If you had to name a place where roofs covered with solar panels are a common sight, California would probably be one of your first choices. The state has good weather, some of the wealthiest neighborhoods in the U.S., and, until recently, it gave residents financial incentives to install photovoltaic modules on their roofs. However, it looks like paying citizens to install solar panels will soon become a thing of the past.
Too many solar panels. California decided to cut subsidies for solar panel installation after electricity fell to a negative price on sunny spring days, a time when the grid receives less demand.
The Golden State already has 47 gigawatts of solar power installed, which theoretically could power 13.9 million homes, or a quarter of California’s population. However, in practice, much of this solar energy isn't even used and goes to waste.
Energy that doesn't go anywhere. The overabundance of solar energy has been creating days with negative energy prices for several years. Although it’s most prevalent in the spring, it’s also starting to happen at other times of the year. For example, during the summer of 2022—a time characterized by a heat wave that prompted many to put their air conditioning on full blast—California wasted thousands of megawatt-hours of solar and wind power that could have been fed back into the grid.
This paradox is peculiar to California, one of the most progressive states in the U.S. in the transition to renewable energy. The state produces so much renewable energy and can’t use it during peak production hours. It also doesn't have the capacity to store it.
Slowing down the renewable transition. According to The Washington Post, around 400,000 American households install solar panels on their rooftops yearly. However, the installation rate might slow down in the future given that California has decreased incentives for excess production. Other states will likely follow suit when they face a similar situation.
Since the 1990s, California has been paying homeowners who install solar panels on their roofs between $0.20 and $0.30 for every kilowatt-hour of electricity they feed back to the grid. However, the state switched to a new system last year. Under the new “net billing” system, solar owners are compensated for their excess solar production, which can be zero in spring. Companies that install solar panels are already seeing a decrease in activity as a result of this change.
Waiting for batteries. It's probably the least important energy problem in the world right now, but it does create a challenge for electricity operators. The sun doesn't shine all the time, limiting solar production, and demand for energy has a U shape. It's high in the morning, almost zero at midday, and high again at night.
While solar energy doesn’t pollute once the panels are installed, more batteries are required to store it. Without them, other less environmentally friendly energy sources are still needed.
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