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In California, renewable electricity cuts more than doubled in 2019


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In California, renewable electricity cuts more than doubled in 2019

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A rooftop solar array generates power at Fort Mason in San Francisco against the backdrop of the Golden Gate Bridge.
Source: S&P Global Market Intelligence

In California, an influx of low-cost renewable energy resources, especially solar, is putting pressure on conventional fossil fuel-based generation, creating substantial stranded assets. At the same time, even as the the state tries to make its power sector completely carbon free, stranded renewable electricity is also on the rise.

In 2019, production cuts of available wind and solar power, known as curtailments, soared on the California ISO transmission system, the state's primary power grid, which serves about 32 million people. The California ISO last year slashed 961,343 MWh of solar and wind power to balance supply and demand, more than double the level of curtailments in 2018 and more than triple the amount in 2016, according to an S&P Global Market Intelligence analysis of grid operator data.

Most curtailments occur during periods of solar-fueled midday oversupply, largely in the spring when demand is lower. Those temporary gluts also lead to negative prices that generators pay distributors to take their production. While they add up to only a small share of the state's total available renewable generation, CAISO's record cuts in 2019 surpassed the annual production of some of California's largest solar plants. The 300-MW Desert Sunlight 300 project in Riverside County, for instance, generated 724,920 MWh in 2018.

CAISO attributed the jump in curtailments to rooftop solar installations, which decrease demand for grid power in the middle of the day, and high hydroelectric generation. Strong hydro was also responsible for the more than 120,000 MWh of renewable energy reductions in January 2020, roughly 10 times greater than a year ago.

"Curtailments are going to get worse if we don't do something," Clyde Loutan, principal of renewable energy integration at CAISO, said on the sidelines of a recent conference in San Francisco.

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'Victims of our own success'

The grid operator is seeking to address the problem through several initiatives that include expanding the use of energy storage, demand response and time-of-use rates, diversifying the state's renewable-energy portfolio, and fostering more collaboration among western U.S. grids.

But the scale of the problem continues to climb, causing consternation in the renewable energy industry.

Solar power plant suppliers have become "victims of our own success," Tom Starrs, vice president of market strategy and policy at SunPower Corp., said Jan. 16 at the Solar, Storage and Smart Energy Expo in San Francisco. There is "nothing dumber, from a policy perspective, than taking a zero-carbon ... zero-incremental-cost resource and shutting it down."

Currently, California's installed solar capacity dwarfs the state's battery storage resources, keeping its grid largely dependent on gas and hydropower to fill the void at sunset. That is when 12,697 MW of CAISO-connected solar, as of Jan. 1, 2020, powers down along with the state's more than 1 million solar roofs, totaling more than 8,700 MW of capacity. By comparison, CAISO's grid hosts just 136 MW of battery storage, though much larger volumes are planned.

"The fleet today does not have the speed to move when the solar drops off in the evening," Loutan said. At times more than 15,000 MW of conventional generation must ramp up over a three-hour period to meet peak system demand.

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Grid 'fiefdoms' create inefficiencies

So far, the most effective approach to reducing California's renewable energy waste has been exporting it to neighboring states, which CAISO has advanced through its expanding Western Energy Imbalance Market.

Launched in 2014 and managed by CAISO, the real-time energy market facilitates energy transfers between power suppliers across the West, avoiding 254,288 MWh of curtailments in 2019, according to a Jan. 30 report. That was up from 237,445 MWh of avoided cuts in 2018. If not for energy transfers between 2015 and 2019, California would have shut down about 44% more renewable electricity than it did.

The market has resulted in $862 million in savings for participants since November 2014, according to CAISO.

CAISO and other supporters are also eyeing a day-ahead market across the West to enhance grid efficiencies, an idea that has previously has stumbled in the California Legislature.

Greater integration of the 38 balancing authorities operating in the Western Interconnection will be key to solving the "fundamental overprocurement and inefficiency" of electricity markets, Johnny Casana, a senior manager at renewable energy developer Pattern Energy Group Inc., said at the conference in San Francisco. "The largest problem in the West is ... the grid is broken up into 38 different fiefdoms that don't talk to each other, that don't share resources, that don't plan annually, seasonally, [daily], with each other."