California Is Grappling With a Growing Problem: Too Much Solar

An anonymous reader quotes a report from the Washington Post: In sunny California, solar panels are everywhere. They sit in dry, desert landscapes in the Central Valley and are scattered over rooftops in Los Angeles’s urban center. By last count, the state had nearly 47 gigawatts of solar power installed — enough to power 13.9 million homes and provide over a quarter of the Golden State’s electricity. But now, the state and its grid operator are grappling with a strange reality: There is so much solar on the grid that, on sunny spring days when there’s not as much demand, electricity prices go negative. Gigawatts of solar are “curtailed” — essentially, thrown away. In response, California has cut back incentives for rooftop solar and slowed the pace of installing panels. But the diminishing economic returns may slow the development of solar in a state that has tried to move to renewable energy. And as other states build more and more solar plants of their own, they may soon face the same problems.

Curtailing solar isn’t technically difficult — according to Paul Denholm, senior research fellow at the National Renewable Energy Laboratory, it’s equivalent to flipping a switch for grid operators. But throwing away free power raises electricity prices. It has also undercut the benefits of installing rooftop solar. Since the 1990s, California has been paying owners of rooftop solar panels when they export their energy to the grid. That meant that rooftop solar owners got $0.20 to $0.30 for each kilowatt-hour of electricity that they dispatched. But a year ago, the state changed this system, known as “net-metering,” and now only compensates new solar panel owners for how much their power is worth to the grid. In the spring, when the duck curve is deepest, that number can dip close to zero. Customers can get more money back if they install batteries and provide power to the grid in the early evening or morning.

The change has sparked a huge backlash from Californians and rooftop solar companies, which say that their businesses are flagging. Indeed, Wood Mackenzie predicts that California residential solar installations in 2024 will fall by around 40 percent. Some state politicians are now trying to reverse the rule. “Under the CPUC’s leadership California is responsible for the largest loss of solar jobs in our nation’s history,” Bernadette del Chiaro, the executive director of the California Solar and Storage Association, said in a statement referring to California’s public utility commission. But experts say that it reflects how the economics of solar are changing in a state that has gone all-in on the technology. […] To cope, [California’s grid operator, known as CAISO] is selling some excess power to nearby states; California is also planning to install additional storage and batteries to hold solar power until later in the afternoon. Transmission lines that can carry electricity to nearby regions will also help — some of the lost power comes from regions where there simply aren’t enough power lines to carry a sudden burst of solar. Denholm says the state is starting to take the steps needed to deal with the glut. “There are fundamental limits to how much solar we can put on the grid before you start needing a lot of storage,” Denholm said. “You can’t just sit around and do nothing.” Further reading: The Energy Institute discusses this problem in a recent blog post.

Since 2020, the residential electricity rates in California have risen by as much as 40% after adjusting for inflation. While there’s been “a lot of finger-pointing about the cause of these increases,” the authors note that the impact on rates is multiplied when customers install their own generation and buy fewer kilowatts-hours from the grid because those households “contribute less towards all the fixed costs in the system.” These fixed costs include: vegetation management, grid hardening, distribution line undergrounding, EV charging stations, subsidies for low income customers, energy efficiency programs, and the poles and wires that we all rely on whether we are taking electricity off the grid or putting it onto the grid from our rooftop PV systems.

“Since those fixed costs still need to be paid, rates go up, shifting costs onto the kWhs still being bought from the grid.”

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