In places with abundant wind and solar resources, like Texas and California, the price of electricity is dipping more and more frequently into negative territory. In other words, utilities that operate big fossil-fuel or nuclear plants, which are very costly to switch off and ramp up again, are running into problems when wind and solar farms are generating at their peaks. With too much energy supply to the grid, spot prices for power turn negative and utilities are forced to pay grid operators to take power off their hands.Transmission line losses, and in some places capacity limitations on the existing transmission lines, limit the renewable power producers' ability to export.
That’s happened on about a dozen days over the past year in sunny Southern California, according to data from Bloomberg, and it’s liable to happen more often in the future. “In Texas, power at one major hub traded below zero for almost 50 hours in November and again in March,” according to the state’s grid operator. In Germany, negative energy prices have become commonplace, dramatically slashing utility revenues despite renewable energy subsidies that bolster electricity prices much more than in the United States.
The first solution to below-zero prices is to build more transmission to ship the power to places where demand is high. Germany now makes close to 2 billion euros a year off energy exports to neighboring countries, according to Berlin’s Fraunhofer Institute. But building out new long-distance, high-voltage transmission lines is expensive: Texas has spent $7 billion on transmission lines to ship power from the windy flatlands of west Texas to Dallas and Houston.Yes, and Dallas and Houston don't have the kind of topography conducive to building pumped-storage reservoirs, another way to put wind power to use. But there are a lot of diesel-powered trains, moving containers, and plastic pellets, and chemicals, and grain, and ethanol, and more than a little coal, even now. Might there be a way to deal with that renewable power surplus?
The ideal setup is for places with abundant renewable energy (many of them in remote areas) to store and ship power to energy-hungry cities on the coasts, forcing fossil-fuel plants to curtail production and, eventually, shut down. But such large-scale storage doesn’t exist yet. So in the meantime, “with more renewable power on the way in Texas, generators have been asking policy makers for incentives to keep conventional plants running,” according to the Dallas Morning News.
So we burn neutrons and Powder River coal instead, and somebody has to pony up for the catenary. Diesel fuel prices are not yet high enough for anyone to seriously look at that prospect, although the idea of some musical thyristor-controlled motors with the authority of a Great Northern W-1 topping the Cascades and keeping electricity's books downhill with 125 stack cars on appeals.Perhaps yet in my lifetime? With all those financial engineers looking for something to do, now that credit default swaps are in bad odor, why not structure a deal among the railroads, the legacy electric utilities, and the renewable power producers by which the excess supply payments finance the construction of the catenary with the bonds subsequently repaid out of the railroads' power purchases?