Why we turn off solar panels when it's too sunny ??

?? Homeowners looking to install rooftop solar have been upset over California's Net Energy Metering (NEM) 3.0 change, which reduces the value of solar energy electricity credits by ~75% for PG&E, SCE, and SDG&E customers. The change is designed to incentivize homeowners to install residential battery systems, but homeowners don't like this because it increases the overall cost of getting a rooftop solar system.

?? There is a good reason NEM 3.0 was implemented--we have "too much" solar production, which is referred to as the "duck curve". In the middle part of the day, the net load drops to 0 GW, which means any additional solar that your home makes cannot be used, since the electrical grid must operate in perfect supply and demand balance. But since we don't have virtual power plants implemented at scale for residential customers, system operators can't turn off your rooftop solar panels. Instead, your home's solar panels keep sending extra electricity to the grid and the system operators have to turn off, or "curtail" electricity from other sources. This is why NEM 3.0 incentivizes residential customers to get a battery backup, so you can help store that excess electricity.

?? Although we see a net load that approaches zero, we don't see that California operates on 100% solar between 12pm and 2pm. For example using GridStatus.io's visualization, on June 24th, we can see that several other fuel sources continue to be used, including nuclear, geothermal and biomass--these three sources have consistent generation throughout the day, as shown by their flat lines below. And we observe ramping up and down of natural gas, hydroelectricity generation, and biomass.

?? Why is this the case?

To simplify the problem, electricity generation sources are deployed based on a balance of the generation source's merit order and flexibility.

?? Merit order is an economic principle that describes the order that power plants send power to the electricity market based on the marginal cost of generating the electricity. Since renewable energy sources such as solar and wind have no incremental marginal cost because the fuel is free, they have a high merit order and are dispatched to the electrical grid first.

?? If solar has a high merit order, why do we see it turned off? That's when we need to think about flexibility of the electricity generation source. The reason we see completely flat lines for nuclear generation in CAISO, and why Diablo Canyon nuclear power plant was extended for 5 more years of operation, is because the ramp time to turn this type of power source is too long. In other words, nuclear energy is not a flexible resource, and therefore, we think of it as "base load electricity generation". System operators will run nuclear energy regardless of the merit order or price of solar or wind, because it takes too long to turn it on and off; by the time you need it again the next day, you won't be able to turn it back on in time.

?? In the middle of the day, when we have nuclear energy (and other base load energy that we cannot turn off) still generating, solar energy is also generating at its maximum output. Therefore, the system operators turn off utility-scale solar. The system operators cannot turn off your home's solar (at least right now, they do not--we do not have demand response for residential systems, which is often referred to as virtual power plants deployed at scale.)

?? This is problematic because solar generation costs are not equal. On average, utility-scale solar is two times cheaper than residential solar due to economies of scale of utility-scale solar. Therefore, we collectively are paying residential rooftop solar customers to make expensive electricity and we are all subsidizing residential customers to pay off their rooftop solar systems. This is why NEM 3.0 needed to be implemented.

?? Looking towards the future, this problem can be solved with industrial-scale energy storage and residential battery energy storage. Batteries are flexible resources with very fast ramp times, and as we continue to drive down costs, we can increase their merit order as well. With more storage, we can eventually retire the more expensive base load energy systems and the ramping resources such as gas power plants.

?? This is why it's so exciting for me to work on utility-scale energy storage at Tesla and be a part of the transition. The Moss Landing power plant facility was formerly a combined cycle gas power plant, but it is currently the second largest battery energy storage system in the world. At least for the time being, Vistra Energy is keeping the iconic non-functioning smokestacks to remind us of our past and how we need to keep adapting for the future. For me personally, seeing this symbolism of old technologies being replaced by newer ones brings me so much optimism, and working on Megapacks is one of the most intellectually interesting jobs I have had in my career.