It could be partially your neighbor's solar panels or batteries. A lot of domestic power that gets contributed to the grid never leaves the neighborhood. These things aren't always as clear cut.
The key to lower prices on the grid is more flexible and localized pricing. Power suppliers don't like this because it favors cheaper sources of power that push their more expensive legacy generation out of the market. But it would create price incentives for demand and supply to align better.
A good example is the UK, which has national energy pricing and a lot of excess wind power in Scottland that is often being curtailed at the same time gas plants further south need to power up to power local demand there. End result: the Scottish pay the same high rate even though they are literally discarding energy they don't know what to do with. If they had local energy pricing, their rates would go down a lot because they have a lot of wind power most of the time.
And further south, people would either invest in local power generation (instead of far away in Scottland) or actually relocate data centers and other energy intensive businesses to where the power is cheap. As opposed to e.g. Slough.
You make an excellent point - so much so that it already exists today at the wholesale level in many markets. What you're describing is Locational Marginal Pricing (LMP) - a reasonable introduction is here: https://www.enverus.com/blog/an-intro-to-locational-marginal...
In the wholesale market the biggest consideration is transmission capacity - if I can generate 100MW of electricity at $15/MW but the transmission line between me and the demand can only carry 20MW, and another generator can generate 100MW for $30/MW with excess transmission capacity to the demand, the price at the demand will lean heavily towards the $30/MW price.
The same model could be applied to local grids as a way to "manage" residential solar installations for example; overcapacity is penalized through pricing signals (but if you throw in batteries so you can shift the release of electricity...).
Two major problems that need to be considered with using localized pricing are sudden bidding wars and partitioning.
Let's say locally you have a few factories when a sudden drop in supply occurs in the energy market. The biggest costs of those factories are personnel, equipment and building, so rather than shutting down they will be willing to pay much more for energy than what is rational in the market in order to continue producing and maintain contracts in the short term. Long term they may move away to a more energy stable and cheaper location, but for the next 10-20 years they will eat the occasional spike in price. Everyone else who locally live there can't eat a sudden 100x in energy costs, with the result that they will vote into office politicians that protect against such situations, and those politicians will in turn spread out the problem over a wider area where areas with stable supply of energy can help through funding (higher energy price) and transmit energy to areas with less stable energy. Alternatively they can pay their citizens' bills directly, as happened during the energy crisis a couple years ago, money that then get taken from the general budget (paid through taxes).
The other issue is partitioning. The more local zones you get, the more borders you get between those zones. People living on the border will see a unreasonable price difference depending if their house/town/city happened to land on one side or the other. This feels unfair, which results in upset citizens, resulting in people voting in politicians that can fix the situation. Politicians then feel a pressure to even out the prices among the zones, using things like adjusting local taxes.
As a general rule, the voting population want stable energy availability, stable prices and fair prices that are similar to everyone else.
Everyone adapts to the single most expensive uneven form of local pricing: property prices.
I think there's a very strong case to link grid and generation capacity improvements to local pricing in the effective area, even if it doesn't end up being through the market. Make the link explicit: "if this pylon project is built, we will give everyone in the receiving county 1p/unit off their bill for five years."
Power demand is often inelastic. There are many places in summer where people would pay $200/kWh to run a small air conditioning unit, for example, when their normal price of power is $0.10/kWh. There is no reason to shift toward generation sources that have price uncertainty when demand is inelastic like this. See the exact same thing in healthcare. The proper solution to this economic problem at a societal level is to have a predictable low price of available power.
There are "many" places where people would pay US$200 to run an air conditioner for one hour?
Hospitals, specialty warehouses, datacenters, the list goes on. Some private citizens in Arizona or Texas, too.
> There are many places in summer where people would pay $200/kWh to run a small air conditioning unit, for example, when their normal price of power is $0.10/kWh.
I don’t know anyone that would pay $200/hr to run a 1kW air conditioner. I’d just go in my air conditioned car and pay for gasoline..
I once had to pay about $1500 USD per kWh. That’s $90 USD to boil 1 litre of water.
Consequently I chose to freeze rather than turn on any heating. At that price even LED lighting is too expensive. I probably should have unplugged my fridge too.
But many people chose to keep themselves (and families) warm.
Lesson learnt: never pay the spot price for power. In minutes I probably lost all the saving I had accumulated by micro managing power until that point.
I have seen my fair share of data centers and office complexes switching to their diesel generators due to very high energy spot prices.
If you have an alternative source of power (even if it is a gas generator) I think a spot price contract is fine. Otherwise it is too risky for residential consumers.
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Good point. If there is an alternate power source, it makes perfect sense to go to spot pricing. If you don't and you have room mates who may not like freezing in the middle of winter, don't.
Parent may be referring to specialty units that for example chill expensive perishable medication.
That sort of facility will have diesel generators for backup power, they will be maintained and tested monthly, load banked yearly.
Even if the generators failed, renting a trailer mounted diesel generator costs much less than $200/kWh.
If you really want to turn everyone who runs a facility that needs power for under $10/kWh into an energy trader who has to build a facility with a larger generator than needed and a battery bank and everything else, there is a huge amount of economic loss involved in that. Energy is cheap. Energy should be cheap. That infrastructure should remain for disasters.
Running those generators is not free, and puts wear on them. Also, starting up those generators takes time and puts a certain amount of wear on them, so you are now talking about also having batteries and other equipment to cover short periods and the gap during generator startup. And now when do you spin up the generator? Do you spin it up when the instantaneous price of a kWh goes over a certain threshold or do you wait? All of these are now things that every single industrial facility has to think about.
If you can't handle volatile prices and know your demand in advance then simply by PPAs or energy futures?
You know, the standard method all markets use to handle volatility. But apparently electricity is different and we need enormous subsidies instead.
Electricity is a bit of different in that it is an general utility, closely attached to government for delivery and production, and historically dependency on natural resources or caused pollution (social impact). Electricity is also essential in many places for human survival, and is critical for economical growth and social stability. During war, electricity is treated different from other commodities in a very clear way.
But my point is that all that isn't necessary the important part. The voting population are not always rational participants in the market, nor are companies. There are Nash equilibriums and strategies with local maximums that results in irrational consumer behavior. When there are major social consequences from irrational behavior then people will look towards social, ie political solutions. That generally means regulation, subsidies and if all else fails, government control. The only way to avoid that is to either eliminate the social consequences, or eliminate irrational behavior.
It's simply not realistic to expect consumers or most small businesses to participate in futures markets. And futures markets sometimes break down with the counterparty failing to deliver. That's not a problem with most commodities but electricity shortages cause real problems.
I expect the only viable solution left is to go around the meter using an aggregator like Tesla Autobidder. A large entity consolidates many home batteries as one "virtual" battery, handles the grid futures prediction and dispatching for a cut, and re-distributes a majority of revenue back to the battery owners.
This effectively uses the existing behind-the-meter grid market to make an end-run around current perverse (non-local, non-instantaneous) end-customer pricing schemes.
They already do - here in the U.K. you can fix your energy price for 12-24 months typically which is a gamble in the future price of energy.
Though in that case the exact prediction made did come true. Massive gas price increases due to the Ukraine war bankrupted a bunch of businesses selling fixed price energy that they could no longer supply without making unsustainable losses.
Various government interventions followed but they were so bad you might assume that they were more interested in ensuring their mates in the gas industry made high profits than protecting the nation from the fallout.
I think it is different than other commodities since it is very expensive to store electricity. A diesel powered generator and tank full of diesel is probably the best option.
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I don’t think it’s as simple as that. Expensive legacy gas and nuclear plants provide base load power at scale. Something renewables don’t really do. These have to be built and the cost distributed across everyone who takes power from the grid. The shared model is what makes it more resilient and reliable.
It is actually that simple. The current pricing system was created for a grid that no longer exists. There is now lots of wind generation, solar, battery power, etc. And growing rapidly. Both on the grid and domestic. And soon large amounts of batteries with wheels capable of powering houses and delivering power to the grid.
All this means lots of fluctuations in power availability and cost. Pretending that it costs the same all the time everywhere is irrational. If you give people incentives to adapt to these fluctuations, they will. Energy providers like Octopus prove that at scale. They by the way are a big proponent of more localized power. Because it's just more optimal.
Price incentives cause people and companies to adapt their behavior. Including when to to use power and where to use power. Likewise, it incentivizes power companies to invest in power generation where the demand is instead of where the NIMBY's are not (like Scottland). Speaking of NIMBY's, if they could benefit from lower pricing, they'd probably love wind power a lot more. Buy more electric cars, do the laundry when it's windy, etc.
