California has some of the most overbearing and aggressive climate change policies in America.
Yet the state also allows massive amounts of clean energy to simply go to waste.
In April 2020, California’s solar farms curtailed over 318,000 megawatt-hours (MWh)!
To put that into perspective, the average monthly electricity consumption for a U.S. residential utility customer is about 877 kilowatt-hours (KWh).
So that lost 318,000 MWh could have powered roughly 363,000 American homes!
That’s almost enough electricity to power New York City for a month!
And this is a growing problem. Producers expect even more potential energy from solar arrays will go to waste in the future.
Source: California ISO
So what’s with all this wasted energy?
Well, it all boils down to an oversupply problem.
Electric power generators can often create more energy than the grid can handle. And this happens very often at solar farms.
The California Independent System Operator (CAISO), which oversees the state’s electric power system, explains the oversupply:
The shift to a clean, efficient, and modern grid is essential to California’s economy and its environment. This transition to a low-carbon grid provides challenges and opportunities, as the state incorporates increasing amounts of renewable energy on to the electric system. Sometimes, during the middle of the day, California’s renewable resources can generate more electricity than is needed.
These oversupply events need to be managed. When they happen, power operators simply reduce output. This is known as energy curtailment.
But the oversupply in California’s solar energy production isn’t exactly an accident.
Amid a steady global increase in the scale of solar manufacturing, there has been a precipitous drop in the price of solar panels over the past several years. According to energy specialist Wood Mackenzie, the price of solar power has dropped by as much as 90% over the past two decades.
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Today, solar power is so cheap that the cost of solar panels themselves are becoming negligible. Quartz senior reporter Michael Coren writes:
Solar panels have become so cheap that the true cost of electricity is shifting from solar arrays themselves to the steel and land needed to house them. Imagine if the most expensive part of a nuclear plant wasn’t the fuel or reactor, but just the land it sits on.
Plummeting solar prices have incentivized energy providers to overbuild. Coren says solar farms are now routinely built to produce at least 130% more than they can output to the grid. And with the price of solar panels expected to drop another 15%–25% in the next decade, there’s no near-term end in sight for the overbuild.
This overbuild has lead to the massive oversupply in California’s solar production. But the problem is not only limited to solar.
Turbines on wind farms may also need to be shut down from time to time so as to avoid overloading the grid.
The Brookings Institution reports, “In 2016, the wind electricity curtailment in China amounted to 49.7 TWh [terawatt-hours], enough to cover the total annual electricity consumption of Bangladesh, with a population of 163 million.”
The result of solar and wind oversupply is billions of dollars in lost clean energy production.
Energy providers will sometimes use batteries or other means to store the oversupply of energy, but the cost of conversion and storage will often outweigh the energy saved in the end.
Something needs to be done. The CAISO writes:
While curtailment is an acceptable operational tool, as [there are] increasing amounts of renewable resources, oversupply conditions are expected to occur more often. The ISO is seeking solutions to avoid or reduce the amount of curtailment of renewable power to maximize the use of clean energy sources.
That’s where an inventor from a small town in Ontario steps in.
He has found a way to produce what scientists are calling “the fuel of the future” from this massive oversupply of solar and wind power production.
This sensational invention has already caught the attention of those in the highest levels of government and business.
And now he’s taken the invention public in the form of a tiny company that trades on Canada’s TSX Venture Exchange.
Alex Koyfman, investment director for Microcap Insider, recently published a new report that provides more details on this provocative small-cap firm that’s set to disrupt the global energy industry. He writes:
Wind and solar energy have surged by 77% in the U.S. since 2010. In California, rooftop solar is already producing three times as much as centralized stations. This incredible fridge-size machine takes all the excess electricity from wind and solar systems and essentially turns it into cash.
Solar and wind energy oversupply isn’t just a problem for California; it’s a worldwide dilemma. However, new technologies are set to mitigate that problem, and investors are set to profit.
Until next time,
Luke Burgess
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
