Both Sides of the Same Coin

Ziad Alaywan

There was an LA Times story that ran last year before Thanksgiving titled, “Solar glut boosts California power bills — other states reap the benefits. ?The article criticized California for having too much solar power, which is forcing ratepayers to pay higher rates while curtailing renewables generation.

The article is correct that we have more solar during certain times of the year and that we have curtailed output and sold the excess solar power at an economic loss, but it ignores a bigger picture—the longstanding reciprocal nature of resource sharing within the vast western grid.? Furthermore, the solar glut does not boost customers’ power bills. ?Rather, it’s the fixed Transmission & Distribution costs (Fact Not Fiction! - ZGlobal).? Let me offer an alternative view on whether other states are reaping the so-called benefits as reported in the LA Times article. ?

It is well known in the energy industry that California relies on its neighboring states to help “keep the lights on” in the Golden State. ?Of course, we do the same for our neighbors during winter cold snaps. ?It has been that way for as long as most of us have been in this business. ?In fact, California’s net imports supply up to 30% of the CAISO’s stack during the summer. ?

Since the establishment of the CAISO in 1998, imports have remained critical to reliability but with the further benefit of transparency regarding the volume and prices of imports. (I may add that prior to 1998, utilities had contracts in place to pay generators to curtail their output.) ?Over the years the net-load needle in the evening has pointed toward a huge installed capacity requirement to cover the load, but what do we do with the extra energy capability in the spring when loads are low?

The state can (1) over build in-state resources, or (2) rely on import/exports based on current market structure. ?Building more generation and transmission infrastructure in California to eliminate imports/exports would clearly be costly, uneconomical, and insane. ?Even when CAISO net exports don’t generate revenue, and there is a need to curtail roughly 4.5% of the potential renewables generation, we see minor impacts on wholesale prices compared with the alternative. ?

The LA Times ignores the fact that selling energy to our neighbors (albeit at a loss) is preferable because it ?allows CAISO’s load-serving entities to purchase imported energy during non-solar hours at a cost lower than in-state generation.

-Ziad is the Z in ZGlobal