California's Mid-Day Solar Power Glut Has Become Obvious

Summary
- California’s Independent System Operator, or CAISO, has long cautioned that renewable power production would eventually grow to a point where supply exceeds demand on pleasant spring and autumn days.
- While CAISO can manage oversupply with economic curtailments and exports, those tools are suboptimal because curtailments impair the economics of existing solar power projects and exporting power is costly.
- Through May 9, 2019, cumulative curtailments of 446,500 MWh were 189% of 2018 levels and there were 25 days when CAISO exported mid-day power, compared with zero days in 2018.
- Unless new solar power projects are paired with energy storage facilities to support “time shift” from afternoon to evening, they will exacerbate California’s obvious mid-day solar power glut.
- Future economic headwinds for solar companies that have booked a disproportionate share of their historic revenue from equipment sales in California could be significant.
Since 2012, CAISO has used “The Duck Curve” to graphically illustrate the impact of renewables on available power supplies. This 2016 version summarized historical and expected trends from 2012 through 2020 for a typical spring day.
The renewables deployment forecast embodied in the 2016 version of The Duck Curve has been quite prescient, as demonstrated by the following graph that summarizes average hourly power production by resource type for the month of April 2019. While the hour-to-hour changes in CAISO’s Duck Curve are steeper than the changes in my graph, the former uses a modified vertical scale and focuses on the impact of solar power while the latter uses a complete vertical scale and includes all important resource classes.
Until recently, I wondered what CAISO would do when over-generation risks became recurring over-generation realities. Today, I know the answer to that question.
- As the first stage defense against grid overload, CAISO imposes local and system-wide economic curtailments.
- As the second stage defense against grid overload, CAISO sells excess mid-day power to utilities in other states at wholesale prices.
This year, solar curtailments have been a daily occurrence, and through May 9, 2019, cumulative curtailments of 446,500 MWh were 189% of 2018 levels. There also were 25 days when CAISO, like Germany, was a net power exporter for at least one hour, compared with zero days in 2018
In 2017, the Los Angeles Times ran a feature story that examined the cost of exporting solar power from California to utilities in neighboring states. It reported that on eight days in January, nine days in February and 14 days in March, California paid Arizona utilities to take excess solar power, and explained that the transactions saved Arizona ratepayers millions of dollars. While the exports were fiscally significant, they weren’t substantial enough to make California a net exporter of electricity for any hourly reporting period in 2017.
A lot has changed over the last two years and between Jan. 1 and May 9, 2019, there were 25 days when California was a net exporter of electricity for at least one hour. The following table summarizes the number of days in each month that California was a net power exporter, the number of hourly periods in each month that California was a net power exporter, and the number of Megawatt-hours that California exported to neighboring states during periods when it was a net exporter of electricity.
Export | Export | Export | |
Days | Hours | MWh | |
February | 1 | 3 | 1,236 |
March | 11 | 51 | 24,870 |
April | 9 | 48 | 38,225 |
May | 4 | 22 | 26,015 |
The following graph stacks curtailment data from CAISO’s Managing Oversupply webpage with export data derived from CAISO’s daily renewables and emissions reports and shows how the curtailment and export landscape in California has changed over the last 2-1/2 years.
Since we’ve reached a point in the annual weather cycle where afternoon power demand is climbing rapidly, I’ll be surprised if CAISO reports more export days before the fall. However, several conclusions seem inescapable given recent developments.
- While curtailments hurt solar power producers, exports hurt ratepayers because CAISO buys unneeded power in the local market, pays significant transmission and other costs, and then sells that power to out-of-state utilities at wholesale prices.
- New residential, commercial and utility-scale solar power projects that are not paired with energy storage to support “time shift” from afternoon to evening will exacerbate California’s mid-day solar power glut.
- Now that a capacity tipping point has been reached, the frequency and magnitude of export days will increase rapidly as new solar power projects are added to the grid.
- There will be increasing pressure to modify existing regulatory structures that let solar power producers dump low-value power into the grid during the mid-day hump.
Since California’s solar power generating capacity has reached a tipping point where the mid-day solar power glut is obvious, I expect to see significant changes in CAISO’s approach to future solar power projects. At the utility-scale level, I think new projects will be strongly encouraged if not compelled, to incorporate energy storage for time shift. Since time shift is not a high-value energy storage application, I expect storage issues to complicate project feasibility analysis, financing, and engineering, procurement and construction.
While companies like Tesla (TSLA) may benefit if utility-scale demand for multi-hour energy storage products increases, they will almost certainly encounter substantial new challenges in fortifying their technology metal supply chains and obtaining enough raw materials to satisfy utility demand without sacrificing their ability to manufacture electric vehicles.
On balance I expect the rapidly evolving solar power glut in California to negatively impact companies like First Solar (FSLR), SunPower (SPWR), Canadian Solar (CSIQ) and JA Solar (JASO) that have booked a disproportionate share of their historic revenue from equipment sales in California.
This article was written by
Analyst’s Disclosure: I am/we are short TSLA THROUGH LONG-DATED OUT-OF-THE-MONEY PUT OPTIONS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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Comments (709)


