Yesterday, Zach wrote that Poland generates so much renewable power that prices go negative during peak sunlight hours. Looks like California is in a similar boat – but with potentially more perverse impacts. According to this piece from the Washington Post,
“… the state and its grid operator are grappling with a strange reality: There is so much solar on the grid that, on sunny spring days when there’s not as much demand, electricity prices go negative. Gigawatts of solar are ‘curtailed’ — essentially, thrown away. In response, California has cut back incentives for rooftop solar and slowed the pace of installing panels. But the diminishing economic returns may slow the development of solar in a state that has tried to move to renewable energy.
In 2022, the state wasted 2.4 million megawatt-hours of electricity, 95 percent of which was solar. (That’s roughly 1 percent of the state’s overall power generation in a year, or 5 percent of its solar generation.) Last year, the state did that in just the first eight months. Clyde Loutan, principal for renewable energy integration at [state grid operator] CAISO, says that the state has long been prepared for more solar on the grid. But, he added, ‘We drastically underestimated the speed at which residential solar was going to come in’ …
It has also undercut the benefits of installing rooftop solar. Since the 1990s, California has been paying owners of rooftop solar panels when they export their energy to the grid. That meant that rooftop solar owners got $0.20 to $0.30 for each kilowatt-hour of electricity that they dispatched. But a year ago, the state changed this system, known as ‘net-metering,’ and now only compensates solar panel owners for how much their power is worth to the grid. The change has sparked a huge backlash from Californians and rooftop solar companies, which say that their businesses are flagging. Indeed, Wood Mackenzie predicts that California residential solar installations in 2024 will fall by around 40 percent…
Other states, which have been slower to adopt solar, are starting to experience the same thing.”
The oversupply in residential solar power – without at-scale storage capacity – seems to pose a risk of unintended consequences. And this comes on the heels of yesterday’s EPA announcement of $7 billion in grants for expanding residential solar across the nation. I suspect that new dynamics will spill over into corporate Scope 2 assumptions before things heat up for company 2030 interim emissions reduction targets.
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