ORIGINAL REPORTING: Prognosis negative: How California is dealing with below-zero power market prices

Prognosis negative: How California is dealing with below-zero power market prices; A rainy winter and growing solar have CAISO prices going negative and renewable energy going to waste — what should policymakers do?

Herman K. Trabish, May 11, 2017 (Utility Dive)

Editor’s note: The pressure from negative pricing eased as summer demand rose but the system operator’s effort to expand its geographic reach continues.

Market forces and contract obligations are regularly dipping power prices below zero in California. Negative pricing has occurred sporadically across the country for decades but expanded renewable energy production is making it more common, especially in the West. System operators say it makes markets more efficient because it allows energy producers to give energy away free or pay consumers to take their generation rather than face the costs of being curtailed. To counteract overproduction and negative pricing, grid operators can order the curtailment of utility generation, thermal or renewable. Until recently, the frequency of negative pricing events was declining around the nation as transmission was built out and grid operators learned better techniques to integrate variable renewable generation.

click to enlarge

In 2017, particularly the California ISO, system operators have seen a boom in negative pricing incidents due to the combination of excessive hydro reserves from a rainy winter and an ever-expanding base of intermittent solar generation. Even with persistent curtailment of renewable energy, the average CAISO real-time electricity price dipped below zero twice a day in March. The negative pricing threatens market revenues for traditional generators, sparking concern from some that flexible gas plants needed to balance out wind and solar production may have to shut down, as the La Paloma plant did last year. Combined with the desire to maximize renewable energy output lost to curtailment, the concerns have policymakers discussing ambitious market fixes to keep power prices in the black… click here for more

click to enlarge

Tweet