October 04, 2022 | Article
On September 6, 2022, it became clear that greater use of solar electricity without adequate storage capacity is insufficient for a sound energy transition. The California electricity market experienced wholesale price spikes due to extreme heat and massive demand for air conditioning. California’s Independent System Operator (CAISO) schedules most of the daily electricity demand by soliciting bids a day ahead, but some residual peak demand is settled in near real time. Electricity from natural gas “peaker” power plants can meet temporary demand peaks but at much higher cost. More storage capacity might have allowed utilities to better allocate electricity delivery over the course of the day, preventing the risk of major economic disruptions for firms and households. This episode foreshadows the challenges facing the US economy amid the transition toward renewable energy sources as outlined in US Energy Transition: The Path to Net Zero.
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