This winter has seemed to drag on with the official start of spring just weeks away. Clocks roll back this weekend and warm weather is finally on the horizon after a long winter.
The time change will bring later sunsets, eventually leading to the longest days of the year. With solar deployments explosive growth over the last decade, could this combo start to impact evening peak pricing?
When the time shifts, the sunset moves an hour later, which means the sun will be setting closer to the peak pricing hours. As people return home from work and ramp up demand, solar generation can continue to supply a substantial portion of the demand well into the volatile price hours of the evening. This could potentially help ease evening price spikes.
We have seen this trend in CAISO in recent years, with fewer real-time price spikes due to supply shortages.
Looking back to last summer, ERCOT's solar generation has seen impressive growth. Last year, around the summer solstice, the maximum solar generation record was about 19.3GW, but currently, the solar record sits around 24.8GW, reflecting an increase of approximately 28.5% since last June. With growth rates like this, we could see more than 25GW for the new record peak solar generation for the grid by this summer.
Last year's average solar generation for June and July at HE19 was 11.37GW, while HE20 saw about 5.58GW. If we apply the same growth rate, we could expect averages around 15GW at HE19 and at least 7GW at HE20 this year, aiming for the upper hand as we assume continued growth in the coming months.
This solar boost, combined with the increase in battery storage, could help alleviate price volatility this summer, especially in the coming years as renewables continue to grow. More solar and batteries could lead to reduced gas burn during peak demand hours, lessening stress on gas-fired generation, especially during the hottest days. This means a reliable net demand forecast will be increasingly necessary in the coming years to help accurately forecast energy prices at the granular and zonal levels.
Less gas burn could result in lower gas prices, which is a major factor that could lead to lower LMPs. However, with demand growth increasing every year, the effect may not be as large. It seems that low wind days during shoulder seasons when generation outages are at their highest levels are now the prime days for making money, while summers might not be as lucrative as before.
Back to the time change. This Sunday, clocks will skip an hour, leaving us with just 23 hours that day. For the energy field, this is the easier of the two time changes. It is a lot easier to ignore an hour of the day when looking at data than adding an extra hour. Thankfully, not much action is typically happening around this time, especially on a Sunday, so it should be a smooth transition to those sunnier days ahead of us.
