I originally thought this could occur rationally due to some government-imposed incentive structure (if you read the tax code enough, or behave like Enron I guess), but it turns out to be a powerline issue.
Ivan Penn (LA Times)]:
On 14 days during March, Arizona utilities got a gift from California: free solar power.
Well, actually better than free. California produced so much solar power on those days that it paid Arizona to take excess electricity its residents weren’t using to avoid overloading its own power lines.
In the noninterest of transparency, the actual cost savings is hidden by the controllers.
It happened on eight days in January and nine in February as well. All told, those transactions helped save Arizona electricity customers millions of dollars this year, though grid operators declined to say exactly how much. And California also has paid other states to take power.
Things were so bad, they had to turn off the solar (ordered it off) to keep it from blowing out the infrastructure.
The number of days that California dumped its unused solar electricity would have been even higher if the state hadn’t ordered some solar plants to reduce production — even as natural gas power plants, which contribute to greenhouse gas emissions, continued generating electricity.
And the take home lesson for econ majors.
Ordinarily, in a healthy, market system, a glut of excess supply — green power or anything else — would lower prices. Supply and demand are a powerful economic forces, but the laws of economics don’t apply to the California energy grid.
“It’s not the renewables that’s the problem. It’s the state’s renewable policy that’s the problem,†said Gary Ackerman, president of the Western Power Trading Forum, an association of independent power producers. “We’re curtailing renewable energy in the summertime months. In the spring, we have to give people money to take it off our hands.â€