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

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

#91

Post by twunde »

bhuga wrote: post #32
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.

You're referring to distributors, the energy companies that are responsible for managing the wires/gas pipes to your house (Think ConEd, EverSource, etc). This effects the energy generators, which don't have prices regulated but are still regulated by FERC.

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

#92

Post by floatrock »

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?)

Energy markets are some of the most complex set of competing incentives I've worked with. You're not going to get a simple microecon theory, because it's actually many different related markets interacting with each other and fighting often conflicting policy goals.

Here's a good lecture that dives into some structures and why it's complicated: https://youtu.be/tsfBewWIF9c?t=21m47s (this is the market structure bit, the first chunk is all about renewables in new england)

Get your wonk hat on, you're going down the rabbit hole. Your econ-style graphs start around the 26:30 mark.

If it was a simple explanation, we wouldn't have these issues. Complex systems produce chaotic results.

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

#93

Post by esaym »

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?

$0.07 here in Texas. Maybe you should move...

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

#94

Post by perl4ever »

blihp wrote: post #56
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.

It depends on whether or not someone is able to demand delivery at that price and what other forces are in play. i.e. presumably there are regulatory requirements that some minimal amount of capacity must be available as generators typically can't quickly spin up based on the whims of the sun/wind... but what if the generator provides it and there are no takers which a zero/negative price would indicate? Of course th…

"Running parts of businesses at a loss isn't unheard of"

A negative price seems fundamentally different than just running at a loss though.

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

#95

Post by eigenvector »

xigma wrote: post #88
nostrademons wrote: post #40

Earlier quoted context omitted.

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…

> 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. That's not how it works. In Germany, the government subsidizes farmers to put up Windfarms, then forces the electric companies to buy the electricity at an inflated price, which those companies charge their customers for. As a…

You hit at an important dimension which is that the problem is not technical per se, it's really a problem of market design. Wind power purchase agreements should allow curtailment (since it is very easy to ramp a wind farm /down/) when needed for system reliability. However, this reduces the rate of return for wind farms so politicians that are looking to maximize wind build-outs will not favour this.

It's also beneficial to increase the size of the power market geographically, which reduces the variability of wind generation, rather than arbitrarily stopping at national borders.

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

#96

Post by docker_up »

bluGill wrote: post #69
verisimilitude wrote: post #31

Earlier quoted context omitted.

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

Unfortunately it doesn't. Aluminum needs a lot of electricity, but it needs to be consistent for several hours. It takes a lot of energy true, but the furnaces need to be at operating temperature. You can't just turn them on and off, there are startup and cool down times that need to be accounted for.

Current furnaces do. But what if you changed the manufacturing process as well so that maybe the yield isn't as high but it's essentially "for free" in terms of electricity?

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

#97

Post by ProAm »

dev_dull wrote: post #17
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 wonder about this as well. I think it’s time we start getting real answers from PG&E about why our power cost so much when apparently it’s so abundant. Even with solar they charge me $10/month to be hooked into the grid, even though they’re using that same connection to sell my excess premium renewable energy to others.

> Even with solar they charge me $10/month to be hooked into the grid, even though they’re using that same connection to sell my excess premium renewable energy to others.

This is likely a charge to help maintain the grid so you can sell your supply. Consider it the Apple Tax of the power grid, but its not 30%

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

#98

Post by yayana »

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 think Pumped Hydroelectric Storage is what you are looking for. I've seen a few of them here in Switzerland. I think many were originally built out with the train system's grid for it's reliably scheduled low and high capacity times.

http://energystorage.org/energy-storage/technologies/pumped-...

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

#99

Post by Spooky23 »

xigma wrote: post #47
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…

You "currently" have a drought, but otherwise you have plenty of water, so a desalination plant isn't a wise investment (yet). Also keep in mind that these are energy spikes that cause negative prices, whereas most industrial uses need a constant and even supply. These spikes are countered by periods of little to no energy . This is the biggest problem with (most) renewables, they cannot entirely replace coal or nucl…

They will slowly eat away at base loads and lower costs.

In the meantime, you address marginal demand at a lower cost.

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

#100

Post by 1996 »

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?

> please explain then why we are paying the highest prices (...) in a state with the highest percentage of renewables

I think you gave the answer yourself. If you prefer the scientific method, take all the states and the percentage of renewables and do a plot. You will see mostly a line if you do not use the fake numbers (ex: 0.15 often reported for California instead of 0.28)

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