Negative Power Prices in Los Angeles as Wind Tops Forecasts

Southern California spot wholesale power prices slumped to negative levels, a signal for generators to cut output, after wind production surged above forecast.

Wind turbines, primarily in the lower half of the state, produced an estimated 1,981 megawatts in the hour ended at 10 a.m. local time, 73 percent more than the California Independent System Operator Inc. predicted for the time. Some suppliers are forced to pay consumers to purchase their power when prices drop to negative levels so they can keep their plants running.

Electricity consumption across the state was coming in close to projections, the grid operator’s website showed.

Spot power at Southern California’s SP15 hub, which includes Los Angeles, averaged minus $6.93 a megawatt-hour in the hour ended at 10 a.m. local time versus $24.65 at the same time on July 27, according to grid data compiled by Bloomberg. Power traded at $10.13 in the 11 a.m. hour.

On average, spot on-peak prices at the hub are down 68 percent so far Monday at $10.60 versus the full-day average of $32.98 on Friday.

In the North, the NP15 hub, which includes San Francisco, fell $11.60, or 43 percent, to $15.16 in the hour ended at 11 a.m. The on-peak average was down 44 percent at $18.82.

The higher-than-anticipated wind output offset a shortfall in solar generation, according to the California ISO’s website. Renewable generation across the grid totaled 5,993 megawatts in the hour ended at 10 a.m., 10 percent higher than the day-ahead forecast and 20 percent of demand during the hour.

Weather Outlook

Fair weather and a warming trend through the middle of the week are forecast along the coast, with a surge of heat sweeping across much of the state, said WSI Corp. in Andover, Massachusetts.

The high temperature in Los Angeles Monday will be 81 degrees Fahrenheit (27 Celsius), 3 below normal, before rising three days later to 89, according to AccuWeather Inc.’s website. Sacramento’s reading will be 96, 3 above normal, and then jump to 105 two days later.

The California ISO issued alerts for July 29 and July 30 to restrict maintenance on the grid through 10 p.m. on both days in anticipation of “high loads and temperatures,” according to its website. Market participants were cautions to avoid any actions that may jeopardize the availability of generating or transmission capacity during those periods.