The price of electricity is still going up a small bit, but recently it has been because of power grid upgrades in spite of the wholesale price of electricity going down. One nuclear proponent asked, “If solar and wind are so cheap, why are they making electricity so expensive?” – the answer is: they are cheap, and they aren’t making it more expensive – in fact, the data suggests the more wind and solar there is the lower pricing gets. With recent record low prices from US based solar+storage, and solar alone globally – expect these decreases to continue.
A study from the US Department of Energy’s Lawrence Berkeley National Laboratory (LBNL), Impact of wind, solar, and other factors on wholesale power prices: An Historical Analysis, has looked at the changes in the wholesale price of electricity across the United States between 2008 through 2017, from wind and solar power, as well other sources.
The research has found that the greatest effect through the whole decade is due to gas pricing going down strongly from 2008 through 2012 as the shale boom expanded (above left image). From 2012 through 2017 this shifted (above center image), with gas still having a great effect, but with the wind and solar boom beginning to take hold and having a greater effect – especially when considered more locally, seasonally, and in heavily deployed markets. And then looking forward from 2017 through 2022 (above right image), where wholesale costs are projected to increase – having the majority of the price slowing effect.
The report showed (below image) that where wind and solar penetrations were the greatest – the California Independent System Operator (CAISO) for solar and the Midcontinent Independent System Operator (MISO), Energy Reliability Council of Texas (ERCOT), and South Power Pool (SPP) regions for wind – the price declines due to these resources were the greatest.
Within these regions, the markets showed variable reasons for their price declines from wind and solar. CAISO is the leading market for solar power in the nation representing a third of all solar power installed, and of course, had – by far – the greatest effect from solar power in the above chart.
The researchers suggested CAISO was the canary in the coal mine, perhaps foreshadowing greater impacts from solar in other regions as solar penetrations grow. The solar impact in CAISO is driven by;
Solar more frequently shifting the net demand in the steeper part of the supply curve and therefore having a larger impact on prices with and without solar. The alignment with the steeper part of the supply curve is due to solar in California reducing net demand during summer afternoons, when marginal generators tend to be less-efficient peaker plants.
Another unique happening due to wind and solar power are negative pricing moments. They are primarily driven by heavy production from wind and solar.
The research found that the “percentage of nodes with negative RT prices during 5% or more of all hours grew rapidly between 2015 and 2017.” There were some nodes with pricing of this nature in the pacific northwest due to wind and hydro electricity in the 2010-2012 period, but transmission upgrades allowing for exports have allayed much of that.
Looking out in the future, the authors projected nationwide wholesale price increases for a variety of reasons – even projecting an increase in gas – with wind and solar prices, especially in California, offering some of the only downward pressure.
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