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New York/Canadian-Media: A few lonely academics have been warning for years that solar power faces a fundamental challenge that could halt the industry’s breakneck growth. Simply put: the more solar you add to the grid, the less valuable it becomes, https://www.technologyreview.com/ said on Jul 14.
The problem is that solar panels generate lots of electricity in the middle of sunny days, frequently more than what’s required, driving down prices — sometimes even into negative territory.
Unlike a natural gas plant, solar plant operators can’t easily throttle electricity up and down as needed, or space generation out through the day, night and dark winter. It’s available when it’s available, which is when the sun is shining. And that’s when all the other solar plants are cranking out electricity at maximum levels as well.
A new report finds that California, which produces one of the largest shares of solar power in the world, is already acutely experiencing this phenomenon, known as solar value deflation.
The state’s average solar wholesale prices have fallen 37% relative to the average electricity prices for other sources since 2014, according to the Breakthrough Institute analysis, which will be published on July 14. In other words, utilities are increasingly paying solar plants less than other sources overall, due to their fluctuating generation patterns.
Wholesale prices are basically the amount that utilities pay power plants for the electricity they deliver to households and businesses. They shift throughout the day and year, edging back up for solar operators during the mornings, afternoons, and other times when there isn’t excess supply. But as more solar plants come online, the periods of excess supply that drive down those costs will become more frequent and more pronounced.
Lower prices may sound great for consumers. But it presents troubling implications for the world’s hopes of rapidly expanding solar capacity and meeting climate goals.
It could become difficult to convince developers and investors to continue building ever more solar plants if they stand to make less money or even lose it. In fact, California…