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Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

bloomberg.com

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Re: Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

#21

Post by EvilEndures »

stcredzero wrote: post #8

If the general pattern holds of the electrical power market being like the natural gas market, just at much shorter time scales, then does this mean that we are going to see an increase in electrical power storage in the next few years? Companies have been making money by offering storage and pooling services in energy for quite awhile. It's just that storage has been more difficult from an economic and technical sen…

Probably that and "quick start" powerplants already serving this function in the UK.

https://www.ft.com/content/ba6bd46a-1d75-11e8-956a-43db76e69...

> The episode showed how small, flexible power plants are now bridging the supply gaps, especially at a local level, between intermittent renewables and Britain’s fleet of large, but slow-to-fire-up, gas and coal plants.

Re: Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

#22

Post by DoctorOetker »

I don't truly understand this "problem". I understand storing the energy in batteries is currently very expensive economically and materially.

However I believe there are plenty of "goods" (irrespective of if they are bulk materials, or partially processed products) which have a high processing energy per volume ratio (this does not need to be recoverable stored energy).

Allow me to give an example: currently we have a drought in Belgium (or at least Flanders). We are not landlocked, there is plenty of water in the sea. Desalination is energy intensive. Instead of only looking at energy storage, why can't we increase the processing capacity (more desalination sites capable of working in parallel), and desalinate say sea water during the energy flood? I don't expect this to be an ideal real world example, only a pattern for identifying such examples: any product (could be composite parts, or bulk material) which is relatively compact and has some high energy per product volume processinng step. Just do the process (desalination, welding some part to another part...) when the sun shines, and store them for later.

Products with very high step energy density are good candidates for storing, and could help flatten daily variations, and perhaps even seasonal variations!

Now some companies would prefer avoiding risk if they don't have guaranteed orders far enough into the future, then perhaps there should be a market for insurance or loans, so that the company is encouraged to take the risk, instead of wasting the cheap energy...

Re: Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

#23

Post by bjoernw »

perl4ever wrote: post #20
maerF0x0 wrote: post #5

> It’s left the utilities complaining that they can’t earn the returns they expected for their investment in generation capacity. Good. That's a well functioning market economy. Those who make poor investment choices need to feel the sting of losses else the market fails to work correctly.

I think that negative prices are prima facie evidence of a market economy not functioning "well". Negative prices seem to me to be to be equivalent to fines for doing things that aren't socially useful. If they proliferate, that's a suggestion something is out of whack.

Only if they stay negative

Re: Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

#24

Post by [deleted] »

perl4ever wrote: post #20
maerF0x0 wrote: post #5

> It’s left the utilities complaining that they can’t earn the returns they expected for their investment in generation capacity. Good. That's a well functioning market economy. Those who make poor investment choices need to feel the sting of losses else the market fails to work correctly.

I think that negative prices are prima facie evidence of a market economy not functioning "well". Negative prices seem to me to be to be equivalent to fines for doing things that aren't socially useful. If they proliferate, that's a suggestion something is out of whack.

[deleted]

Re: Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

#26

Post by jartelt »

maerF0x0 wrote: post #5

> It’s left the utilities complaining that they can’t earn the returns they expected for their investment in generation capacity. Good. That's a well functioning market economy. Those who make poor investment choices need to feel the sting of losses else the market fails to work correctly.

Exactly - this will finally make them think twice about installing more generation capacity and will force them to consider installing battery storage or other solutions to fix issues on the grid.

These non-generation solutions exist, but utilities love to just install more generation because it's in their playbook and they don't want to innovate.

Re: Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

#27

Post by sj4nz »

aphextron wrote: post #3

Can someone please explain then why we are paying the highest prices in the continental US for retail electricity, at $0.28/kWh, in a state with the highest percentage of renewables in the country?

I think it's because government and electrical utility systems have a weird regulatory setup. Many utility systems have to petition to alter their prices with these governments. No one ever asks to "reduce" prices voluntarily in most systems like this. So this must have the long-term effect of propping up prices where it is hard to compete for business where everyone is supposed to charge the same "approved" rate for energy in a given market.

Re: Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

#28

Post by perl4ever »

bjoernw wrote: post #23
perl4ever wrote: post #20

Earlier quoted context omitted.

I think that negative prices are prima facie evidence of a market economy not functioning "well". Negative prices seem to me to be to be equivalent to fines for doing things that aren't socially useful. If they proliferate, that's a suggestion something is out of whack.

Only if they stay negative

That's reasonable. The headline says it's spreading though.

Re: Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

#29

Post by rb808 »

aphextron wrote: post #3

Can someone please explain then why we are paying the highest prices in the continental US for retail electricity, at $0.28/kWh, in a state with the highest percentage of renewables in the country?

I can't say for sure, but quite likely renewables cause high costs like the article says. The problem is that electricity generators of all types have very high fixed costs. If you have a lot of wind and solar power its a problem that it ruins the profitability of the traditional generators half the year, so they need high prices in the other half to cover the capital costs.

Also California isn't most expensive, seems pretty much the same as many blue states. https://www.eia.gov/electricity/state/

Re: Power Worth Less Than Zero Spreads as Green Energy Floods the Grid

#30

Post by pitaj »

perl4ever wrote: post #20
maerF0x0 wrote: post #5

> It’s left the utilities complaining that they can’t earn the returns they expected for their investment in generation capacity. Good. That's a well functioning market economy. Those who make poor investment choices need to feel the sting of losses else the market fails to work correctly.

I think that negative prices are prima facie evidence of a market economy not functioning "well". Negative prices seem to me to be to be equivalent to fines for doing things that aren't socially useful. If they proliferate, that's a suggestion something is out of whack.

It's certainly not a free market economy because almost every electricity utility is a state monopoly.
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