As cities flock to explore alternative energy solutions, California has driven its wholesale electricity prices to zero, and sometimes negative, at certain hours of the day – a result of the coastal state’s 15 years of work on transitioning to solar energy.

Reaching below-zero prices happens when generators with high shut-down or restart costs must compete with other generators to avoid operating below equipment minimum ratings or shutting down completely. California witnessed the peak for the first time on March 11, when more than half of the power needs of the entire city came from solar power for a few hours. The California Independent System Operator (CAISO) accounted for almost 40% of net grid power produced during the hours between 11 AM to 2 PM. This is the first time CAISO has achieved these levels, reflecting an almost 50% growth in utility-scale solar photovoltaic installed capacity in 2016.

 

Solar Energy

CAISO.

In the aftermath, power prices on both the day-ahead and real-time CAISO markets were drastically lower in March compared with any other time last year. Between the hours of 8 AM to 2 PM in March of this year, system average hourly prices were often at or below $0 per megawatt-hour. That reflects a sharp drop compared to the same hours in the month of March between 2013 and 2015, when wholesale prices ranged from $14-45 per megawatt-hour.

While utility-scale solar generation includes solar photovoltaic systems and a few solar thermal plants – both of which have had a significant impact on California’s solar-generation capacity – 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.

California is home to 2,459 solar companies. The state has invested $48,987.64 million in solar energy, resulting in 64% price declines over the last five years. One of the state’s largest photovoltaic power stations – Solar Star – has the capacity to generate 579 megawatts of electricity, which is enough to power over 160,000 California homes. Following Solar Star, a developer Abengoa established Mojave Solar in 2016. Generating 250 megawatts, Mojave Solar is among the largest solar installations in California, with a capacity to power more than 61,000 homes.

Due to the state’s solar incentives, several large retailers in California have gone solar, including Campbell’s Soup, Johnson & Johnson, Google and Toyota. Intel has installed one of the largest corporate photovoltaic systems in the state, with 6,454 kilowatt of solar capacity at their location in Folsom.

Last year, a San Francisco law was passed requiring that all new buildings of 10 floors or less to have solar panels.

The solar energy movement has been very popular in cities known for their sunny days, like the Dutch City of Amsterdam. The Port of Amsterdam, nicknamed the ‘city’s battery,’ also generates heat for the capital and invests heavily in the production and storage of renewable energy. By 2020, it is planned to embrace a 100,000 square-meter solar array; this will transform Port of Amsterdam into a large sustainable energy supplier for the region.

Correction: An earlier version of this story began with: As surging oil prices have cities flocking to explore alternative energy solutions, California has driven its wholesale electricity prices to zero, and sometimes negative, at certain hours of the day – a result of the coastal state’s 15 years of work on transitioning to solar energy. That has now been corrected to: As cities flock to explore alternative energy solutions, California has driven its wholesale electricity prices to zero, and sometimes negative, at certain hours of the day – a result of the coastal state’s 15 years of work on transitioning to solar energy.

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