~8% renewables
~8.5% hydro
~2.4% nuclear.
China has less of an excuse imo. India is doing alright given how poor they are. The interesting thing is India is clearly committed to nuclear power,"
*****************Really?
This year, India made additional steps to further boosting its imports of the chilled fuel as part of plans to shift to a natural gas-based economy. www.lngworldnews.com/...

www.pri.org/...
Reality is that burning wood generates more C02 and emissions that coal. But that clearly does not matter, because it gets a renewable tick. The hypocrisy is palpable.

(2). Burning wood also ignores carbon sinks. The burning of Brazil's rain forests and the burning of Indonesia release great amounts of CO2.
(3). You must be careful about your units. For clearing forests, you want the CO2 per kg of wood. For energy production, you want the CO2 per kWh.

Assuming one took the C02 risk seriously, surely chopping down trees to burn in a power station is about as bad as you can get?
I guess the point I am making is that the C02 risk is not being taken seriously.

(1). Each country faces a plethora of risks. Each country must prioritize its risks and address them by risk. CO2 emissions may poise a higher risk for the Marshall Islands than for Nepal. Unfortunately, the Marshall Islands have little ability to affect global CO2 emissions.
(2). Given Englands nuclear ambitions, wood burning may only be a short-term expediency.
(3). If anthropogenic climate change is real, the solution is a global solution and not an individual solution.


Forgive my ignorance, but is the rood top solar even considered part of the house for insurance purposes?


www.pv-magazine.com/...


wired,
You should look more at the arguments than the source of the arguments. The VFEA post is just basic economic theory that would be taught in any undergraduate economics class. You are drinking from the poisoned well of ignorance. You accuse others as the the slaves of the fossil fuel industry while you are a slave of the renewable industry. Any valid application of economic theory would eviscerate your renewable mantra consign it to dung heap of discarded theories such as Marxism.
www.rechargenews.com/...Costs for both solar and wind fall by 5-20% each year, year after year.
Meanwhile battery costs fell by 35% year-over-year in Q1 2019:
"Battery Power’s Latest Plunge in Costs Threatens Coal, Gas"
about.bnef.com/...

Talking to Chinese solar cell manufacturers, they are demanding prices start rising now that subsidies are being lifted.
www.pv-magazine.com/...

pv-magazine-usa.com/...

www.youtube.com/...
www.slideshare.net/...
www.pv-magazine.com/...



They need only get serious about developing the resources.
Seems you said that since cobalt is a byproduct of copper, and since copper isn't being mined the cobalt would be prohibitively expensive.
Well, copper has become short in supply and so WILL be mined, thus supplying more cobalt.
Besides, considering the importance of cobalt, it would be mined for it's own sake in any case.
Perhaps you saw that these rare metals are to be placed into high priority as strategic materials?



Has nobody ever explained the economy of solar power to you?

www.marinij.com/...
On Wednesday, Pacific Gas & Electric revealed contracts for 75 megawatts of storage that includes 20 megawatts of flywheels from startup Amber Kinetics and 10 megawatts of zinc-air batteries from Eos Energy Storage amidst the expected lithium-ion winners.Maybe it was deemed uneconomic given they are now going with Tesla utility-grade Li-ion to replace actually base load gas plants in South bay? Is this maybe going to be the solution to get that 3-5 hour shift to get out of the duck curve conundrum problem? 10 MW of battery storage interestingengineering.com/...
www.weforum.org/...
The total project is comprised of four separate sites including a 183-megawatt facility south of San Jose, California, that will be designed and built by Tesla and owned by PG&E.
Hummingbird Energy Storage LLC is developing a 75-megawatt project, and Micronoc Inc. plans to install 10 megawatts of capacity at customer locations.
PG&E will purchase energy capacity from the other projects, but it will own outright the Tesla infrastructure.
The battery projects are set to go online by 2020.


In California, ocean front property owners would not allow off-shore oil platforms which directionally drilled 40 wells. What makes you think the California elite will allow vast wind farms to spoil their ocean views?

www.utilitydive.com/...

