California's Duck Curves

California’s Duck Curves

On last week’s episode of The Energy Desk, Zane and I discussed a 2024 analysis of Germany’s anti-nuclear “Energiewende” transition policy and its estimated $770 billion price tag for fewer emissions benefits than a $403 billion pro-nuclear strategy.

As reiterated during our chat, variable renewable energies (VREs) like wind and solar have a place in a balanced grid — resource diversification benefits cheap, abundant, and reliable power.

However, over-optimizing for one attribute, such as Germany’s focus on reduced emissions, while neglecting resource-specific deficiencies invites real-world economic consequences for energy-intensive sectors — as indicated by Germany’s post-2000 deindustrialization.

A closer look at regional U.S. grid operators shows these reliability risks are not unique to Germany.

Indeed, in 2013, the California Independent System Operator (CAISO) created a moniker, “the duck curve,” to describe the effects of increasing VRE capacity on net load (total load minus renewable generation).

Readers are likely familiar with the overall load curve — power demand rises slightly in the morning and steadily increases to a late afternoon/early evening peak between 17:00 and 19:00.

However, in regions with high VRE/solar adoption like California, peak mid-day solar output creates a substantial drop in net load followed by a steep rise in the evenings when solar generation declines. This pattern resembles the outline of a duck — i.e., the duck curve.

The midday dip associated with CAISO’s duck curve (above) has deepened alongside solar generation growth (below).

A more pronounced duck curve presents new resource planning challenges to grid operators.

As outlined by CAISO:

In summary,

• Pre-VRE resource planning required grid operators to match supply to variable demand — a single variable component.

• Post-VRE resource planning adds a second variable component into the equation, forcing grid operators to adjust dispatchable generation according to variable demand and variable supply.

In the context of CAISO’s growing solar fleet, this requires accommodating the steep decline in solar generation in the evening hours when load reaches its zenith — i.e., managing an increasingly pronounced net load ramp.

The Net Load Ramp

As the name implies, variable renewable energies are unpredictable. Averages, such as those outlined above, mask the day-to-day variability in renewable generation.

As shown below, August 2024’s 24-hour VRE output created similarly variable net load ramping requirements.

The table below shows the range of 3-hour ramping requirements between 16:00 and 19:00 in August 2024 relative to 2023 and 2019.

Added Pressure on Dispatchable Generation

The duck curve presents three challenges for grid operators and traditional dispatchable generation resources.

1. A rapid ramping period elevates grid stress/overgeneration risks as operators attempt to match declining VRE output with increasing dispatchable generation.

2. The duck curve reduces revenue-generating opportunities for traditional dispatchable resources, often making it uneconomical to maintain requisite reliable generation capacity.

3. Increased cycling to meet swings in net load stresses dispatchable thermal generation, reducing long-term dispatchable reliability.

As shown below, CAISO’s gas-fired generation faced its most challenging ramping period on record in 2024.

Again, averages disguise the day-to-day variability of these ramping requirements.

Comparing three-hour ramp-up requirements for August 2024 and August 2019:

Duck Curves and Takeaways

While CAISO created the moniker, duck curves are appearing across U.S. ISOs as VREs capture market share.

Emerging dispatchable technologies like battery storage systems will ease some intraday reliability constraints, though instances of “dunkelflaute” (prolonged VRE outages from insufficient wind/solar) are beyond the current state of the art for BES systems limited to 2-4 hours of dispatchable output.

For interconnected grids like CAISO, power imports provide another level of risk mitigation. However, steep ramping extends grid stress, cycling, and economic consequences to neighboring ISOs.

Ultimately, reliability concerns and expensive utilities will likely incentivize the migration of energy-intensive sectors to regions with a balanced resource mix.

CAISO’s decreasing peak load reflects this migration, with an estimated 6.3 businesses departing California each month — approximately half of which are moving their headquarters to Texas.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation concerning the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is intended for Mobius clients only and is not considered promotional material.