As for base load. Nobody ever specifies a number in GW or GWH. It's a very fuzzy notion that people just assert is needed in huge (unspecified) amounts. If you put actual numbers on it, you would be able to have a sane discussion on (much) cheaper alternatives. But that never happens. Most discussions around base load center on the notion that we allegedly need a lot of it. What's the budget we need to reserve for that? How much? When? Where? Why? Are there any alternatives? The debate is mostly completely irrational and hand wavy on this.
There is a basic notion that power companies don't mind charging the same rate nationally because that means they make lots of money charging for mostly cheap power available everywhere except in a handful of places. The way the system works is that everybody pays the highest price on the system. Localized prices would introduce lots of variation and cause lots of reasons for power companies to optimize their power delivery and pricing. High prices mean unhappy customers voting with their feet. They are being shielded from that currently.
It's a big reason they are resisting changes on this front. In some cases they actually get paid to not generate power or discard it. That's wasteful. Scottland has plenty of base load. They are exporting their power surplus most of the time.
For base load one obvious reason to be sceptical is that in country A you may find that a generation technology is "base load" and so we can't possibly throttle it up or down, that's just how it works, and then in country B the very same technology is indeed throttled up and down as needed.
The UK has a lot of combined cycle gas burners. You will sometimes see US claims that these generators are only baseload and it wouldn't make sense to throttle them up and down. Over the course of an ordinary day in Britain you might see power output from these "baseload" generators vary between 2GW and 20GW and it's no big deal.
gas turbines last much longer when run at constant optimal RPM than when constantly varying.
My naive presumption is that the gas turbines do run at constant RPM, but vary the fuel use to deliver more torque and hence energy?
Maybe just wrong though :P
I'm not sure. I do not that gas peaker plants that have to be started and stopped a lot wear out very fast.
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What £/kWh rate could we achieve at 2am, if we had the perfect localised modern pricing model?
The whole point of the discussion is that there would be no single answer to that question: the number will vary by location, and by the current availability of power, because it becomes a price signal.
It would likely converge on wind farm strike prices plus margin, so about 10p/kWh .. if you lived in Scotland or near the coast. Being a localized market I would expect to see higher prices in London.
But there's also a risk of spikes. You'd probably want a regulatory guarantee of maximum prices, I think during the Texas crisis it got over $100/unit at one point.
0-infinity
Depends on the weather.
What's the range?
And to quote the person to whom I replied: "If you put actual numbers on it, you would be able to have a sane discussion "
There is often an implication or assertion that the tech to enable surge pricing will actually enable way cheaper energy. So I want to know the estimated unit prices.
It really isn't that simple.
Every decision is a trade-off. The trade-off here is between on the one hand the savings from additional network reinforcement, the savings from reduction in aggregate Dx/Tx costs, and increasing the optimality of placement of generation wrt load; on the other hand, the cost of renewables generation being placed in areas with lower potential, the cost of increased price instability due to smaller markets, and of course, the switching costs. There is also the question of what incentives a zonal electricity market would actually provide to renewables developers.
With regards to the network reinforcement savings, it is worth noting a few things. A major obstacle to increasing network reinforcement is not the intrinsic investment cost, but inadequate and restrictive planning, which, the grid being a natural monopoly, results in artificially constrained connection supply (not out of malice but policy failure). Just as an illustration, the way DNOs currently determine whether to pay for flexibility services or upgrade the network is done on the basis of a _5 year_ calculation (ludicrously short!). The current waiting lists for new grid connections are on the order of a decade. Fundamentally, there is a short-sightedness in the planning system, and the long term is catching up.
As for the optimality of placement of assets, price signals already exist to reflect local needs -- there isn't exactly one single price for electricity for the whole of the UK (though it's a decent approximation). Transmission and distribution costs are baked into the settlement system. For grid constraints, both distribution and transmission use of system charges vary in space and time to reflect constraints (and flexibility services also introduce a local price signal, although I have earlier expressed skepticism of the procurement process).
If these price signals exist, why don't they cause renewables generation to become more distributed across the UK? The answer is that they probably do, but that grid losses are just smaller than the increased capacity factor of building in Scotland. Grid losses (both Dx and Tx) is on the order of 10%, and wind farms in Scotland will have a capacity factor about 30-40% greater.
Finally, to touch on the incentives question. The justification for pay-as-clear pricing (which is what you refer to as paying the highest price on the system) is actually to _incentivize_ the construction of cheaper, _renewable_ and nuclear energy. Sure, it doesn't especially disincentivize the construction of marginally-priced gas plants, but it doesn't incentivize it either. You could argue that maybe power companies are keeping this market structure to profit from their renewable assets instead of moving the whole grid to renewable, except for a simple fact: there is no monopoly on power generation in the UK.
Let me be clear: I am not actually arguing against zonal pricing. There are plenty of good arguments being made by people who have studied this more closely than me. What I'm fundamentally trying to do is provide a different perspective: that there is a lower-hanging fruit in the form of improving grid planning, a point which may be argued. But it is _not_ a simple problem with an obvious solution that's only being held back due to a conspiracy of energy suppliers.
> The current waiting lists for new grid connections are on the order of a decade.
There's a number of projects in the connection queue that are speculative - in many cases, people applying for a connection, then sitting on it to resell. Thankfully, a lot of these "zombie" projects are getting ejected from the queue due to some recent reforms, so we might see those 10+ year connection dates move down.
> Expensive legacy gas and nuclear plants provide base load power at scale. Something renewables don’t really do.
Running hydro, biogas (e.g. in Denmark) and offshore wind (UK, Spain, France, Italy) can definitely fulfill base load demand on the basis of renewable energy generation. With solar, enough overcapacity can guarantee base load during the day even when it's cloudy, and in the summer the solar overcapacity can be used to run synth-fuel plants for those things that we absolutely cannot run with electricity (ships and large airplanes).
Additionally, we can reduce base load demand during night time... a lot of places are still running incandescent lighting, for example. Replace that with LEDs, better reflectors (for less waste) and movement detectors, and you tackle light pollution at night at the same time. Or heat, add storage to a heat pump system to avoid having to run the heat pump at night. And for fucks sake France please get rid of resistive heating.
> Running hydro, biogas (e.g. in Denmark) and offshore wind (UK, Spain, France, Italy) can definitely fulfill base load demand on the basis of renewable energy generation.
This seems entirely region dependant, but even so, I think a citation is needed here.
I know there are poster children for renewables, like Iceland which struck the energy lottery. But I don't know of many places other than that which can satisfy base load today with renewables unless you're going hyper-local.
Or was your point that we could do it if we threw billions at the problem?
Your entire second paragraph is basically "throw money at it" when, sadly, the politics (which are reflective of the will of the majority) of the world seem to be instead moving in the opposite direction.
> the politics (which are reflective of the will of the majority)
where did you read that?
e.g. in the US politics = top 10%
I don’t think it is obvious which is the “throw money at it” solution. Energy utilities are already heavily regulated. Users aren’t really exposed to a market with transparent pricing to enable supply and demand. The folks who want smart grid stuff are the ones trying to let the free market actually work on the energy problem.
Currently, petrochemicals might be:
-Benefiting from consumer-focused subsidies, like heating or energy assistance.
-Subsidized by, like, actual intentional industrial subsidies
-Subsidized by infrastructure investments, like a road out to some hinterlands that is only needed to get to some mine, pipeline, or whatever
-Subsidized by allowing these companies to externalize their costs onto society by dumping them on the environment. All those greenhouse gasses, cleaning them up isn’t going to be free, and we’re going to pay for it.
-Subsidized by international relations. This isn’t a political site, so let’s not dig into the details there. But the long dependency chains for petrochemicals have made some odd international relations bedfellows. These constraints on our diplomatic options have a cost that is hard to capture.
We could start by making sure to price all that in to petrochemicals if we wanted to give ourselves a ton of extra homework (actually we shouldn’t try to run the numbers because it is big country-dependent mess, but we should at least have the size of the picture in our heads).
Renewables have fewer built-in, structural, or snuck-in by negligence subsidies like that. They don’t produce as many toxic byproducts to dump on the planet (though, semiconductors aren’t byproduct-free for sure), and energy falling from the sky is easier to just grab without any drama. So, I think if it were possible to actually run those numbers, renewables would look pretty good.
Then we add in the fact that renewables probably are the future (eventually we will run out of oil). So, subsidies for renewable R&D are an investment that should pay off with future manufacturing jobs.
Overall, sticking with petrochemicals seems very expensive to me.
You're not wrong, but all this amounts to wishing. At the end of the day, the majority only care about their utility bill. Telling them that X will cost more today but lower the bill for the next generation isn't enticing.
