Are Renewables the Answer to Electricity Price Volatility?
The recent streamlining of the permit process for new powerplants in California has led to a great deal of new generating capacity coming online to meet the increased demand for electricity. According to the California Energy Commission, plants with a capacity totaling 5,942 MW are under construction, with 1,734 MW coming online this summer. While this may in part reduce the rolling blackouts, volatile price fluctuations may continue. Natural gas turbines are a large source of electricity generation in California, and the marginal price of electricity is determined by the cost of natural gas fired turbines. The volatility in electricity prices result to a large extent from fluctuations in natural gas prices, as well as high demand for electricity, and limited hydroelectric supply…
