Emmet Penney: Negative Price-a-Palooza

One of my go-to resources for energy information is Grid Brief, a daily newsletter published by Emmet Penney. You can sign up for it by clicking here.

Today, Emmet writes:

As energy prices shatter ceilings worldwide, America has regions where prices have been plunging into the negatives. What’s going on?
In the electricity spot markets where renewables have been massively built out, prices tend to go negative nearest their location. Renewables are built far from where energy is most needed, and because no one ever includes the costs of new transmission or distribution to onboard them (this is also why they can be considered “cheap”), they often don’t have enough transmission. So, when they start producing fat bands of heavily subsidized kilowatt-hours, there’s nowhere else to move the power. Thus, they bury the price needle in their respective regions. 
Transmission takes a long time to build–people defend their property in the courts–and is highly expensive (also because people defend their property in the courts). The bottleneck in T&D construction breeds the negative price phenomenon. 
“Wholesale prices went negative about 200 million times across the seven US grids in 2021, more than twice as often as five years earlier,” reports Bloomberg. “That record will be broken this year as bottlenecks worsen on three renewable-rich grids in Texas, California, and the Southwest, the data show.”
Negative prices, over time, force reliable generation off the grid. They don’t meet the clearing price dictated by the renewables and slowly the business case for keeping a coal or nuclear plant running falls apart, as we saw in Palisades. This rings even truer for electricity markets that have failed to pry apart the major monopoly utilities–why would a utility hold onto a depreciating coal plant when they could scoop up more subsidized wind and solar?
Permitting reform may make it easier to build transmission and distribution, of course. But then we’ll be faced with the real question behind these ambitions: what could Rube-Golberging our grid possibly improve?