Power Worth Less Than Zero Spreads as Green Energy Floods the Grid • Hacker News Board

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

#31

Post by verisimilitude » Tue, Aug 07, 2018, 8:31 PM UTC

DoctorOetker wrote: post #22

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…

I believe aluminum is nicknamed "solid electricity" due to the ore purification process or somesuch; which dovetails well with the strategy you outline here!

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

#32

Post by bhuga » Tue, Aug 07, 2018, 8:31 PM UTC

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.

For many utilities, it's not as simple as that. They're heavily regulated and their prices are generally set, capped or otherwise limited to give them a certain percentage profit. They often have to get price increases approved by their regulators. If they have debt outstanding on underperforming gas power plants, they may need to make this argument publicly so they can adjust pricing.

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

#33

Post by MrRadar » Tue, Aug 07, 2018, 8:32 PM UTC

petermcneeley wrote: post #25

Can someone with a microecon background explain how this is possible? (My guess is that consumption is somehow completely independent of unit price and that its also inelastic?)

The key thing to understand is that the electricity market is unusual in that electricity can't be easily "stockpiled" the same way most commodities can be. This means it needs to be produced at almost the same rate it's consumed.

Some types of generators have long ramp-up/ramp-down times so it can actually be cheaper to keep them running and pay someone to consume the excess power they're producing compared to how much it would cost to stop them when the energy they're producing is no longer needed and then start back up again when it is. Additionally, some other types of generators (wind and solar) receive tax credits for every kWh they produce so even if you lose money selling the energy you can come out ahead when factoring in the tax credit.

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

#34

Post by mtgx » Tue, Aug 07, 2018, 8:34 PM UTC

DoctorOetker wrote: post #22

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…

If they can produce so much cheap energy, doesn't that balance out with the more expensive batteries they have to buy? (which will only get cheaper in the years to come)

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

#35

Post by jabl » Tue, Aug 07, 2018, 8:34 PM UTC

DoctorOetker wrote: post #22

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…

Desalination is AFAIK energy AND capital intensive, so it's very expensive having such equipment sitting around doing nothing until energy prices fluctuate low enough.

Now, there are situations where demand response makes economic sense; just not enough by far to balance a huge amount of variable renewables.

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

#36

Post by ethagknight » Tue, Aug 07, 2018, 8:35 PM UTC

DoctorOetker wrote: post #22

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…

With your desal example, I think a bulk of the energy requirement for desalination is building a pressure differential. That seems like it would be very easy to parallelize.. you don't need full on duplicative Desalination sites, you just need pressure vessels that can store large amounts of compressed air to take advantage of energy gluts.

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

#37

Post by rwcarlsen » Tue, Aug 07, 2018, 8:35 PM UTC

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.

Low/negative prices (caused largely by various regulation/policies) have been putting a lot of economic pressure on existing nuclear power generation - sometimes causing it to close [1]. Generation that is largely replaced by natural gas plants. So maybe this very non-free-market state is actually not helping make forward progress on what many would consider to be one of the most important issues relating to energy - climate change.

[1] https://www.forbes.com/sites/jamesconca/2016/05/16/natural-g...

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

#38

Post by milcron » Tue, Aug 07, 2018, 8:35 PM UTC

Latteland wrote: post #13

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?

you left out your state :-) I thought washington state was the state with most renewables. I pay about 12c per kwh.

That's mostly due to the hydroelectric dams, though. Negative prices come from too much solar power in the middle of the day.

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

#39

Post by jartelt » Tue, Aug 07, 2018, 8:36 PM UTC

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?

CA is a huge state with a lot of grid to manage. There are lot of transmission lines and lots of trees, fires, mountains etc. that must be dealt with when doing grid maintenance.

Utilities also over installed a lot of generation capacity after the blackouts in the 2000s. We are still footing the bill for all the natural gas plants they built out of fear for future blackouts. Electricity demand has been flat since 2008, and many generators don't get used much (yet rate payers still paid a guaranteed rate of return to the utility to build the plants).

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

#40

Post by nostrademons » Tue, Aug 07, 2018, 8:36 PM UTC

DoctorOetker wrote: post #22

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…

It's likely a short-term problem. There are plenty of ways to fix it (besides the one you mention, just shut down coal & oil power plants for good and replace them with technologies like natural gas or hydro that can easily react to spikes in demand), but all of the fixes require capital investments and time to build factories & tooling.

Basically this is a problem because a bunch of existing incumbents are probably going to go bankrupt, or at least have to write down a lot of capital equipment and invest in new technologies. Boo-hoo for the incumbents, but it's good for consumers and good for society.