For that, you need forward-thinking politicians who can dance the subtle dance of planning for the future without making the current situation too onerous for the people. The recent election results in the USA is an example of getting that dance wrong.
> Running hydro, biogas (e.g. in Denmark) and offshore wind (UK, Spain, France, Italy) can definitely fulfill renewable base load demand.
What is renewable base load demand?
Sorry, brain fart, shifted the words around and didn't fix the sentence up. Corrected, thanks.
No worries! However I don't understand it :) Base load is the load that can't vary based on weather conditions; i.e. it needs to be supplyable from coal/diesel/gas/nuclear-type generation, or from batteries that have a certain number of hours or days of supply in them at all times. I don't think we have that, although I'm happy to be corrected.
or from any other type of energy storage
The best way to supply "synthetic baseload" with renewables is typically not to use just batteries for storage, but rather a combination of batteries and another storage mode more suited for longer term storage. The latter is optimized to have lower cost per unit of energy storage capacity than batteries, at the expense of lower (perhaps much lower) round trip efficiency.
This latter storage mode isn't needed until fossil fuels are almost entirely eliminated from the grid, since otherwise just use those instead for that long term firming.
The idea that the electricity supply system has to itself shoulder the burden of dealing with intermittency is also mistaken. If it's worthwhile users will be willing to dispatch at least some of their demand. I'm reminded of the argument against deregulation of telecom or airlines: that the new system wouldn't be as reliable or nice. But users were willing to make the tradeoff if the services were cheaper.
geothermal power would make good base load.
Yeah but geothermal isn't without its own risks. For one it's not available everywhere, for it to be viable at scale you need some serious hot rock formation and a way to drill through to it, and finally geothermal energy has been linked with an increased risk of earthquakes.
France has 80% zero carbon all the time. Why not resistive heating?
According to the IEA [1], 43% of the energy consumption is oil (transportation, heating), 18% is natural gas (mostly heating), and 25% is electricity. Switching to resistive heating would require doubling the electricity production. Using heat pumps is much more efficient.
Heat pumps reduce electricity usage by at least 3x and also provide cooling.
It's expensive compared to heat pumps, especially if you also want air conditioning.
They lose out on export revenue
> Why not resistive heating?
Because France has a massive dependency on nuclear power... of course resistive heaters are cheaper than anything else when you got a ton of NPPs around. But their plants are all aging and are a nightmare to keep operational, so if they'd switch over to heat pumps their total energy demand would go down drastically.
To reduce curtailment, more transmission is required. However, the planning process is absolutely ridiculous, so multiple years of consultations are required before there's a chance anything might actually get built.
I wonder if you could use tunnel boring machines to dig tunnels to run power cables to avoid some of the NIMBY objections. Expensive sure but the tunnels will be there basically forever.
Which is why the UK is putting in subsea cables between Scotland and England despite the added cost.
Yep, there are on-shore plans, but there is a lot of NIMBYism that results a resistance to these necessary projects.
Well I find it understandable. I was recently looking for a terrain to build a house and I didn't choose the one that was within the area for the new high voltage power line that they're planning.
I bought another terrain in a slightly less interesting place nearby, but that is definitely not on the path of the power line. I think it's a normal reaction.
Those transmission components are expected to cost the taxpayer at least £54 bn (https://www.bbc.co.uk/news/business-62085297). Transmission, of course, doesn't solve storage, which, to quote the article, "can’t really be stored or stockpiled on an industrial scale". Because it can't. Batteries are orders of magnitude less than what is needed, as is hydro.
Do you think anyone would be building mammoth turbines in the North of Scotland without access to the Southern markets? Oh yes please, I really want to invest several billion pounds in order to serve Ullapool and Wick, that makes my capitalist bones tingle.
But "nuclear expensive", and of cause that isn't to do with the planning process at all. Not if you have a competing product to sell.
The UK has the most expensive electricity in the developed world, and approximately 10 times the CO2 footprint per kWh of France, or of France since the 1980s. If the goal of the renewable energy policy was to be a world leader, it has dramatically failed.
£54 bn over eight years is around 0.2% of the UK's GDP. A lot of money, but doesn't sound unreasonable for a major overhaul of a central price of infrastructure.
Ruling out the possibility of storing energy at industrial scale might also not age terribly well.
Especially if the energy being stored is heat. Heat is embarrassingly storable, much more cheaply per unit energy than electrical energy. Any industry that uses heat can be a target for thermal storage of renewable energy.
How is this partitioning implemented?
Local “production-generation” can make sense at some level, but the mental model breaks down when you go back to the “water-in-a-lake” way of considering the grid.
I assume that there is less electricity being moved on one end of a winding of some downstream transformer, but it could also be that we really don’t know.
The grid can’t move infinite power through any one point.
Substations and long distance transmission lines make local production a meaningful thing with real upsides. The overall grid avoids losses when power isn’t going through long distance transmission lines. Further as heat increases transmission losses and transmission losses produce heat, lowering the power sent through a long distance transmission line makes it more efficient.
Yeah, it’s the same in Germany. (And to add insult to injury, people in places with renewable generation often pay higher grid fees due to the investments necessary to connect all the new plants.)
Yes, but that's partly a consequence of how the German electricity market operates and the neglected state of its infrastructure, isn't it?
Wind power and other intermittent sources create grid instability, which drives up costs.
And to my knowledge, Germany has chosen not to have different bidding markets within the country (or has at least kept prices consistent across its four markets) to protect vital industries in the west?
This is how the energy grid operates everywhere, it's not some uniquely German mistake. Renewables require an incredibly huge grid investment - it's the same story they keep telling about external costs, only this time they don't want to hear it. I don't want to subsidize others' cheaper energy, I don't have any place to put my panels and batteries, I was happy with how it was before. But they would do anything to avoid the fees when they can.
Would you buy wind power if somebody provided that close to where you live? The way the system currently works is that you see no benefit at all if wind towers are close to where you live. Because somebody on the complete opposite side of the country only has access to gas power and the national prices are set for the highest price needed anywhere in the country. You are effectively subsidizing those people. Not the other way around. Your rates are high because gas is expensive and has to be shipped in in LNG form these days. No matter where you live in the country.
Gas is expensive because stable demand has been replaced by spikes based on renewable availability. I don't have any opportunity to get any renewable power - it's cold and there's no space for grid scale wind or solar.
This doesn't make any sense. Germany has storage for more than a season's worth of natural gas. The price went up because Russia stopped selling cheap gas to western Europe after its attack on Ukraine.
Myself I'm not affected by this. It's used too much as a counter argument, it's not universally applicable - even in Germany. The price spikes were happening before the war too.
> This is how the energy grid operates everywhere, it's not some uniquely German mistake.
The fact that Bavaria keeps sabotaging north-south transmission capacity is a uniquely German mistake, as is the insistence of Bavaria and Baden-Württemberg to keep the single pricing zone.
> Power suppliers don't like this because it favors cheaper sources of power that push their more expensive legacy generation out of the market.
Meanwhile a common scam in several EU countries consists in having the power supplier that is either fully state-owned or officially a private company but actually state-ran behind the scenes and... They force you to give back any excess power for free to the grid.
At the same time ofc they pass crazy laws mandating most of the energy generated to be sold for pennies on the dollar to other state ran companies, while then reselling it based on the price of... natural gas. It's quite the wonderful state-ran scam. Some politicians denounced that scam when electricity prices skyrocketted in France etc. a few years ago.
So not only do they steal people's produced energy but they also make sure to resell it at an inflated price, while their little friends in fake privately owned companies are lining up their pockets (the scheme is very probably complete with illegal kickbacks to the politicians).
I know not one but two person who have powering on on-demand... Cryptocurrency mining equipment (for some GPU based ones)! This way they make sure to not give back for free electricity to the state. Sucks but it's what it is. Wouldn't be that way if these people were paid for that excess energy.
They simply don't want to encourage this government ran electricity scam.
Yes, one of the problems of renewables is that they are highly correlated as to when they generate power, so the value of the power they produce (per kWh) is much lower than it would be if they were uncorrelated with each other. Since we have all invested so heavily in renewables, there is generally a huge amount of excess power generated at these peak times that has to be burned. The correct marginal price of those joules that have to be burned is $0.
Providing that power back to the grid for free is about the right price for the power, and if you would like to be the one to burn it instead (because that is what the grid is doing with a lot of that power), I assume you are free to do so.
"They force you to give back any excess power for free to the grid."
If the power being generated is in excess of what the grid is consuming then it is worthless. I've seen people suggest installing bitcoin mining hardware directly inside wind turbines so they can consume excess electricity and make a profit.
