Can we Generate Too Much Power?


On the face of it, this seems like an odd question to ask. After all, why would we generate more power (i.e. energy at a faster rate) than was demanded by consumption needs?

In practice, a power system has to be in balance at any point in time: what is going in must match what is going out. So if we do find a situation where there is more supply available than is needed to meet demand, there are really just a couple of choices:

1. Tell some of that supply to turn off.

2. Increase demand to utilise the excess supply.

So why would we ever face a situation where excess power is a problem? Surely if there are no buyers of electricity, then suppliers will just stop generating it? After all, basic economics suggests that in a situation of more sellers than buyers, the latter have market power and prices plummet.

In electricity markets, the answer lies – once again – in the issue of supply flexibility (as well as other market constraints).

For some plants it may prove to make better economic sense to keep operating through periods of low demand, because to turn off and on again adds too much additional cost (i.e. they are inflexible in terms of rapid ramping up and down of their output). This additional cost may be sufficient even that they are better off paying consumers – typically big commercial or industrial users – to increase their electricity usage. This is negative pricing.

In the long run, more sensible options than paying energy consumers to consume could include turning on or meeting other demands instead: for example charging batteries (so the electricity is stored rather than used); or supplying electricity to other, interconnected systems.

For other plants, excess supply may be a result of plentiful resource at a time of minimum demand: the wind blowing strongly in the middle of the night, for example. Since variable resources such as these are often paid according to a contracted and static feed-in or power purchase agreement (PPA) price, they may be immune from issues such as negative pricing. They have no incentive to turn off generation, particularly since they don’t reduce any operating costs by doing so (they save no fuel but still have to pay back any debts they owe: i.e. their costs are fixed). However they may be forced to turn off by the system operator – this is known as curtailment.

Although negative prices and curtailment are relatively rare, they have been significant in some markets: e.g. see references (1), (2) & (3) below.

The key point is that, just like the challenge of meeting enough power at any point in time, the problem of having too much is solved by flexibility within the power system:

  • Are there sources of demand that can be shifted in time (to when it is most windy or sunny, for example)?
  • Is there enough flexible supply in the system, that can be easily turned off at times when it isn’t needed?
  • Are there other ways to make use of “excess” power, such as charging batteries or exporting it elsewhere?

References

(1) A particular issue around solar generation has been famously described by the “duck curve” in California, referenced here (pdf)

(2) & (3) However this isn’t just an issue for solar: indeed curtailment has historically been a bigger issue for wind power. Here are a couple of example articles about curtailment, focusing on Germany and on China.