For some time, pundits have been saying that with so much variable renewable generation flooding the electric power sector, wholesale prices will plummet and go negative with increased frequency and duration.
And that is precisely what is happening with regularity in Texas with roughly 19 GW of wind, or Germany, which has roughly 80 GW of mostly wind and solar, or California, which has nearly 19 GW of solar. Denmark, of course, frequently gets more wind than its total load.
Even not-so-sunny UK now gets episodes of solar generation dwarfing its traditional heavy reliance on coal. Ditto for South Australia and Queensland or the Iberian Peninsula. China and India, both countries with massive new investments in wind and solar are also finding that they don’t have sufficient transmission capacity to deliver the rising renewable output to major load centers.
Welcome to the brave new world of plentiful, variable, zero marginal cost renewable energy, By all indications – we ain’t seen nothing yet (see Box below).
When there is more renewable generation than load, of course, prices go negative – which means that the grid operator will pay to get rid of the excess generation.
As reported in the Los Angeles Times (22 June 2017), the California Independent System Operator (CAISO) has been doing precisely that. Which means neighboring states of Arizona, Nevada and others farther away are getting paid to take up some of the excess juice when there is more solar energy on the network than can be used within California.
With an attention-grabbing title California invested heavily in solar power. Now there’s so much that other states are sometimes paid to take it, the LA Times reported:
“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 8 days in January and 9 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.”
As states like Hawaii and California, among others, move towards higher renewable targets – 50 to 100% – by 2045 – expect more such news headlines. Moreover, as described in the article on page 20, the debate about how much renewable is enough in the energy mix is heating up as states ratchet up their targets.
But beyond transmitting the excess generation elsewhere – assuming there are adequate capacity on the network to do so – retailers and distribution companies are beginning to pilot novel experiments where customer can get free electrons when they are cheap and plentiful. An example of this is offered by Sonnen, a German energy storage and management company in Australia.
The issue of what to do with the excess variable renewable generation, of course, is one that requires more fundamental, sophisticated and sustainable solutions, which can be scaled-up as the problem grows. The obvious solutions – no single one will suffice – include:
- Bigger geographical footprint to diversify the type and time of generation from various forms of renewables – many of which are uncorrelated and/or those which are controllable or dispatchable such as hydro with storage;
- More storage – a broad spectrum and diversity of which will be needed to cover a range of needs from milliseconds to hours, days, weeks or months;
- More transmission lines allowing trading with neighboring countries and states on different time zones and with different load patterns; and of course
- More flexible demand, or price responsive demand, which can follow variable generation while taking advantage of spikes and dips in prices.
All of these options, and much more, will be needed and not a day too soon.
Source: EEnergy Informa. Reproduced with permission.