What mechanism exists in the initial bid phase to deter lower cost producers from offering less power than they will actually supply? This would push the price per unit up. Supplying more than they offered would get them a larger chunk of it.
I'm not sure how the market works in my country, but I understand there are bitcoin miners that work directly with suppliers to buy power that can be cut off at a moments notice so extra supply can be generated and sold cheaply if not needed, eliminating spin up time.
I think it might be at the pilot program stage, but it does seem like a reasonable option to provide resiliency in an economical fashion.
> There’s pretty much no way for them[renewables] to lose money if they’re connected to the grid, especially because many get outside incentives for every megawatt-hour they generate. They even submit negative bids in some cases, meaning they’re willing to pay money to stay connected to the grid.
The negative price reflects their incentive, not their willingness to pay.
If I am guaranteed $18 a MW/h for my solar farm, then I will bid -$18 (or maybe slightly less to account for costs). The state, or federal government will ensure I am paid at least $18.
Without these incentives we would not see negative prices, zero perhaps, but not negative.
For instance the IRA offers upto $33.00/MWh incentives.[1]
This is a problem if you have a power plant that must run - such as a nuke. You may end up paying that negative price, unless the market offers you some sort of make whole payment. But where does that come from?
I was hoping for some website where I could plug in my address and find out.
Clickbait headlines like this should be flagged
Just because you misunderstood what the article was about does not make it clickbait. The article answers the question in the title in a generalized way and I did not interpret it the way you did on first read.
> Just because you misunderstood what the article was about...
The headline is supposed to tell us what the article is about. If we only understand after reading the article, the headline has failed.
> The headline is supposed to tell us what the article is about.
In what way does the current title not do that? The post explains how the energy market works and answers the question somewhat literally:
> Confusingly, the flow of power isn’t really controlled on a line-by-line basis or sometimes even on a system-by-system basis. Power flows where it flows once it’s released on the grid, and there’s no simple way to keep track of who made it or who bought it at individual points on the network.
The answer being "you can't really know" which isn't always true but in general is correct.
A lot of discussion focuses on the supply side (not unexpected given the article).
The demand side is where we can take individual / small group action. On the one hand, you have CA (and most of the US) phasing out incandescent light bulbs (great - lowers baseline demand) - but you also have an order of magnitude increase in compute (model training anyone?) as well as a push towards electrification of cars, household appliances, heating etc. All fine - but that energy has to be moved (unless you're generating locally with Solar Panels).
Grid scale batteries and similar ancillary services do a pretty good job of levelling this out - making the market more "liquid" (to borrow a stock market term) - but they take 3-7y to bring up depending on the usual infra variables.
<shill>
We think batteries to absorb household demand are part of the solution. [www.energyapplied.com]
If you can control when these batteries act in unison (and, as with anything, the devil is in the details) - and deploy them densely enough to absorb forecasted demand spikes (another comment ITT mentioned LMP markets - astute) - then you complement grid scale storage with something you can roll out in weeks to cover a high stress area, not years
</shill>
Another comment mentioned "differently regulated" - and that's right - in order to participate in any of the supply and demand programs on the grid, you need to do a lot of things a certain way. The more you can encapsulate that for the user (don't have a household participate in Demand Response, do it through Nest or something similar and have 1mm households participate) - gets a lot more achievable.
In a funny way, power markets are probably the US's last real free-trade market. My first few years deep in the back office of an investment bank, there were 31 NYSE floor traders, when I left 13 years later in 2020, there were 2, and most volume is program trading / etfs / electronic trading. Ditto fixed income (bonds and bond like instruments), foreign exchange (though these latter two are slower).
Financial Markets inherently move towards being vanilla and scalable because it's cheaper - and this has been one area where the race to the bottom hasn't entirely harmed the consumer (there once was a time when you had to pay a broker a commission on each stock trade. Etrade / Robinhood anyone?).
Power still has a long way to go before it's there - but it will _probably_ be a good thing when it does, and given that it touches hard infrastructure and nobody's forgetting Enron any time soon - it _probably_ will end up better off for the consumer.
This article discusses the “deregulated” energy markets that allow many different participants to be involved in the generation of electricity.
One consequence of having many market participants is the availability of data that is published to make the markets function.
If you’re interested in seeing more about the real-time operations, I built a site that tracks all this data: https://www.gridstatus.io/live
[deleted]
This was an interesting read. I still don't quite understand the pricing during emergencies or shortages, though.
There is no tolerable scenario where providers could choose not to generate electricity for a grid if it were necessary and they were the only provider available.
I want to assume that in the freest of markets the state could still compel electrical generators to operate in the events of an emergency.
I really need to read up on what happened in Texas in 2021.
> providers could choose not to generate electricity for a grid if it were necessary
Enron basically forced this exact situation in order to charge inflated prices.
Maybe worse is that this isn’t even the reason they ended up in court.
> I still don't quite understand the pricing during emergencies or shortages, though.
Unpredictable supply shortages (almost always from emergency shutoffs at fossil plants) happen on the grid all the time. To deal with this, grid operators contract with "operating reserves", which are sources of supply that stay ready to make up for a supply shortfall. Often this takes the form of running natural gas turbines (hence the subcategory called "spinning" reserves).
This is very expensive electricity because usually you must pay for the fuel spent while the reserve isn't being used also.
As more battery storage is added to the grid, this service will be increasingly provided by batteries instead of natural gas turbines.
It can also be provided by voluntary (and compensated) demand curtailment programs.
None of this can make up for a grid that is under-invested in resilience (in exchange in the short term for extremely low electricity prices), which is basically what happened in Texas.
IDK how it is in the jurisdiction of the author, but I know a bit about how it is in the small European country I reside in (and which has a market almost identical to how it's described in the post).
There is a "System operator" which has the final responsibility for the stability of the grid. The TLDR is that they really really really want to use the market to solve it, but in a crisis they have supreme powers over all production and all consumption.
There are multiple short-term intra-day markets for extra capacity, and both producers and consumers can participate (consumers can reduce their capacity temporarily). It is extremely rare that these markets are not enough. Any "weird" bidding (e.g possible attempts at market manipulation) is audited, and market manipulation is of course illegal. You can only provide bids based on your estimation on the value of the power, and you need (if audited) to be able to show how this is calculated in a consistent (over time) way.
In the case of a system instability from either market failure or some extreme unexpected event (e.g. multiple production facilities going offline) there are a hierarchy of actions:
- Many/most large industrial consumers have deals where they pay less in grid fees, but they can be disconnected with little warning and no compensation. In the old days the system operator would call them, but these days more and more of this is digitalized. (There are prototypes of markets where these kind of load-shedd services can sold on a per-kW-per-hour basis)
- Any producer can be forced to produce at any time. They will be compensated according to normal spot-price for that hour.
- Any consumer can be cut at any time. Every substation is prioritized according to their criticality (suburbia is less important than hospitals). If nothing else works then substations will be disconnected in accordance with this list. (Also btw, there is always 2 network-paths to every substation over a certain size)
"Our generators & compressors froze over" was PR bullshit. The spot price of natural gas went through the roof at the time.
From wikipedia:
>Data showed that failure to winterize power sources, principally natural gas infrastructure but also to a lesser extent wind turbines, had caused the grid failure,[15][16] with a drop in power production from natural gas more than five times greater than that from wind turbines.
What's the difference between "Our generators & compressors froze over" and "natural gas infrastructure froze over"? What's the PR gain from blaming yourself?
They also have a marvelous youtube channel.
Or Nebula :)
One thing that bothers me about Nebula lately is their apparent shift toward quantity over quality.
They started as a handpicked group of creators who consistently produced excellent content, but it seems they've fallen into that classic 'eternal growth' trap, lowering their standards and accepting creators who, IMO, put out mediocre or lazy stuff.
The platform's now flooded with so many creators that finding good content has become a real challenge. The irony is that I remember Nebula founders advertising the lack of YouTube’s recommendation system and ratings as a feature. While that made perfect sense in a carefully curated environment, these tools have become necessary now that, like on YouTube, it's hard to separate signal from noise.
I would like to use Nebula - I even bought a subscription once - but will not until they add comments.
That sounds similar to what I think about Nebula. They need to try to make that place feel alive.
Interesting. I had no idea that these sorts of things happen in countries that never went through 70 years of socialism. We have "the" electric utility that services each particular city/area, it's a monopoly. The bill never breaks anything down, it's just "electricity" or "electricity (day)" and "electricity (night)" depending on what kind of meter you have. The power plants, the transmission lines, and the utilities are all owned by the government.
Though I am pretty sure that most of my electricity comes from the nuclear power plant near my city.
It could be partially your neighbor's solar panels or batteries. A lot of domestic power that gets contributed to the grid never leaves the neighborhood. These things aren't always as clear cut.
