On March 11, utility-scale solar generation in the territory of the California Independent System Operator (CAISO) accounted for almost 40% of net grid power produced during the hours of 11:00 a.m. to 2:00 p.m. This is the first time CAISO has achieved these levels, reflecting an almost 50% growth in utility-scale solar photovoltaic installed capacity in 2016. The large and growing amount of solar generation has occasionally driven power prices on the CAISO power exchange during late winter and early spring daylight hours to very low, and sometimes negative, prices. However, consumers in California continue to pay average retail electricity prices that are among the highest in the nation.
Altogether, these and other merchant-transmission projects could cost upward of $17 billion, plus at least a further $20 billion in wind, solar and hydro projects to fill these lines. There are no federal subsidies available for building transmission lines, though wind farm developers are eligible to tap a U.S. tax credit for building new production.
But economists and business groups warn that China’s industrial ambitions have entered a new, far-reaching phase. With its deep government pockets, growing technical sophistication and a comprehensive plan to free itself from dependence on foreign companies, China aims to become dominant in industries of the future like renewable energy, big data and self-driving cars.
With solar, it has already happened. China is now home to two-thirds of the world’s solar-production capacity. The efficiency with which its products convert sunlight into electricity is increasingly close to that of panels made by American, German and South Korean companies. Because China also buys half of the world’s new solar panels, it now effectively controls the market.
The financial losses by Germany’s two energy giants raise fundamental questions about who will pay for the country’s ambitious renewable energy program. To date, German households and small businesses have borne the burden in the form of high electricity prices. Now the shareholders of E.ON and RWE are being asked to step up. If they continue to face losses and cut dividends, they will not be able to attract the capital necessary for Germany’s electricity grid to survive. At that point, Germany’s tax payers will be invited to the payments window to keep companies like E.ON and RWE in business.