As energy costs soar around the world, a curious thing is happening with increasing frequency in power grids in certain corners of the US: Prices are plunging below zero.
So much wind and solar have been added that power is getting stuck where it’s generated because there aren’t enough high-voltage lines to move it to where demand is highest. That’s forcing power plant owners to pay users to take the excess electricity.
Wholesale prices went negative about 200 million times across the seven US grids in 2021, more than twice as often as five years earlier, according to Yes Energy, a data and analytics provider. That record will be broken this year as bottlenecks worsen on three renewable-rich grids in Texas, California, and the Southwest, the data show.
All seven US grids price electricity at five-minute intervals across a total of 41,000 nodes that are the equivalent of on-ramps and exits on a highway. Prices aren’t falling below zero often enough to meaningfully dent wholesale power costs. But the phenomenon is a warning sign that grids aren’t anywhere near ready for a broad shift to renewable power. The US needs to spend $360 billion through 2030 and $2.4 trillion by 2050 to expand transmission systems enough to handle the expected onslaught of renewables, according to a Princeton study. Otherwise, power will keep getting stuck where no one needs it. “We don’t have the right big transmission infrastructure,” says CliffRose, product manager at Yes Energy, who performed the analysis for Bloomberg News.
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