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The Economics Behind the California Duck Curve:

The California Independent System Operator (CAISO) has been monitoring and analyzing the Duck Curve and its future expectations for about a half a century now and their biggest finding is the growing gap between morning and evening hours prices relative to midday hours prices. According to their last study, the U.S. Energy Information Administration, found that the wholesale energy market prices over the past six months during the 5 p.m. to 8 p.m. period (the “neck” of the duck) have increased to $60 per megawatt-hour, compared to about $35 per megawatt-hour in the same time frame in 2016. However, on the other side they have measured a drastic decrease in the midday prices, nearing $15 per megawatt-hour. These high peaks and deep valleys are only showing continues trends of going further apart making this Duck Curve even more prevalent as our renewable energy production continues to grow.

To understand these deep valleys and the high peaks we need to look at many different variables that go into the renewable energy grid. The green resources such as solar, wind, geothermal, and hydroelectric are increasingly satisfying California’s total electricity needs. Green energy is abundant, which has become an economic issue on the time of use front. However, as of now, the technology that has been implemented puts a lot of control into consumers which leads to issues amongst different operating conditions. In order for it to run smoothly this would require flexible resource potentials to guarantee reliability from the renewable energy grid. The idea of reliability is one of the biggest issues facing the green energy market. Intermittency, “occurring at irregular intervals; not continuous or steady” leads to skepticism by consumers. If they are going to be transferring into the renewable grid then they must be guaranteed a constant stream of energy at a price/rate that can be maintained, but the Duck Curve issues is proving just the opposite.

A critical part of this curve comes from the “Net load,” net load is the difference between expected load and anticipated electricity production from the range of renewable energy sources. In certain times of the year (namely Spring and Summer), the curves create a “belly” appearance in the midday that then drastically increases portraying an “arch” similar to the neck of a duck, consequently the name “The Duck Chart .” During the midday mass amounts of solar energy is created (seeing as that is when the sun is out and brightest) but because of this, people require much less energy during the day. This is when the issue with lack of battery storage comes into play. We have enough solar technology to power the world, but we have very little infrastructure that would enable us to store it to be used later. So, we have an oversupply of energy at a time when demand is low and an inverse issue of lack of supply when demand is high due to lack of storage availability. This is why prices are so high at those peak times.