from $15 to $75 a megawatt-hour in the last two years, experts say.
ôAll of a sudden there was a huge demandö for the credits, Ackerman said.
That means a solar farm can still earn a profit even when prices are
deeply negative. Last year, prices plunged to negative $145 per megawatt-
hour or below as the sun was shining, CAISO said in a recent report.
Then the sun sets. And power prices can spike to $50, $100 or far more.
This volatility is a gold mine for electricity traders.
ôAny fluctuation, any variation, theyÆre making money off that,ö Chien
said.
Traders see profit
Scores of traders buy and sell electricity on the wholesale market that
CAISO runs.
Many of the traders work for utilities trying to buy power at the lowest
price possible. But some, including banks like Citigroup and hedge funds
like Citadel, are not distributing power. They are in the market to make
money.
ôThese profits are losses to ratepayers,ö CAISO officials warned about
traders trying to collect money from grid congestion in their most recent annual report.
Consulting firms help the traders by closely tracking data on
curtailments, weather and congestion on the grid. They calculate when
prices are expected to fall and then surge.
ôPower traders need to make a living ù which means it doesnÆt make sense
for them to move power from one market to another if prices are the same,ö explained Jake Landis at Yes Energy, a consulting firm tracking
CaliforniaÆs market, in a blog post.
One popular strategy is to buy power during the day when prices are low or
even negative and then sell it as the sun sets and prices soar as solar
panels stop producing.
The traders also include those working for utilities in other states,
including Arizona Public Service, which operates a 24-hour trading floor
in Phoenix looking for CaliforniaÆs cheap or negatively priced solar
power.
Solar field construction expanding
California grid officials say that paying other statesÆ utilities to take
the excess solar power is a benefit to the environment since it can
replace electricity that would otherwise be produced by fossil fuels.
But sometimes, Arizona Public Service turns off its own solar fields to
take CaliforniaÆs excess.
ôWe may make adjustments to our generation to purchase power à at prices
that are economically beneficial to customers,ö said Yessica Del Rincon, a spokesperson for the Arizona utility.
In a 2021 report, the Newsom administration estimated California needs
another 70 gigawatts of industrial solar farms by 2045 to get to a carbon-
free electrical grid. That would require solar to be built across another
300 to 450 square miles, an area that would cover nearly half of Rhode
Island.
Some of those projects have cleared thousands of acres of pristine land in
the Mojave Desert, where it has angered local residents worried about
declining property values and environmentalists concerned about the loss
of wildlife habitat.
ôWe have this planet to save and they are throwing away power?ö said Mark Carrington, a resident of Desert Center, a town east of Joshua Tree
National Park, which has been nearly surrounded by solar projects. ôThat
can upset people.ö
https://www.latimes.com/environment/story/2024-11-24/california-has-so- much-solar-power-that-increasingly-it-goes-to-waste
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