Grid operators and traders thought they were totally prepped for the historic U.S. solar eclipse. There was just this one thing they didn’t completely factor in: “irregular human-behavior patterns.”
That’s the technical definition, from the folks who manage the electricity network at the Southwest Power Pool, for the conduct of millions of Americans who were outdoors ogling the moon shadowing the sun instead of cranking up the A/C in homes and offices. Demand, of course, tends to rise heading into the hottest part of a summer day. On Monday, it developed a weird U-shaped dip over a two-hour period across the country.
This was a bummer for traders who’d bet prices would jump as a whole load of solar-produced megawatts faded to black. “If anything, it was bearish from a trading perspective because people were more busy looking at the eclipse and talking about the eclipse,” said Tom Hahn, vice president of U.S. power derivatives at brokerage ICAP Energy LLC in Durham, North Carolina.
Spot power in California fell to negative levels as the eclipse wiped out and restarted thousands of megawatts of solar power, and they also dipped from Texas to New York. While natural gas demand rose to a one-month high on Monday, spot prices at several hubs weakened versus the U.S. benchmark.
The outage of renewable resources, fossil fuel or nuclear generation can send prices shooting up by hundreds of dollars within minutes. But grid operators, utilities and electricity generators had been planning for months to make up for big swings in supplies. Add that pesky human factor and, oops.
“The eclipse was definitely a distraction to the market,” Hahn said.
Spot electricity at Northern California’s NP15 hub averaged $21.50 a megawatt-hour at 10 a.m. to 11 a.m., less than half the price for supply secured in advance for the hour in the day-ahead market, according to grid data compiled by Bloomberg. Then at 11:50 a.m. local time — as the sun started to reappear from behind the moon — the ramp-up in solar power sent prices to a low of minus $15.97.
While that was the most dramatic case of a power-price retreat, there were noticeable dips elsewhere. Cloud coverage in places like North Carolina, Texas and New Jersey had reduced solar output before the eclipse anyway, limiting the magnitude of the loss. The moon’s shadow also reduced temperatures a bit. And then there were all those people playing hooky from work and school.
Alphabet Inc.’s Net Labs unit, which deploys thermostats and other smart home technologies, drew more than 750,000 customers into its Solar Eclipse Rush Hour experiment to cut consumption. They reduced power use by about 700 megawatts nationwide, helping to offset a 10,000-megawatt drop in solar power. In California, Nest and other partners worked with the the state utility commission to cut consumption by about 1,500 megawatts.
For the Southwest Power Pool, which manages a network stretching from North Dakota to Louisiana, electricity use came in 2,500 megawatts below the forecast. The dip was also “very evident” in New England, New York and the nearby 13-state grid managed by PJM Interconnection LLC, said Tom DiCapua, managing director at Con Edison Energy in Valhalla, New York. The network, which manages the largest U.S. grid with 65 million people, saw demand fall by 5,000 megawatts, or as much as 3.8 percent, during the event.
“People drove up the day-ahead price thinking that prices would settle higher in real time,” DiCapua said. That was the wrong way to go. “The people who tended to be short tended to make money. You wanted to be short.”
Remember that for the next total eclipse in the U.S.: April 8, 2024.