Solar Power In California Produces So Much Electricity That Prices Turn Negative

In California, the sun is so strong and the number of solar farms is so high, that, according to the US Energy Information Administration (EIA), electricity prices in the state have begun turning negative on the main power exchange.


Negative price:

On its website, the EIA said that following utility-scale solar farms growth by almost 50% in 2016, for a few hours on 11 March, solar made up a record 40% of the electricity sent to the grid in the California Independent System Operator’s (CAISO’s) territory.

But, according to Quartz website, negative wholesale prices do not translate into an unexpected windfall for consumers. The reason is retail prices are based on the average cost, meaning that consumers might receive somewhat cheaper electricity, not an actual payment due to prices becoming negative for a few hours.


“The large and growing amount of solar generation has occasionally driven power prices on the CAISO power exchange during late winter and early spring daylight hours to very low, and sometimes negative, prices,” the EIA said. “However, consumers in California continue to pay average retail electricity prices that are among the highest in the nation.”


In the past few years, California’s solar capacity has grown quickly. It went from less than one gigawatt (GW) in 2007, to nearly 14GW in the past few years.


Too much electricity:

During this time of year, too much electricity could be produced around the middle of the day thanks to large amounts of sunlight and the relatively low demand.

The EIA said:

“Electricity demand in California tends to peak during the summer months. However, in late winter and early spring, demand is at its annual minimum, but solar output, while not at its highest, is increasing as the days grow longer and the sun gets higher in the sky. 

“Although the sun is at a similar angle in September and October, electricity demand is still relatively high, leading to lower solar generation shares than seen in March.

“Consequently, power prices were substantially lower in March compared with other times of the year or even March of last year. 

“In March, during the hours of 8am to 2pm, system average hourly prices were frequently at or below $0 per megawatthour. 

“In contrast, average hourly prices in March 2013–15 during this time of day ranged from $14/MWh to $45/MWh. 

“Negative prices usually result when generators with high shut-down or restart costs must compete with other generators to avoid operating below equipment minimum ratings or shutting down completely.”