California’s solar panels are driving up electricity bills for residents while making power cheaper for customers in other states. The Golden State is producing more solar power than it can use, leading to significant energy waste and financial losses.
Over the past 12 months, California curtailed more than 3 million megawatt-hours of solar energy, enough to power over 500,000 homes for a year. This issue has grown as the state’s solar capacity increased about 20-fold over the last 11 years, with the amount of solar energy wasted in 2024 now more than doubling the total in 2021 and climbing eight times higher than in 2017.
Experts estimate the retail value of the curtailed energy in 2024 exceeds $1 billion. California’s sunny climate is ideal for solar energy production, but peak demand typically occurs at night, leaving a portion of what is generated in the daytime unused.
Industrial-scale batteries, which could store excess energy for later use, are costly, often twice as expensive as the solar panels themselves. Most current systems only store energy for four hours, which is insufficient to meet overnight demand.
This oversupply contributed to California’s electric rates being around twice the national average, as residents effectively pay for unused power. Since 2021, the state’s largest utility providers have raised rates by 51%, but the situation could be worse if California was not sending some of its surplus solar energy to other states.
Ultimately, out-of-state utilities benefit more from this arrangement than Californians. For example, Arizona’s largest public utility saved $69 million in 2023 by purchasing California’s excess solar energy, passing the savings on to customers through bill credits. Similarly, New Mexico’s largest utility saved $34 million in 2022 by buying surplus solar power from California.
California’s increasing solar energy production also caused the price of electricity sold out of state to plummet. Prices have dropped so low that they occasionally become negative, forcing solar plants to pay energy traders to take the power.
Despite these challenges, California Gov. Gavin Newsom said he plans to add another 70 gigawatts of industrial solar capacity by 2045. The plan requires enough solar panels to cover an area nearly half the size of Rhode Island. The initiative aims to make California’s electrical grid carbon-free over the next two decades, but experts warn that high curtailment rates could hinder this goal.
Newsom’s advisers are exploring solutions, including expanding industrial-scale battery storage to save excess solar power for high-demand periods, attempting to direct more of those renewable energy benefits towards the Californians who paid for it.