The key to lower prices on the grid is more flexible and localized pricing. Power suppliers don't like this because it favors cheaper sources of power that push their more expensive legacy generation out of the market. But it would create price incentives for demand and supply to align better.
A good example is the UK, which has national energy pricing and a lot of excess wind power in Scottland that is often being curtailed at the same time gas plants further south need to power up to power local demand there. End result: the Scottish pay the same high rate even though they are literally discarding energy they don't know what to do with. If they had local energy pricing, their rates would go down a lot because they have a lot of wind power most of the time.
And further south, people would either invest in local power generation (instead of far away in Scottland) or actually relocate data centers and other energy intensive businesses to where the power is cheap. As opposed to e.g. Slough.
You make an excellent point - so much so that it already exists today at the wholesale level in many markets. What you're describing is Locational Marginal Pricing (LMP) - a reasonable introduction is here: https://www.enverus.com/blog/an-intro-to-locational-marginal...
In the wholesale market the biggest consideration is transmission capacity - if I can generate 100MW of electricity at $15/MW but the transmission line between me and the demand can only carry 20MW, and another generator can generate 100MW for $30/MW with excess transmission capacity to the demand, the price at the demand will lean heavily towards the $30/MW price.
The same model could be applied to local grids as a way to "manage" residential solar installations for example; overcapacity is penalized through pricing signals (but if you throw in batteries so you can shift the release of electricity...).
Two major problems that need to be considered with using localized pricing are sudden bidding wars and partitioning.
Let's say locally you have a few factories when a sudden drop in supply occurs in the energy market. The biggest costs of those factories are personnel, equipment and building, so rather than shutting down they will be willing to pay much more for energy than what is rational in the market in order to continue producing and maintain contracts in the short term. Long term they may move away to a more energy stable and cheaper location, but for the next 10-20 years they will eat the occasional spike in price. Everyone else who locally live there can't eat a sudden 100x in energy costs, with the result that they will vote into office politicians that protect against such situations, and those politicians will in turn spread out the problem over a wider area where areas with stable supply of energy can help through funding (higher energy price) and transmit energy to areas with less stable energy. Alternatively they can pay their citizens' bills directly, as happened during the energy crisis a couple years ago, money that then get taken from the general budget (paid through taxes).
The other issue is partitioning. The more local zones you get, the more borders you get between those zones. People living on the border will see a unreasonable price difference depending if their house/town/city happened to land on one side or the other. This feels unfair, which results in upset citizens, resulting in people voting in politicians that can fix the situation. Politicians then feel a pressure to even out the prices among the zones, using things like adjusting local taxes.
As a general rule, the voting population want stable energy availability, stable prices and fair prices that are similar to everyone else.
Everyone adapts to the single most expensive uneven form of local pricing: property prices.
I think there's a very strong case to link grid and generation capacity improvements to local pricing in the effective area, even if it doesn't end up being through the market. Make the link explicit: "if this pylon project is built, we will give everyone in the receiving county 1p/unit off their bill for five years."
Power demand is often inelastic. There are many places in summer where people would pay $200/kWh to run a small air conditioning unit, for example, when their normal price of power is $0.10/kWh. There is no reason to shift toward generation sources that have price uncertainty when demand is inelastic like this. See the exact same thing in healthcare. The proper solution to this economic problem at a societal level is to have a predictable low price of available power.
There are "many" places where people would pay US$200 to run an air conditioner for one hour?
Hospitals, specialty warehouses, datacenters, the list goes on. Some private citizens in Arizona or Texas, too.
> There are many places in summer where people would pay $200/kWh to run a small air conditioning unit, for example, when their normal price of power is $0.10/kWh.
I don’t know anyone that would pay $200/hr to run a 1kW air conditioner. I’d just go in my air conditioned car and pay for gasoline..
I once had to pay about $1500 USD per kWh. That’s $90 USD to boil 1 litre of water.
Consequently I chose to freeze rather than turn on any heating. At that price even LED lighting is too expensive. I probably should have unplugged my fridge too.
But many people chose to keep themselves (and families) warm.
Lesson learnt: never pay the spot price for power. In minutes I probably lost all the saving I had accumulated by micro managing power until that point.
I have seen my fair share of data centers and office complexes switching to their diesel generators due to very high energy spot prices.
If you have an alternative source of power (even if it is a gas generator) I think a spot price contract is fine. Otherwise it is too risky for residential consumers.
Good point. If there is an alternate power source, it makes perfect sense to go to spot pricing. If you don't and you have room mates who may not like freezing in the middle of winter, don't.
Parent may be referring to specialty units that for example chill expensive perishable medication.
That sort of facility will have diesel generators for backup power, they will be maintained and tested monthly, load banked yearly.
Even if the generators failed, renting a trailer mounted diesel generator costs much less than $200/kWh.
If you really want to turn everyone who runs a facility that needs power for under $10/kWh into an energy trader who has to build a facility with a larger generator than needed and a battery bank and everything else, there is a huge amount of economic loss involved in that. Energy is cheap. Energy should be cheap. That infrastructure should remain for disasters.
Running those generators is not free, and puts wear on them. Also, starting up those generators takes time and puts a certain amount of wear on them, so you are now talking about also having batteries and other equipment to cover short periods and the gap during generator startup. And now when do you spin up the generator? Do you spin it up when the instantaneous price of a kWh goes over a certain threshold or do you wait? All of these are now things that every single industrial facility has to think about.
If you can't handle volatile prices and know your demand in advance then simply by PPAs or energy futures?
You know, the standard method all markets use to handle volatility. But apparently electricity is different and we need enormous subsidies instead.
Electricity is a bit of different in that it is an general utility, closely attached to government for delivery and production, and historically dependency on natural resources or caused pollution (social impact). Electricity is also essential in many places for human survival, and is critical for economical growth and social stability. During war, electricity is treated different from other commodities in a very clear way.
But my point is that all that isn't necessary the important part. The voting population are not always rational participants in the market, nor are companies. There are Nash equilibriums and strategies with local maximums that results in irrational consumer behavior. When there are major social consequences from irrational behavior then people will look towards social, ie political solutions. That generally means regulation, subsidies and if all else fails, government control. The only way to avoid that is to either eliminate the social consequences, or eliminate irrational behavior.
It's simply not realistic to expect consumers or most small businesses to participate in futures markets. And futures markets sometimes break down with the counterparty failing to deliver. That's not a problem with most commodities but electricity shortages cause real problems.
I expect the only viable solution left is to go around the meter using an aggregator like Tesla Autobidder. A large entity consolidates many home batteries as one "virtual" battery, handles the grid futures prediction and dispatching for a cut, and re-distributes a majority of revenue back to the battery owners.
This effectively uses the existing behind-the-meter grid market to make an end-run around current perverse (non-local, non-instantaneous) end-customer pricing schemes.
They already do - here in the U.K. you can fix your energy price for 12-24 months typically which is a gamble in the future price of energy.
Though in that case the exact prediction made did come true. Massive gas price increases due to the Ukraine war bankrupted a bunch of businesses selling fixed price energy that they could no longer supply without making unsustainable losses.
Various government interventions followed but they were so bad you might assume that they were more interested in ensuring their mates in the gas industry made high profits than protecting the nation from the fallout.
I think it is different than other commodities since it is very expensive to store electricity. A diesel powered generator and tank full of diesel is probably the best option.
I don’t think it’s as simple as that. Expensive legacy gas and nuclear plants provide base load power at scale. Something renewables don’t really do. These have to be built and the cost distributed across everyone who takes power from the grid. The shared model is what makes it more resilient and reliable.
It is actually that simple. The current pricing system was created for a grid that no longer exists. There is now lots of wind generation, solar, battery power, etc. And growing rapidly. Both on the grid and domestic. And soon large amounts of batteries with wheels capable of powering houses and delivering power to the grid.
All this means lots of fluctuations in power availability and cost. Pretending that it costs the same all the time everywhere is irrational. If you give people incentives to adapt to these fluctuations, they will. Energy providers like Octopus prove that at scale. They by the way are a big proponent of more localized power. Because it's just more optimal.
Price incentives cause people and companies to adapt their behavior. Including when to to use power and where to use power. Likewise, it incentivizes power companies to invest in power generation where the demand is instead of where the NIMBY's are not (like Scottland). Speaking of NIMBY's, if they could benefit from lower pricing, they'd probably love wind power a lot more. Buy more electric cars, do the laundry when it's windy, etc.
