Batteries reshape solar pricing in California market

According to a new report by Aurora Energy Research, “increasing battery charging demand is raising mid-day prices” in the CAISO electricity market.

The chart below shows CAISO wholesale electricity rates during a March 20 five-minute bidding window. The gold line shows the actual pricing that was cleared for the electricity at negative $8.34/MWh. The red line shows a hypothetical clearing rate of -$50/MWh, if there were no batteries bidding. The $42/MWh spread was driven by the more than 3 GW of energy storage buying electricity at that moment.

Source – Aurora Energy Research

For the five-minute period noted above, at $42/MWh, the 3,100 MW of energy storage assets injected $10,850 into the solar market.

For the entire day on March 20, 2026, batteries purchased 52,777 MWh of electricity, according to CAISO supply data. If they were all purchased at a $42/MWh premium, the batteries would have paid solar asset owners an additional $2.2 million.

According to Aurora, the same grid in 2022 had only 0.6 GW of energy storage capacity buying electricity. At that level of storage penetration, as noted in the chart below, Aurora observed only a $5/ MWh increase in price.

Source – Aurora Energy Research

Aurora warns that rising midday charging demand may cause further battery revenue challenges. First, the group said renewable (mainly solar) capacity additions may slow within the state in the near term. Concurrently, they project further battery additions. If battery capacity demand growth outpaces solar output, additional upward pricing pressure will follow.

California is seeking significant new capacity, including 6 GW at the end of the decade.

Battery competition has also lowered the rates at which electricity can be sold.

Evening peak rates have declined measurably. According to Aurora, peak electricity prices were above $70/MWh 14% of the time in 2022. In 2025, the $70/MWh level was rarely breached.

According to Aurora, batteries earned an average of $115/kW-year of capacity deployed in 2022, with most of this revenue coming from selling into the evening peak period. In 2025, with pressure from higher solar costs and lower peak rates, this revenue is expected to decline to $52 per kW-year.

CAISO recently stated that battery discharge volume has increased in all non-solar hours, including the early morning hours. In a recent development, batteries were the largest morning electricity source.

Solar power plants can offer electricity at negative wholesale prices because spot market revenue is only one component of their total income. A fixed-price power purchase agreement pays a contracted rate per MWh regardless of real-time conditions, while federal production tax credits, renewable energy credits, and state-level incentive payments all accrue per unit of output. Curtailment forfeits real money even when the market price goes negative.

From pv magazine USA