Solar Briefly Topped 50% of California Electricity in March, Driving Rates Below Zero

April 8, 2017, 8:26 PM UTC

In a Friday update, the U.S. Energy Information Administration reports that for a brief period on March 11th, utility-scale solar accounted for 40% of net grid power produced in California. The EIA says that, combined with residential and commercial rooftop generation, “the total solar share of gross demand probably exceeded 50% during the mid-day hours.”

During the same window, real-time wholesale electric rates dipped below zero, compared to prices between $14 and $45 per megawatt-hour in the same windows from 2013-2015. That’s because some forms of power generation, including nuclear, can’t be easily shut down when solar generation peaks, adding up to a net market oversupply.

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This is good news for renewable energy, reflecting a massive expansion of solar capacity in California in 2016—but it comes with several caveats. The late winter and early spring are periods of low demand for electricity, because air conditioners aren’t in heavy use, making it easy for solar to get larger market share.

And as the EIA points out, this brief wholesale price drop hasn’t been matched by overall drops in California’s consumer electric rates, which remain well above average. But it does point to long-term declines in energy costs in areas with heavy solar investment: in many regions, solar is already cheaper than wind, coal, or gas. Futurist Ray Kurzweil has predicted that market forces will lead to extremely rapid solar adoption over the coming decade.

But electricity pricing below zero simultaneously reflects both the expansion and the immaturity of the renewable energy grid. Because both solar and wind generation experience generation peaks and troughs, grid storage (i.e. high-capacity batteries) is needed to reliably supply 24-hour demand. Until that storage is widespread, other sources remain vital for filling in the gaps.

In fact, the situation already leads to “curtailment” of solar production during peak hours, with thousands of megawatt-hours of potential energy simply getting turned off, even as other plants continue to produce.

Though they’re far from alone in the field, Tesla made waves last year with the introduction of both home and industrial-scale batteries intended to solve just this problem. Tesla CEO Elon Musk said that the company will likely enter the grid services business eventually, and its acquisition of SolarCity last year gave it even more tools and motivation to do just that.