As for base load. Nobody ever specifies a number in GW or GWH. It's a very fuzzy notion that people just assert is needed in huge (unspecified) amounts. If you put actual numbers on it, you would be able to have a sane discussion on (much) cheaper alternatives. But that never happens. Most discussions around base load center on the notion that we allegedly need a lot of it. What's the budget we need to reserve for that? How much? When? Where? Why? Are there any alternatives? The debate is mostly completely irrational and hand wavy on this.
There is a basic notion that power companies don't mind charging the same rate nationally because that means they make lots of money charging for mostly cheap power available everywhere except in a handful of places. The way the system works is that everybody pays the highest price on the system. Localized prices would introduce lots of variation and cause lots of reasons for power companies to optimize their power delivery and pricing. High prices mean unhappy customers voting with their feet. They are being shielded from that currently.
It's a big reason they are resisting changes on this front. In some cases they actually get paid to not generate power or discard it. That's wasteful. Scottland has plenty of base load. They are exporting their power surplus most of the time.
For base load one obvious reason to be sceptical is that in country A you may find that a generation technology is "base load" and so we can't possibly throttle it up or down, that's just how it works, and then in country B the very same technology is indeed throttled up and down as needed.
The UK has a lot of combined cycle gas burners. You will sometimes see US claims that these generators are only baseload and it wouldn't make sense to throttle them up and down. Over the course of an ordinary day in Britain you might see power output from these "baseload" generators vary between 2GW and 20GW and it's no big deal.
gas turbines last much longer when run at constant optimal RPM than when constantly varying.
My naive presumption is that the gas turbines do run at constant RPM, but vary the fuel use to deliver more torque and hence energy?
Maybe just wrong though :P
I'm not sure. I do not that gas peaker plants that have to be started and stopped a lot wear out very fast.
What £/kWh rate could we achieve at 2am, if we had the perfect localised modern pricing model?
The whole point of the discussion is that there would be no single answer to that question: the number will vary by location, and by the current availability of power, because it becomes a price signal.
It would likely converge on wind farm strike prices plus margin, so about 10p/kWh .. if you lived in Scotland or near the coast. Being a localized market I would expect to see higher prices in London.
But there's also a risk of spikes. You'd probably want a regulatory guarantee of maximum prices, I think during the Texas crisis it got over $100/unit at one point.
0-infinity
Depends on the weather.
What's the range?
And to quote the person to whom I replied: "If you put actual numbers on it, you would be able to have a sane discussion "
There is often an implication or assertion that the tech to enable surge pricing will actually enable way cheaper energy. So I want to know the estimated unit prices.
It really isn't that simple.
Every decision is a trade-off. The trade-off here is between on the one hand the savings from additional network reinforcement, the savings from reduction in aggregate Dx/Tx costs, and increasing the optimality of placement of generation wrt load; on the other hand, the cost of renewables generation being placed in areas with lower potential, the cost of increased price instability due to smaller markets, and of course, the switching costs. There is also the question of what incentives a zonal electricity market would actually provide to renewables developers.
With regards to the network reinforcement savings, it is worth noting a few things. A major obstacle to increasing network reinforcement is not the intrinsic investment cost, but inadequate and restrictive planning, which, the grid being a natural monopoly, results in artificially constrained connection supply (not out of malice but policy failure). Just as an illustration, the way DNOs currently determine whether to pay for flexibility services or upgrade the network is done on the basis of a _5 year_ calculation (ludicrously short!). The current waiting lists for new grid connections are on the order of a decade. Fundamentally, there is a short-sightedness in the planning system, and the long term is catching up.
As for the optimality of placement of assets, price signals already exist to reflect local needs -- there isn't exactly one single price for electricity for the whole of the UK (though it's a decent approximation). Transmission and distribution costs are baked into the settlement system. For grid constraints, both distribution and transmission use of system charges vary in space and time to reflect constraints (and flexibility services also introduce a local price signal, although I have earlier expressed skepticism of the procurement process).
If these price signals exist, why don't they cause renewables generation to become more distributed across the UK? The answer is that they probably do, but that grid losses are just smaller than the increased capacity factor of building in Scotland. Grid losses (both Dx and Tx) is on the order of 10%, and wind farms in Scotland will have a capacity factor about 30-40% greater.
Finally, to touch on the incentives question. The justification for pay-as-clear pricing (which is what you refer to as paying the highest price on the system) is actually to _incentivize_ the construction of cheaper, _renewable_ and nuclear energy. Sure, it doesn't especially disincentivize the construction of marginally-priced gas plants, but it doesn't incentivize it either. You could argue that maybe power companies are keeping this market structure to profit from their renewable assets instead of moving the whole grid to renewable, except for a simple fact: there is no monopoly on power generation in the UK.
Let me be clear: I am not actually arguing against zonal pricing. There are plenty of good arguments being made by people who have studied this more closely than me. What I'm fundamentally trying to do is provide a different perspective: that there is a lower-hanging fruit in the form of improving grid planning, a point which may be argued. But it is _not_ a simple problem with an obvious solution that's only being held back due to a conspiracy of energy suppliers.
> The current waiting lists for new grid connections are on the order of a decade.
There's a number of projects in the connection queue that are speculative - in many cases, people applying for a connection, then sitting on it to resell. Thankfully, a lot of these "zombie" projects are getting ejected from the queue due to some recent reforms, so we might see those 10+ year connection dates move down.
> Expensive legacy gas and nuclear plants provide base load power at scale. Something renewables don’t really do.
Running hydro, biogas (e.g. in Denmark) and offshore wind (UK, Spain, France, Italy) can definitely fulfill base load demand on the basis of renewable energy generation. With solar, enough overcapacity can guarantee base load during the day even when it's cloudy, and in the summer the solar overcapacity can be used to run synth-fuel plants for those things that we absolutely cannot run with electricity (ships and large airplanes).
Additionally, we can reduce base load demand during night time... a lot of places are still running incandescent lighting, for example. Replace that with LEDs, better reflectors (for less waste) and movement detectors, and you tackle light pollution at night at the same time. Or heat, add storage to a heat pump system to avoid having to run the heat pump at night. And for fucks sake France please get rid of resistive heating.
> Running hydro, biogas (e.g. in Denmark) and offshore wind (UK, Spain, France, Italy) can definitely fulfill base load demand on the basis of renewable energy generation.
This seems entirely region dependant, but even so, I think a citation is needed here.
I know there are poster children for renewables, like Iceland which struck the energy lottery. But I don't know of many places other than that which can satisfy base load today with renewables unless you're going hyper-local.
Or was your point that we could do it if we threw billions at the problem?
Your entire second paragraph is basically "throw money at it" when, sadly, the politics (which are reflective of the will of the majority) of the world seem to be instead moving in the opposite direction.
> the politics (which are reflective of the will of the majority)
where did you read that? e.g. in the US politics = top 10%
https://www.cambridge.org/core/journals/perspectives-on-poli...
I don’t think it is obvious which is the “throw money at it” solution. Energy utilities are already heavily regulated. Users aren’t really exposed to a market with transparent pricing to enable supply and demand. The folks who want smart grid stuff are the ones trying to let the free market actually work on the energy problem.
Currently, petrochemicals might be:
-Benefiting from consumer-focused subsidies, like heating or energy assistance.
-Subsidized by, like, actual intentional industrial subsidies
-Subsidized by infrastructure investments, like a road out to some hinterlands that is only needed to get to some mine, pipeline, or whatever
-Subsidized by allowing these companies to externalize their costs onto society by dumping them on the environment. All those greenhouse gasses, cleaning them up isn’t going to be free, and we’re going to pay for it.
-Subsidized by international relations. This isn’t a political site, so let’s not dig into the details there. But the long dependency chains for petrochemicals have made some odd international relations bedfellows. These constraints on our diplomatic options have a cost that is hard to capture.
We could start by making sure to price all that in to petrochemicals if we wanted to give ourselves a ton of extra homework (actually we shouldn’t try to run the numbers because it is big country-dependent mess, but we should at least have the size of the picture in our heads).
Renewables have fewer built-in, structural, or snuck-in by negligence subsidies like that. They don’t produce as many toxic byproducts to dump on the planet (though, semiconductors aren’t byproduct-free for sure), and energy falling from the sky is easier to just grab without any drama. So, I think if it were possible to actually run those numbers, renewables would look pretty good.
Then we add in the fact that renewables probably are the future (eventually we will run out of oil). So, subsidies for renewable R&D are an investment that should pay off with future manufacturing jobs.
Overall, sticking with petrochemicals seems very expensive to me.
You're not wrong, but all this amounts to wishing. At the end of the day, the majority only care about their utility bill. Telling them that X will cost more today but lower the bill for the next generation isn't enticing.
