California solar spike leads to negative CAISO real-time prices in March
There is more evidence that the rapid growth of renewable energy is causing upheavals in organized power markets.
Power prices in CAISO plummeted last month, at times going negative, compared with average prices from $14/MWh to $45/MWh during the same time periods in recent years.
EIA explains the negative prices materialize when generators with high shut-down or restart costs are forced to compete with other generators to avoid operating below equipment minimum ratings or shutting down completely.
“Large price spikes immediately before and after mid-day periods when both utility-scale and distributed solar generation reaches its peak level suggest a need for dispatchable generation sources to help cover ramping periods, when the need for power from the grid to meet load is rapidly changing,” EIA concluded.
While gas displacing coal-fired generation has become a familiar story, the growth of renewable power in some markets has begun to pressure gas generators as well. Last year the La Paloma gas plant in California filed for bankruptcy.
In Texas, inexpensive wind energy has been hurting independent power producers with gas-fired facilities. The state now gets more energy from wind farms than nuclear plants, and as the fuel-free resource is dispatched first it has driven down energy prices, cutting revenues for IPPs.