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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

#191

Post by ars »

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.

> 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.

You say that - up until the day there is a brownout on a cloudy, yet boiling hot day, because there is little sun and no wind, and no one wants to build non-economical power plants.

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

#192

Post by zyren »

aphextron wrote: post #59
rb808 wrote: post #29

Earlier quoted context omitted.

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, seem…

>Also California isn't most expensive, seems pretty much the same as many blue states. https://www.eia.gov/electricity/state/ >Data for 2016 This lists California at $0.15/kWh. I've never paid even close to that anywhere I've lived. The current PGE residential rate of $0.28/kWh [0] is about the same as Honolulu, Hawaii, where 100% of electricity is produced from burning natural gas and petroleum.[1] [0] https://www.p…

I live in San Diego and I pay on average 40 cents per kw after everything. I used under 1000kw this last bill and the electricity portion was around $400, gas was $15, total bill around $432.

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

#193

Post by WalterBright »

pitaj wrote: post #30
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's certainly not a free market economy because almost every electricity utility is a state monopoly.

When markets get "out of whack" it's almost certainly due to government regulation. In this case, it's the government setting fixed electric rates for consumers.

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

#194

Post by kkylin »

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'd also think another challenge is the issue of timescales. "Green" energy sources like wind and solar can have large fluctuations, on the timescale of minutes. I don't know much about desalination plants, but I'd imagine they cannot be started and stopped just like that.

(This, incidentally, is a reason I've heard power engineers give for preferring natural gas to e.g. coal, aside from cost considerations: generators are faster to start and stop.)

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

#195

Post by ianai »

notatoad wrote: post #187
prostoalex wrote: post #176

Earlier quoted context omitted.

Stabilization? https://www.nasdaq.com/markets/crude-oil.aspx?timeframe=10y

just because there is fluctuation, doesn't mean there's nothing stabilizing it.

OPEC without a doubt decides output and price (with noise). They can hold the economy hostage nearly unilaterally and have for decades - see the 70s supply shock.

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

#196

Post by nkurz »

CompelTechnic wrote: post #161
amluto wrote: post #65

Earlier quoted context omitted.

I wonder if a less efficient desalination plant would be cheaper. The modern efficient plants use RO with pressure exchangers, I think. Maybe a flash distillation plant or an RO plant without pressure exchangers would be economical to operate intermittently. But desalination may be a poor example in general. It’s not actually very energy intensive, at least compared to the value of potable water in an urban location.

Yeah, if I was gonna build a desalination plant built to use Just a big resistor in a big tank (or pond), a big fume hood and coil to another tank. Capital cost can probably be minimized a whole lot.

Seeing as "boiling the ocean" is the standard business phrase used to dismiss an overly ambitious and likely impossible to execute plan [1], there would be something beautifully ironic about a startup whose explicit goal is to solve a real world problem by literally boiling the ocean.

[1] http://workingwithmckinsey.blogspot.com/2013/11/Avoid-Boilin...

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

#197

Post by WalterBright »

nostrademons wrote: post #76
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?)

Consumption and production are both inelastic and storage costs are high. Traditionally when a producer produces more of a good than consumers want to buy, the price drops, consumers buy more, and producers produce less. If consumption & production are both inelastic, consumers won't buy more and producers can't produce less. The excess goes into inventory, where it's treated as an asset and then sold (often at lower…

> Consumption and production are both inelastic and storage costs are high.

Consumption is inelastic because the electricity rates are fixed 24/7. Allow variable pricing based on supply, and you'll see very elastic behavior.

For example, people will charge their car batteries when the rates are cheapest. Same for running the electric hot water heater, and the A/C, refrigerator, etc.

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

#198

Post by toomuchtodo »

eigenvector wrote: post #95
xigma wrote: post #88

Earlier quoted context omitted.

> 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 bene…

You do not want to force curtailment of clean energy. You either force curtailment of fossil generators (and let those operators deal with the operational complexity of doing so) or incentivize storage.

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

#199

Post by psergeant »

WalterBright wrote: post #189

I'll suggest again that the solution to this is to charge variable prices to the consumer based on the supply. For example, I pay exactly the same rate, 24/7. Of course this will result in a mismatch of supply and demand. A lot of electricity demand can be shifted to when the supply is cheapest. When the supply varies wildly, like solar and wind do, there's a giant impedance mismatch when demand is charged a fixed pr…

But also: consumers with Powerwalls and other home storage options.

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

#200

Post by mmt »

whatsstolat wrote: post #106
milcron wrote: post #44

Earlier quoted context omitted.

Electricity isn't a great market. End-users with solar power are allowed to use the grid as a perfectly free battery, which is why everyone is dumping power on the grid at high noon.

Where I live its about 25c (of Australian Dollar) for 1kwh but you only get 7c back. So a real battery would be much preferable.

> Where I live its about 25c (of Australian Dollar) for 1kwh but you only get 7c back

I've read about places that don't actually do "net metering" and implement this with two separate meters, one for inflow and one for outflow.

Is that the case where you are? Are there any time-of-use options available that might sweeten the deal?

> So a real battery would be much preferable.

Assuming it were free (even to purchase, with only charge/inverter efficiency losses), of course it would. However, as much of the discussion in the thread points out, storage is very capital (if not maintenance) intensive, even at utility scale.

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