Rising Solar Generation in California Coincides with Negative Wholesale Electricity Prices
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Utility-scale solar generation in the territory of the California Independent System Operator (CAISO) accounted for almost 40% of net grid power produced during the hours of 11:00 a.m. to 2:00 p.m. This is the first time CAISO has achieved these levels, reflecting an almost 50% growth in utility-scale solar photovoltaic installed capacity in 2016. 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. However, consumers in California continue to pay average retail electricity prices that are among the highest in the nation.
Utility-scale solar generation includes solar photovoltaic (PV) systems as well as a few solar thermal plants. Additional generation from customer-sited solar generators installed in California (such as those on residential and commercial rooftops) further adds to the total solar share of mid-day electricity generation, while displacing demand for power from the grid. As of December 2016, utilities in CAISO reported 5.4 gigawatts (GW) of net-metered distributed solar capacity. (EIA reports installed electric capacity data in alternating current terms, which are typically 10% to 30% lower than the direct current capacities sometimes reported for PV systems.) EIA estimates that this capacity would have generated approximately 4 million kilowatthours (kWh) during the peak solar hours on March 11. This level of electricity reduced the metered demand on the grid by about the same amount, suggesting that the total solar share of gross demand probably exceeded 50% during the mid-day hours.
Total solar capacity in California (including both distributed and utility-scale systems) has grown from less than 1 GW in 2007 to nearly 14 GW by the end of 2016. Solar generation follows daily and seasonal sunlight patterns, peaking during the long summer days and reaching its annual minimum during the winter.