When it comes to renewable energy, California is doing great. The state is ahead of schedule for meeting its goal of 50% of all power coming from renewable sources by 2030. Thanks to abundant sunshine and plenty of wind in places like the desert around Palm Springs, a full 68% of renewable energy is coming from solar and wind farms.

(Read on Forbes)

But is it possible to have too much of a good thing?

While California’s renewable energy boom is good for the environment, it’s not always financially efficient. That’s because on many days, California is actually producing more renewable energy than residents are using. On several occasions, utilities have had to pay surrounding states to take the excess energy off of their hands.

This is a tricky but not insurmountable problem. Entrepreneurs are well positioned to create products and technologies to help the state better manage its energy supply and demand. But to see the potential for this new industry, it’s important to understand why California has been forced to dump excess electricity in the first place.

Power grids work on a delicate balance of supply and demand. With fossil-fuel-powered plants, that’s not really an issue. When demand increases, these plants can easily power up to produce more electricity. When demand drops, they can temporarily slow generation.

But renewables work differently. When the sun is shining, solar panels convert it into power. When the wind blows, operators can’t just stop wind turbines from spinning. That can result in excess power flowing into the grid. And if supply outstrips demand, there’s a significant risk of blackouts as transmission lines get overwhelmed. Instead, utilities have to find ways to get rid of that excess electricity, too often by paying other states to take it.

This imbalance is a result of government and industry focusing more on generation than energy management. That’s why management is the next big market.

For example, a critical solution to the grid problem is batteries. Batteries in homes could store solar power to help people become energy self-sufficient. (Currently people with solar panels can draw energy from them only when the sun shines — unless they own a storage system like the Tesla Powerwall.) Batteries throughout the grid could store and release renewable energy to help keep the grid in balance.

Another way to manage energy use is through smart devices in the home. Power companies could alert people to use energy when demand is low and to curtail use when demand is high. The app OhmConnect already offers a service that pays people to reduce their energy use when demand is high (the company profits from utility companies that pay to avoid firing up additional power plants).

Expect to see more entrepreneurial innovation in this space — especially coming from San Diego, where the San Diego Regional Energy Innovation Network is working with startups on creative solutions to California’s energy problems.

Southern California Edison also has an interesting plan to help manage energy use through a combination of energy storage, more electric cars on the road and electrification of home space and water heaters. The idea is that by tackling the problem from a holistic point of view, every aspect of renewable power — from generation to use — could become more efficient and prevent future supply-and-demand imbalances. This kind of plan could open the door for many entrepreneurs.

In the first quarter of 2017, utilities had to curtail solar and wind production by 3% to compensate for supply-and-demand imbalances. With a little encouragement and some California ingenuity, entrepreneurs can help keep the state moving toward its goals while building new businesses.