For that, you need forward-thinking politicians who can dance the subtle dance of planning for the future without making the current situation too onerous for the people. The recent election results in the USA is an example of getting that dance wrong.
> Running hydro, biogas (e.g. in Denmark) and offshore wind (UK, Spain, France, Italy) can definitely fulfill renewable base load demand.
What is renewable base load demand?
Sorry, brain fart, shifted the words around and didn't fix the sentence up. Corrected, thanks.
No worries! However I don't understand it :) Base load is the load that can't vary based on weather conditions; i.e. it needs to be supplyable from coal/diesel/gas/nuclear-type generation, or from batteries that have a certain number of hours or days of supply in them at all times. I don't think we have that, although I'm happy to be corrected.
or from any other type of energy storage
The best way to supply "synthetic baseload" with renewables is typically not to use just batteries for storage, but rather a combination of batteries and another storage mode more suited for longer term storage. The latter is optimized to have lower cost per unit of energy storage capacity than batteries, at the expense of lower (perhaps much lower) round trip efficiency.
This latter storage mode isn't needed until fossil fuels are almost entirely eliminated from the grid, since otherwise just use those instead for that long term firming.
The idea that the electricity supply system has to itself shoulder the burden of dealing with intermittency is also mistaken. If it's worthwhile users will be willing to dispatch at least some of their demand. I'm reminded of the argument against deregulation of telecom or airlines: that the new system wouldn't be as reliable or nice. But users were willing to make the tradeoff if the services were cheaper.
geothermal power would make good base load.
Yeah but geothermal isn't without its own risks. For one it's not available everywhere, for it to be viable at scale you need some serious hot rock formation and a way to drill through to it, and finally geothermal energy has been linked with an increased risk of earthquakes.
France has 80% zero carbon all the time. Why not resistive heating?
According to the IEA [1], 43% of the energy consumption is oil (transportation, heating), 18% is natural gas (mostly heating), and 25% is electricity. Switching to resistive heating would require doubling the electricity production. Using heat pumps is much more efficient.
[1] https://www.iea.org/countries/france/energy-mix
Heat pumps reduce electricity usage by at least 3x and also provide cooling.
It's expensive compared to heat pumps, especially if you also want air conditioning.
They lose out on export revenue
> Why not resistive heating?
Because France has a massive dependency on nuclear power... of course resistive heaters are cheaper than anything else when you got a ton of NPPs around. But their plants are all aging and are a nightmare to keep operational, so if they'd switch over to heat pumps their total energy demand would go down drastically.
To reduce curtailment, more transmission is required. However, the planning process is absolutely ridiculous, so multiple years of consultations are required before there's a chance anything might actually get built.
I wonder if you could use tunnel boring machines to dig tunnels to run power cables to avoid some of the NIMBY objections. Expensive sure but the tunnels will be there basically forever.
Which is why the UK is putting in subsea cables between Scotland and England despite the added cost.
Yep, there are on-shore plans, but there is a lot of NIMBYism that results a resistance to these necessary projects.
Well I find it understandable. I was recently looking for a terrain to build a house and I didn't choose the one that was within the area for the new high voltage power line that they're planning.
I bought another terrain in a slightly less interesting place nearby, but that is definitely not on the path of the power line. I think it's a normal reaction.
Those transmission components are expected to cost the taxpayer at least £54 bn (https://www.bbc.co.uk/news/business-62085297). Transmission, of course, doesn't solve storage, which, to quote the article, "can’t really be stored or stockpiled on an industrial scale". Because it can't. Batteries are orders of magnitude less than what is needed, as is hydro.
Do you think anyone would be building mammoth turbines in the North of Scotland without access to the Southern markets? Oh yes please, I really want to invest several billion pounds in order to serve Ullapool and Wick, that makes my capitalist bones tingle.
But "nuclear expensive", and of cause that isn't to do with the planning process at all. Not if you have a competing product to sell.
The UK has the most expensive electricity in the developed world, and approximately 10 times the CO2 footprint per kWh of France, or of France since the 1980s. If the goal of the renewable energy policy was to be a world leader, it has dramatically failed.
£54 bn over eight years is around 0.2% of the UK's GDP. A lot of money, but doesn't sound unreasonable for a major overhaul of a central price of infrastructure.
Ruling out the possibility of storing energy at industrial scale might also not age terribly well.
Especially if the energy being stored is heat. Heat is embarrassingly storable, much more cheaply per unit energy than electrical energy. Any industry that uses heat can be a target for thermal storage of renewable energy.
How is this partitioning implemented?
Local “production-generation” can make sense at some level, but the mental model breaks down when you go back to the “water-in-a-lake” way of considering the grid.
I assume that there is less electricity being moved on one end of a winding of some downstream transformer, but it could also be that we really don’t know.
The grid can’t move infinite power through any one point.
Substations and long distance transmission lines make local production a meaningful thing with real upsides. The overall grid avoids losses when power isn’t going through long distance transmission lines. Further as heat increases transmission losses and transmission losses produce heat, lowering the power sent through a long distance transmission line makes it more efficient.
Yeah, it’s the same in Germany. (And to add insult to injury, people in places with renewable generation often pay higher grid fees due to the investments necessary to connect all the new plants.)
Yes, but that's partly a consequence of how the German electricity market operates and the neglected state of its infrastructure, isn't it?
Wind power and other intermittent sources create grid instability, which drives up costs.
And to my knowledge, Germany has chosen not to have different bidding markets within the country (or has at least kept prices consistent across its four markets) to protect vital industries in the west?
This is how the energy grid operates everywhere, it's not some uniquely German mistake. Renewables require an incredibly huge grid investment - it's the same story they keep telling about external costs, only this time they don't want to hear it. I don't want to subsidize others' cheaper energy, I don't have any place to put my panels and batteries, I was happy with how it was before. But they would do anything to avoid the fees when they can.
Would you buy wind power if somebody provided that close to where you live? The way the system currently works is that you see no benefit at all if wind towers are close to where you live. Because somebody on the complete opposite side of the country only has access to gas power and the national prices are set for the highest price needed anywhere in the country. You are effectively subsidizing those people. Not the other way around. Your rates are high because gas is expensive and has to be shipped in in LNG form these days. No matter where you live in the country.
Gas is expensive because stable demand has been replaced by spikes based on renewable availability. I don't have any opportunity to get any renewable power - it's cold and there's no space for grid scale wind or solar.
This doesn't make any sense. Germany has storage for more than a season's worth of natural gas. The price went up because Russia stopped selling cheap gas to western Europe after its attack on Ukraine.
Myself I'm not affected by this. It's used too much as a counter argument, it's not universally applicable - even in Germany. The price spikes were happening before the war too.
> This is how the energy grid operates everywhere, it's not some uniquely German mistake.
The fact that Bavaria keeps sabotaging north-south transmission capacity is a uniquely German mistake, as is the insistence of Bavaria and Baden-Württemberg to keep the single pricing zone.
> Power suppliers don't like this because it favors cheaper sources of power that push their more expensive legacy generation out of the market.
Meanwhile a common scam in several EU countries consists in having the power supplier that is either fully state-owned or officially a private company but actually state-ran behind the scenes and... They force you to give back any excess power for free to the grid.
At the same time ofc they pass crazy laws mandating most of the energy generated to be sold for pennies on the dollar to other state ran companies, while then reselling it based on the price of... natural gas. It's quite the wonderful state-ran scam. Some politicians denounced that scam when electricity prices skyrocketted in France etc. a few years ago.
So not only do they steal people's produced energy but they also make sure to resell it at an inflated price, while their little friends in fake privately owned companies are lining up their pockets (the scheme is very probably complete with illegal kickbacks to the politicians).
I know not one but two person who have powering on on-demand... Cryptocurrency mining equipment (for some GPU based ones)! This way they make sure to not give back for free electricity to the state. Sucks but it's what it is. Wouldn't be that way if these people were paid for that excess energy.
They simply don't want to encourage this government ran electricity scam.
Yes, one of the problems of renewables is that they are highly correlated as to when they generate power, so the value of the power they produce (per kWh) is much lower than it would be if they were uncorrelated with each other. Since we have all invested so heavily in renewables, there is generally a huge amount of excess power generated at these peak times that has to be burned. The correct marginal price of those joules that have to be burned is $0.
Providing that power back to the grid for free is about the right price for the power, and if you would like to be the one to burn it instead (because that is what the grid is doing with a lot of that power), I assume you are free to do so.
"They force you to give back any excess power for free to the grid."
If the power being generated is in excess of what the grid is consuming then it is worthless. I've seen people suggest installing bitcoin mining hardware directly inside wind turbines so they can consume excess electricity and make a profit.
