Too Much of a Good Thing? An Illustrated Guide to Solar Curtailment on California’s Grid
The end of California’s drought is exposing the full effect of the state’s move to renewable energy.
A wet winter has loaded up the hydroelectric system, while solar generation rose by 33 percent in the past year. These increases, combined with the usual spring winds, are pushing gas off the grid, cutting imports, and reducing carbon emissions at an unprecedented level.
As California’s independent system operator said: “The growth in these preferred resources is nothing short of phenomenal.”
But that “phenomenal” growth is also setting new records for negative prices and curtailment of renewables, primarily utility-scale solar plants. CAISO predicts 6,000 megawatts to 8,000 megawatts of curtailment this year.
“It’s an interesting growing pain of our increasingly green grid,” said Shannon Eddy of the Large-Scale Solar Association. “We’re curtailing the cleanest and newest resource on the grid, and leaving alone the 2,000+ megawatts of mostly fossil imports and in-state gas.”
And the growing pains will likely continue. The latest U.S. Solar Market Insight report from GTM and SEIA counts solar projects in the works that will double California’s capacity from 17 gigawatts in 2016 to 34.5 gigawatts by 2022. With springtime power demand peaking at well under 30 gigawatts, we may see a very solar future.
Spring shoulder months are especially concerning. With demand low due to cool temperatures, supply is already high from copious wind, water and sun. As summer temperatures rise, air conditioning demand will soak up the solar power.
March 26, a balmy spring Sunday in the Golden State, was an especially vivid example of the growth of renewables and their impact on the market. CAISO got 33 percent of its power from RPS-eligible renewables, plus 15 percent from big hydro, plus another 10 percent from nuclear — making it fully two-thirds carbon-free. As shown in the first interactive figure below, thermal (namely gas) and imports were shoved out of the way by a huge burst of solar power, but came back to cover the evening ramp and peak.
(The figure also estimates output from customer-owned solar, though no one actually tracks it. See the article “California Has More Solar Than You Think” for more information.)
Unfortunately, March 26 also saw lots of curtailment of utility-scale solar plants — about 6,500 megawatt-hours or 8.5 percent of their output for the day. Two-thirds of the cuts were to mitigate local congestion, with the rest to reduce system-level impacts.
This can also result in negative prices. While good for consumers, too much negative pricing can spell trouble for generators of all kinds. Negative pricing has been steadily increasing in recent years, and shifting to midday hours. January and February saw more than twice as many incidents of negative pricing as the year before, and the peak is expected to come in April. April 2016 saw negative prices in 15 percent of all 5-minute intervals tracked in the state.
Too much of a good thing
Curtailment and negative prices come from a surfeit of generation. Lots of generation relative to supply means low prices, as generators compete to be called on by the ISO market optimization software. Too much generation, or “oversupply” as CAISO calls it, can create reliability problems, and must be curtailed.
Neither is strictly a problem — they are just signals to market participants to change behavior — but if California’s clean energy and climate goals are to be met, they can create long-term complications.
As GTM’s Jeff St. John recently explained, CAISO follows a set procedure to deal with oversupply. First, market prices drop, pushing some generators out of the market. Prices can even go negative, giving generators a very strong incentive to curtail. CAISO can also accept bids from generators to reduce their output, called a “decremental” bid. And as a last resort, CAISO can order specific generators to turn down, though this is very rare.
What is curtailment?
Who gets curtailed, in what order, and why? And what does curtailment mean for market participants?
CAISO considers three types of curtailment: Economic dispatch, a self-scheduled cut, and exceptional dispatch. These can all happen at the local level, to reduce congestion, or at the system-wide level, to reduce oversupply.
As shown in the second interactive figure below, virtually all curtailments in the past three years have been in the first category, where generators respond to CAISO’s call for less generation and get paid to do so. These “decremental” bids can be worth as much as generation, though they can have other revenue implications for renewable generators.
In economic terms, the decremental bid needs to be more than the opportunity cost of the producer to make it worth their while to turn down. Generators do get paid not to generate, but it is more economically efficient than the alternatives.