Central Planning Fail: Negative Power Rates in California as Los Angeles Goes Dark

Solar power is becoming competitive, especially when oil prices eventually rebound, but instead of letting the market develop solar and other renewables organically, activists and politicians are stepping in with central planning. Tax subsidies, forced utility subsidies and ultra low interest rates have led to boom in renewable power generation. And just as the central bankers are forcing interest rates below zero with their interventions, plans to boost renewable energy have at times pushed energy prices below zero.

Dallas Morning News: What do Texas and California have in common? 'Negative power' caused by renewables glut
Average, wholesale power prices in Southern California have gone negative on about a dozen days over the past year, falling as low as minus $23.87 a megawatt-hour, grid data compiled by Bloomberg show. A year earlier, it happened once.

In Texas, power at one major hub traded below zero for almost 50 hours in November and again in March, said Robbie Searcy, a spokeswoman for grid operator Electric Reliability Council of Texas.

The growing frequency of these price plunges are a testament to how renewable power is reshaping U.S. power markets and squeezing the profits of traditional power generators. Clean energy resources, including solar, wind and hydropower, now account for 13 percent of the nation’s power mix, up from 9 percent just a decade ago, government data show. And their share only stands to gain amid state and federal policies designed to cut greenhouse-gas emissions.

Negative pricing may become so predictable in California that the state’s utilities may eventually be able to encourage consumers to use power during the hours it occurs, California Public Utilities Commissioner Carla Peterman said in an interview Monday at the Bloomberg New Energy Finance Summit in New York. “We have some predictability about that — forecasts are getting better,” she said. “So why not encourage people to use power when it’s cheaper with negative prices?“
If this was really a temporary glut caused by renewables, it wouldn't be a major issue. Except that there is no long-term power glut. California is actually shutting off its power generation and has a long-term crisis on its hands. Back in 2013 this was an issue:
Bloomberg: California Power Facing Biggest Test Since Enron: Energy Markets
Power at the SP15 hub for next-day delivery has averaged $49.92 a megawatt-hour this year through April 19 on the Intercontinental Exchange, the most for the period in five years. Northern California’s NP15 hub has averaged $41.99 this year, the most since 2010.
The shutdown of the San Onofre reactors boosted prices at the southern hub to an average premium of $7.97 a megawatt-hour against the northern hub, the most in 12 years. The five-year average is 97 cents.
Abundant hydroelectric generation made up for the lost nuclear output in the Los Angeles basin last year, Michael Blaha, the principal analyst of North American power at Wood Mackenzie Ltd. in Houston, said in an interview.
“There is always a threat of brownouts and blackouts and I think it’s higher this summer because of San Onofre being out and you’re not putting hydro into the basin,” he said.

...Supply constraints on the grid this summer may point to even bigger shortages in the next decade as state environmental regulations force coastal plants to shut while the intermittent power from renewable sources gains, according to UBS AG and Wood Mackenzie Ltd.
Today in Reuters: California seeks to avoid power outages after Aliso Canyon gas leak
Power generators in the greater Los Angeles area face up to 14 days of natural gas shortages severe enough to cause blackouts this summer in the aftermath of the months-long methane leak at the Aliso Canyon gas storage field, state energy regulators warned on Tuesday.

Forecasting the likelihood of power disruptions as the region's warm-weather demand for electricity peaks, regulators called for greater conservation and other measures to help offset gas supplies lost as Aliso Canyon remains partially shut down indefinitely.

...But meeting electricity demands amid gas shortages could be further complicated by the planned decommissioning of the San Onofre Nuclear Generating Station north of San Diego, even as wind and solar energy account for a growing share of the region's power grid, the utility said.
"Even as" are the wrong words there, it should be "especially as" because renewables are a destructive force on the energy supply due to central planning. Renewables are destroying the power grid because subsidies allow them to be added even if unprofitable, with the cost burden shifted onto the remaining fossil fuel and nuclear power plants. As more renewables are added, the burden increases and supply drops further. If you see what is happening, you will put solar on your property as well because the long-term price of energy in California is rapidly increasing.

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