What mechanism exists in the initial bid phase to deter lower cost producers from offering less power than they will actually supply? This would push the price per unit up. Supplying more than they offered would get them a larger chunk of it.
I'm not sure how the market works in my country, but I understand there are bitcoin miners that work directly with suppliers to buy power that can be cut off at a moments notice so extra supply can be generated and sold cheaply if not needed, eliminating spin up time.
I think it might be at the pilot program stage, but it does seem like a reasonable option to provide resiliency in an economical fashion.
> There’s pretty much no way for them[renewables] to lose money if they’re connected to the grid, especially because many get outside incentives for every megawatt-hour they generate. They even submit negative bids in some cases, meaning they’re willing to pay money to stay connected to the grid.
The negative price reflects their incentive, not their willingness to pay.
If I am guaranteed $18 a MW/h for my solar farm, then I will bid -$18 (or maybe slightly less to account for costs). The state, or federal government will ensure I am paid at least $18.
Without these incentives we would not see negative prices, zero perhaps, but not negative.
For instance the IRA offers upto $33.00/MWh incentives.[1]
This is a problem if you have a power plant that must run - such as a nuke. You may end up paying that negative price, unless the market offers you some sort of make whole payment. But where does that come from?
[1]https://www.energy.gov/eere/water/inflation-reduction-act-ta...
I was hoping for some website where I could plug in my address and find out.
Clickbait headlines like this should be flagged
Just because you misunderstood what the article was about does not make it clickbait. The article answers the question in the title in a generalized way and I did not interpret it the way you did on first read.
> Just because you misunderstood what the article was about...
The headline is supposed to tell us what the article is about. If we only understand after reading the article, the headline has failed.
> The headline is supposed to tell us what the article is about.
In what way does the current title not do that? The post explains how the energy market works and answers the question somewhat literally:
> Confusingly, the flow of power isn’t really controlled on a line-by-line basis or sometimes even on a system-by-system basis. Power flows where it flows once it’s released on the grid, and there’s no simple way to keep track of who made it or who bought it at individual points on the network.
The answer being "you can't really know" which isn't always true but in general is correct.
A lot of discussion focuses on the supply side (not unexpected given the article).
The demand side is where we can take individual / small group action. On the one hand, you have CA (and most of the US) phasing out incandescent light bulbs (great - lowers baseline demand) - but you also have an order of magnitude increase in compute (model training anyone?) as well as a push towards electrification of cars, household appliances, heating etc. All fine - but that energy has to be moved (unless you're generating locally with Solar Panels).
Grid scale batteries and similar ancillary services do a pretty good job of levelling this out - making the market more "liquid" (to borrow a stock market term) - but they take 3-7y to bring up depending on the usual infra variables.
<shill> We think batteries to absorb household demand are part of the solution. [www.energyapplied.com]
If you can control when these batteries act in unison (and, as with anything, the devil is in the details) - and deploy them densely enough to absorb forecasted demand spikes (another comment ITT mentioned LMP markets - astute) - then you complement grid scale storage with something you can roll out in weeks to cover a high stress area, not years </shill>
Another comment mentioned "differently regulated" - and that's right - in order to participate in any of the supply and demand programs on the grid, you need to do a lot of things a certain way. The more you can encapsulate that for the user (don't have a household participate in Demand Response, do it through Nest or something similar and have 1mm households participate) - gets a lot more achievable.
In a funny way, power markets are probably the US's last real free-trade market. My first few years deep in the back office of an investment bank, there were 31 NYSE floor traders, when I left 13 years later in 2020, there were 2, and most volume is program trading / etfs / electronic trading. Ditto fixed income (bonds and bond like instruments), foreign exchange (though these latter two are slower).
Financial Markets inherently move towards being vanilla and scalable because it's cheaper - and this has been one area where the race to the bottom hasn't entirely harmed the consumer (there once was a time when you had to pay a broker a commission on each stock trade. Etrade / Robinhood anyone?).
Power still has a long way to go before it's there - but it will _probably_ be a good thing when it does, and given that it touches hard infrastructure and nobody's forgetting Enron any time soon - it _probably_ will end up better off for the consumer.
This article discusses the “deregulated” energy markets that allow many different participants to be involved in the generation of electricity.
One consequence of having many market participants is the availability of data that is published to make the markets function.
If you’re interested in seeing more about the real-time operations, I built a site that tracks all this data: https://www.gridstatus.io/live
This was an interesting read. I still don't quite understand the pricing during emergencies or shortages, though.
There is no tolerable scenario where providers could choose not to generate electricity for a grid if it were necessary and they were the only provider available.
I want to assume that in the freest of markets the state could still compel electrical generators to operate in the events of an emergency.
I really need to read up on what happened in Texas in 2021.
> providers could choose not to generate electricity for a grid if it were necessary
Enron basically forced this exact situation in order to charge inflated prices.
Maybe worse is that this isn’t even the reason they ended up in court.
> I still don't quite understand the pricing during emergencies or shortages, though.
Unpredictable supply shortages (almost always from emergency shutoffs at fossil plants) happen on the grid all the time. To deal with this, grid operators contract with "operating reserves", which are sources of supply that stay ready to make up for a supply shortfall. Often this takes the form of running natural gas turbines (hence the subcategory called "spinning" reserves).
This is very expensive electricity because usually you must pay for the fuel spent while the reserve isn't being used also.
As more battery storage is added to the grid, this service will be increasingly provided by batteries instead of natural gas turbines.
It can also be provided by voluntary (and compensated) demand curtailment programs.
None of this can make up for a grid that is under-invested in resilience (in exchange in the short term for extremely low electricity prices), which is basically what happened in Texas.
IDK how it is in the jurisdiction of the author, but I know a bit about how it is in the small European country I reside in (and which has a market almost identical to how it's described in the post).
There is a "System operator" which has the final responsibility for the stability of the grid. The TLDR is that they really really really want to use the market to solve it, but in a crisis they have supreme powers over all production and all consumption.
There are multiple short-term intra-day markets for extra capacity, and both producers and consumers can participate (consumers can reduce their capacity temporarily). It is extremely rare that these markets are not enough. Any "weird" bidding (e.g possible attempts at market manipulation) is audited, and market manipulation is of course illegal. You can only provide bids based on your estimation on the value of the power, and you need (if audited) to be able to show how this is calculated in a consistent (over time) way.
In the case of a system instability from either market failure or some extreme unexpected event (e.g. multiple production facilities going offline) there are a hierarchy of actions:
- Many/most large industrial consumers have deals where they pay less in grid fees, but they can be disconnected with little warning and no compensation. In the old days the system operator would call them, but these days more and more of this is digitalized. (There are prototypes of markets where these kind of load-shedd services can sold on a per-kW-per-hour basis)
- Any producer can be forced to produce at any time. They will be compensated according to normal spot-price for that hour.
- Any consumer can be cut at any time. Every substation is prioritized according to their criticality (suburbia is less important than hospitals). If nothing else works then substations will be disconnected in accordance with this list. (Also btw, there is always 2 network-paths to every substation over a certain size)
"Our generators & compressors froze over" was PR bullshit. The spot price of natural gas went through the roof at the time.
From wikipedia:
>Data showed that failure to winterize power sources, principally natural gas infrastructure but also to a lesser extent wind turbines, had caused the grid failure,[15][16] with a drop in power production from natural gas more than five times greater than that from wind turbines.
What's the difference between "Our generators & compressors froze over" and "natural gas infrastructure froze over"? What's the PR gain from blaming yourself?
They also have a marvelous youtube channel.
Or Nebula :)
One thing that bothers me about Nebula lately is their apparent shift toward quantity over quality.
They started as a handpicked group of creators who consistently produced excellent content, but it seems they've fallen into that classic 'eternal growth' trap, lowering their standards and accepting creators who, IMO, put out mediocre or lazy stuff.
The platform's now flooded with so many creators that finding good content has become a real challenge. The irony is that I remember Nebula founders advertising the lack of YouTube’s recommendation system and ratings as a feature. While that made perfect sense in a carefully curated environment, these tools have become necessary now that, like on YouTube, it's hard to separate signal from noise.
I would like to use Nebula - I even bought a subscription once - but will not until they add comments.
That sounds similar to what I think about Nebula. They need to try to make that place feel alive.
Interesting. I had no idea that these sorts of things happen in countries that never went through 70 years of socialism. We have "the" electric utility that services each particular city/area, it's a monopoly. The bill never breaks anything down, it's just "electricity" or "electricity (day)" and "electricity (night)" depending on what kind of meter you have. The power plants, the transmission lines, and the utilities are all owned by the government.
Though I am pretty sure that most of my electricity comes from the nuclear power plant near my city.
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