
Solar farm has to switch off every second day due to negative prices - arthurdenture
https://reneweconomy.com.au/this-solar-farm-has-to-switch-off-every-second-day-due-to-negative-prices-63529/
======
ZeroGravitas
I'm not a fan of most reporting of these negative price events.

First, they rarely explain why the price is negative. As the article explains,
solar can switch itself off, so it's nothing physical about solar that can
cause negative prices, as all solar can switch itself off before it goes
negative it would bottom out at zero for those reasons.

In most cases I've seen so far, contractual agreements with gas, coal or
nuclear (who struggle to switch themselves off quickly without hurting
themselves) have been the reasons for negative pricing and the grid wasn't
actually at 100% renewable at the time of the curtailment. In other words,
solar switches itself off, while other, dirtier plants get fined (negative
price!) for demanding that they be allowed to still run.

In South Australia they're doing pretty well on renewable, so it's possible
they actually are at 100% renewable at these times (would be good for the
stories to clarify). If that's the case then the negative price is most likely
caused by subsidies to wind that are paid per generation. If the subsidies to
two renewable plants are different then one will bid the other off the market
at that point since the price can go down to the opposite of the subsidy
before they make an actual loss.

All in all, these negative prices are useful market signals. I wish the
weren't covered by journalists who seem to think negative numbers are taboo
for some reason.

The fact that it's the same plant that gets switched off repeatedly (rather
than all solar reducing output) makes me think this is either a contractual
thing that only affects its owner or a regional transmission thing that only
affects its geographic location. Again, would be nice for stories to find out
which.

~~~
ryan_j_naughton
I agree. Negative prices make perfect sense in electricity markets, and
journalism does a bad job at explaining it.

Supply and demand must always be in equilibrium in real time with electricity
(forgetting storage / batteries for a second). If there is more supply than
demand or vice versa, then you have instability in the grid and can have
blackouts. Those electrons have to go somewhere. This is in contrast to
virtually any other good where you can store the good in a warehouse and
smooth it supply intertemporaly.

Thus, if there is a big drop in demand or it's simply too sunny / windy of a
day, there can be too much supply.

To incentivize reducing supply quickly enough, sometimes prices have to go
negative. This is in part because some supply simply cannot reduce quickly
(e.g. nuclear) and are still happy to operate in zero price situations bc
either they have no marginal cost of generation (solar, wind) or the cost of
reducing generation and increasing it back up is high (nuclear, coal).

Thus, there simply might not be enough plants that have the characteristics
where they can scale down quickly AND have a marginal cost of generation such
that they would turn off when prices go to zero (e.g. combined cycle natural
gas plants can turn on and off very quickly and don't want to be on when the
price falls below the cost of the gas used to generate electricity, but
Australia doesn't have enough of them to absorb a supply decrease as prices
fall). Alternatively, the subsidies that you mention shift the break even
point into negative prices territory.

Either was, negative is needed to incentivize solar and wind to turn off or
else there would be a blackout from oversupply.

Thankfully, this all gets solved with energy storage and all the slow, dirty
systems that stay on will be priced out by more nimble renewables and rapid
energy storage. Bc then that excess supply is stored and arbitraged to higher
price times (when the sun isn't shining and wind isn't blowing). Then prices
should always be positive (so long as there is available storage). If the
storage is full though, prices could again go negative. Without a place to put
those electrons, they quickly go from a good to an externality. It's almost
like how we'll pay a musician to perform, but if your neighbor is blasting
music at 3am. Without someone willing to consume and pay for those electrons,
they literally are just causing trouble for all the other electrons that we do
want to consume.

It in part why you can't simply just create significant generation and hook it
into the grid anywhere without working with the grid operator. AC power, dude.
We don't control where those electrons flow directionally. So you adding too
much power somewhere can really destabilize the system.

~~~
tremon
_some supply simply cannot reduce quickly (e.g. nuclear)_

What is it about nuclear that makes it impossible to reduce as fast as gas or
coal? From my layman's point of view, they all use comparable (steam) turbines
to power the actual generators, so I would expect them to be equally capable
of disengaging the generator from the turbine.

Is this perhaps due to design decisions, or simply a size problem? A foolish
question perhaps, but I don't have more knowledge to draw from.

~~~
_ph_
The nuclear part of the reactor is slow to react to control input. Even when
completely switched off it produces hundreds of megawatts of thermal energy.
This is what doomed the Fukushima reactor. After the earthquake it was
technically switched off, but required a lot of cooling as the nuclear
reactions continue to go on even with the control rods completely extended.
But with the failure of the power supply there was not enough cooling and the
reactor eventually melted. Theoretically it should have been possible to
passively cool this reactor, but due to operators mistake, one important valve
was in the wrong position for that.

Beyond shutting down slowly, nuclear reactors are even slower to start up
again. So after a complete shutdown it can take up to two weeks to put a
reactor back into full production.

It is conceiveable to build nuclear reactors which are a bit quicker to ramp
up and down - I guess more like the reactors of nuclear submarines, but our
existing reactors are not suiteable for that, as this was not a requirement
when they were designed. They were designed to be combined with quicker
providers like gas and water plants.

