By Howard Plante, Vice President of Procurement
With State policies driving clean energy requirements and the increasing demand to reduce electricity generation from fuel and non-renewable sources, the installation of solar power systems is growing at a rapid pace in New England. As of 2020, there was close to 4,000 MW of solar generating capacity including more than 180,000 behind-the-meter (BTM) installations. And it is beginning to have an overall impact on the grid.
What does this mean for end users? What difficulties does it pose for ISO-NE?
ISO Records Some First Time Ever Events as a Result of Solar Power
Solar power is changing historical grid patterns. On an April day in 2018, solar output drove down demand on the grid such that New Englanders used more grid electricity during the overnight hours than they did during the day. That had never happened, but it has several times since. ISO also reported for the first time since at least 2000, and possibly ever, grid electricity demand on Thanksgiving Day 2018 did not peak in the morning as New Englanders turned on their ovens; solar pushed the peak to after sunset.
Annual System Peak
Solar power has reduced demand during the afternoon hours, pushing the peak to early evening. From 2001 through 2011, the Annual System Peak occurred in the 2:00-3:00 pm hour in 10 out of 11 years with 2004 the exception at 3:00-4:00 pm. Since then, the peak has shift to later in the afternoon and from 5:00-6:00 pm the past two years. Based on the data to date this year, June 29th will hold as the Peak which also occurred from 5:00-6:00 pm.
For many end users, a later peak may naturally yield a lower capacity tag as a result of reduced or no production on second shifts, lower cooling load than in the afternoon, etc. A lower capacity tag results in a lower overall electricity price.
Reduced Peak Hours Pricing
Behind the meter (BTM) solar power is reducing the amount of grid electricity during the peak hours of the day, avoiding the need to dispatch more expensive generation as demand increases. As a result, end users that purchase market-based power experience lower prices in those peak hours than they would otherwise without solar.
Although the cost reduction is difficult to quantify because it means modeling a hypothetical scenario with the change in dispatched generation that would have taken place, there is a cost reduction, but it will not completely eliminate periodic price spikes in summer peak hours. Increased solar will result in more extreme dips in demand that leads to system imbalance and excess generation. To help avoid those scenarios, negative pricing was implemented by ISO to disincentivize resources to continue operating when there is a surplus of power.
When pricing is negative, end users on a market-based product get paid for the electricity they used in those hours. In 2019 there were 50 negative priced hours with an average of -1 cent per kWh, and 29 hours in 2020.
Difficulties for the Grid Operator – ISO-NE
We all know the weather can change rapidly in New England. Throughout the day, in 5-minute increments, the ISO must rely on forecasts to accurately predict demand on the grid so that generation balances actual demand with precision. Solar output can vary considerably on any given day depending on weather conditions, as well as seasonal variations. Those conditions result in rapid swings in solar output. As more solar is installed, these fluctuations will require the ISO to rely more heavily on resources that can quickly balance the fluctuations, such as fast-start natural gas power plants. Eventually, battery storage systems will help to balance the variations. The increase in solar installations will continue to pose challenges to ISO for long term and day to day planning and it is continuously looking at methods to improve its forecasting and operational reliability capabilities.