On the diagram: the frequency of measuring negative electricity prices CAISO SP-15. CAISO stands for California Independent System Operator.
Frequency (frequency) is the number of times a negative price occurs. The total value is the hourly negative price multiplied by the hourly generation. Data for April 2023 are correct as of 4 April.
California Independent System Operator (CAISO) prices are falling below zero at a record pace – and reaching record negative levels. The increase in both the frequency and magnitude of negative prices achieved is driven by the growth in California’s renewable electricity production.
In March 2023, there were 105 hours of negative real-time prices, resulting in a record negative generation cost of $24.5 million in the first month of spring. April has barely begun, but there have already been 33 cases of negative prices for a total of regarding $20 million.
It is almost inevitable that a new record will be set by the end of April.
Negative electricity prices occur when there is an excess of generation relative to demand. The continued growth of solar generation in California means that this situation is happening more and more often. Typically, CAISO’s negative price peaks in April and May, when there is enough sunshine, but the temperature has not yet reached a level where the need for electricity for air conditioning absorbs excess solar energy.
Thermal generators also play a role in negative pricing. Some gas plants do not have the flexibility to quickly increase or decrease capacity, but are willing to generate at a loss during negative price hours to be able to take advantage of expected price increases later in the day.
CAISO prices usually peak at sunset, when solar power stops. A negative price during peak hours of solar power generation reflects the level of financial loss at which a marginal gas plant is willing to cut production and stop producing.
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