Yes, it has to turn off industrial solar production on sunny days. Less frequently, it has negative wholesale prices where it pays other states to take the excess power.
Yeah this is exactly why the new version of the policy (attempts to) incentivize storage in addition to solar, because that makes the excess solar power more useful, by allowing it to be time-shifted to times when there is a dearth instead of an excess (ie. when the sun goes down). The big subsidy of net metering for stand-alone residential solar is no longer beneficial; there are better things for the system at large to be spending its resources on, like storage, and also transmission and distribution improvements.
Net metering meant pge had to buy residentially generated power for 40 cents instead of industrial solar for 4 cents.