Last month, California defied the US president’s withdrawal from the Paris Climate Agreement to mandate for 100% renewable energy. By 2045, all of the Golden State’s power must be derived from renewable sources and, unsurprisingly, solar looks set to play a significant role.
Solar, again unsurprisingly, is already a major player in the state’s energy market. Utility-scale solar alone neared 9GW of peak production on a single day in May. Rooftop solar arrays, of which there are many, would have sent that spiralling even further.
Such generation has had its consequences. In March the prospect of negative wholesale prices reared its head, causing California’s utilities a headache. Presented with excessive generation, the state’s power companies have been forced to pay businesses to take it off their hands.
Of course, California is not alone in having to contend with such an occurrence. Germany, with its strong wind and solar assets, has also faced negative wholesale pricing and the UK power market feared it might have reached a landmark earlier this summer when solar generation soared on unseasonal weather.
California’s response has been innovative, but remarkably simple in its nature. When the state has more renewable power than it needs, it will simply sell it to other, neighbouring states that aren’t so fortunate. California’s independent system operator has established an ‘energy imbalance market’ which will allow it to distribute power to seven nearby states, including Nevada, Arizona and Idaho.
It helps iron out market imbalances, ease the impact of California’s solar duck curve and furthers the renewables cause further up the western seaboard. It is, for all intents and purposes, California’s energy market tackling a problem head on and turning it into a cross-border advantage.
And it’s a system that is so easily replicated in other markets.
The UK’s clean energy transition continues to shift gear. Solar has swelled in generation capacity. Wind continues to grow both on and offshore. Excessive renewables are pushing fossil fuel generators off the grid on the way to new records for generation. It’s happening at such a pace that the regulators can’t keep up, and holders of legacy assets are having to repurpose them to negate losses.
The UK is not quite encountering regular periods of negative pricing just yet, but it will do. And there needs to be a plan in place for when it does. National Grid has mechanisms like Demand Turn-Up, which incentivises businesses to use more energy, in place to help balance the grid, but that will do little to prevent many of the effects associated with wholesale prices going south.
Which is why, when viewed against the kind of system California already has in place, the UK’s looming departure from the European Union – and with it the internal energy market (IEM) – threatens to be such a backwards step.
Last month European body Eurelectric published its own take on the matter, assessing that while the UK remaining in the IEM is incompatible with the government’s current Brexit stance, it is imperative that disruption is kept to a minimum.
But if it’s one thing that this government appears to specialise in of late, it’s disruption.
Cross-border sharing of electricity will be vital to a flourishing, renewable-heavy European market. Wind flows off the Irish coasts and the North Sea could just as easily be traded with thriving solar activity in the south of the UK, Germany, Spain and Italy, while Scandinavia’s geothermal capacity will come in handy when the sun doesn’t shine and the wind doesn’t blow.
The UK turning its back on such a prospect will not only threaten consumers with higher costs, but place its energy transition in even greater jeopardy than the country’s uncertain policy climate has already.
California’s cross-border sharing model is to be revered and copied. Just this week UK Power Networks, the distribution network operator for London, the South and the South East, raised the prospect of more localised wholesale markets to reflect the distributed nature of future generation.
If the UK was to turn its back on a continent-wide energy-sharing market, then it might be seen in the not-too-distant future as one of the most counterproductive and archaic impacts of the Brexit result.