~~~
redblacktree
I don't think you answered the question. The way I read it was "Why can't the
nuclear power plant simply vent the steam they create instead of turning
turbines with it?" In order to switch off power generation, even if the
reactor is still creating thermal energy.

~~~
_ph_
That could possibly done, but then, no one had created such a design yet. It
is also not trivial to cool in the gigawatt range. Actually, many power plants
even run into cooling issues in some time of the year, as they often rely on
local rives to provide the cooling and the water supply as well as maximum
water temperatures (animal and plant live) limit their cooling capacity in
normal operations.

In Belgium there were even streetlights being installed along all highways to
use up nuclear energy when the grid was not consuming it.

------
nabla9
EXPLANATION: Some power sources can’t be shut down and restarted quickly and
cost-efficiently. If the cost of stopping and restarting plant is higher than
the cost of selling energy at a negative price for some time, prices go
negative.

This kind of price fluctuation can increase the overall cost of energy
production. We need cost effective power storage solutions and better electric
grids to make renewable more effective.

[https://en.wikipedia.org/wiki/Duck_curve](https://en.wikipedia.org/wiki/Duck_curve)

------
JMTQp8lwXL
An explanation of the mechanics of how I'd have to pay somebody else to take
my electricity (e.g., a negative rate) would be helpful.

As prices approaches 0, I could take the excess electricity and say, mine
cryptocurrency. Is nobody considering the arbitrage opportunities here? Take
the 0-cost electricity, move water up a hill, and convert it back to electric
when it's needed, etc.

~~~
apendleton
Anything you could do it with it would have capital costs. Maybe it's
transient enough that that money would be better invested elsewhere. Like, if
you only run your cryptocurrency mining when the price is negative, your
capital is stuck in an idle asset most of the time, and if you run it all the
time, it's the average price you want to consider, not the minimum price (even
if the minimum price is negative), and my guess is that Australian electricity
isn't cheaper _on average_ than other kinds of power other places (especially
places with lax environmental regulation).

Another way to think about it: uses like those you propose that can soak up
excess energy in the grid are exactly why energy markets are allowed to float,
and even to go negative. If there's a surplus, they want you to use it, and if
it were economical to store it and sell it back to the power company later,
both they and you would benefit. That this isn't common suggests that it isn't
economical.

~~~
solotronics
There are older bitcoin ASIC miners that aren't nearly as efficient but if you
are getting totally free electricity... definately an opportunity here.

~~~
iknowalot
Yea shutting off anything that is producing free electricity to keep a market
price stable is moronic....

~~~
Leherenn
It's not to protect market price, it's to protect the grid. You basically need
to use as much power as you produce, if this becomes imbalanced, you damage
the grid.

In this case, demand is lower than supply, so either you decrease the supply
(shutting down the solar farm here), or increase the demand (lower the price).
Because this is transient, and some powerplants (e.g. nuclear) take time and
effort to shut down, for those operators it is cheaper to pay you to use their
energy during those times (negative prices), than to shutdown/restart when
needed.

------
cetra3
I wish these prices were reflected to the consumer. Electricity bills in South
Australia are ridiculous, and as a renter you don't have the luxury of
installing solar panels.

~~~
Felz
I'm not sure how South Australia works, but I think in general you pay for the
cost of electricity generated (here going to zero) AND for the infrastructure
required to get it to your house.

In part that's why rooftop solar is hazardous for a grid in high amounts- you
don't pay the infrastructure price half the time, but the infrastructure still
has to be there for you.

~~~
cperciva
Indeed -- so called "net metering" ignores the fact that the costs are driven
by both _consumption_ and _capacity_. Providing a 400A supply to a house is
expensive even if you never draw any power, because the utility has to be
_ready_ to provide the power.

~~~
ZeroGravitas
The reason for net metering (other than it being a cheap hack to take
advantage of just rewinding a standard power meter) is that the energy from
the houses is valuable to the grid in lots of ways (e.g. in reducing peak
generation and transmission demand).

It doesn't ignore those costs you mention, it just also doesn't ignore the
benefits. In some jurisdictions the benefit exceed the money the householders
are being paid (it varies depending on how dirty the grid is, when peak load
happens etc.).

For whatever reason, like negative prices, this attack on net metering appears
to resonate well with people who don't like renewables, but it's just a
talking point from utilities who see the ability to increase their own profit
by taking but not paying for that benefit via political shenanigans.

Apparently the idea that electricity can be differently valuable at different
times of the day or year is something that ordinary people are insulated from,
so paying an average seems normal, but getting paid an average seems crazy.
But it's not something being argued against from a wider economic standpoint
of efficiency, as it is literally a good thing, that's why people proposed it
in the first place and continue to support it.

------
rosege
I'm in SA and I'm currently looking at getting solar panels and maybe a
battery because we have the highest cost of electricity in the country. I'd
like to know why we have the highest when the price seems to be going negative
every other day?

~~~
roenxi
The market reacts quite quickly if a company is going bankrupt; so assume for
the sake of argument that all the electricity producers in the market are
turning at least a small profit.

If power prices are negative but the provider is making a profit, then at some
other time prices will have to be very high to bring the average price sold
positive.

I assume that is what is happening here. I don't have a lot of respect for
SA's electricity strategy, but it may work out. At least there are interesting
opportunities if anyone can think of a way of profitably sinking vast amounts
of power; there has to be something useful that can be done. Ironically in
this case, using more power might reduce power prices because the providers
don't need to charge as much in off-peak times.

~~~
rosege
So perhaps they should drop the costs to encourage more usage and thereby also
reduce the wholesale cost.

~~~
roenxi
Bunch of stuff they should be doing; negative power prices are an economic
emergency. If your lot can figure out something that works for consumers I'm
sure we'll start copying it up and down the east coast. I'm glad it was NT
doing this expensive experiment and not NSW; for all that we've mucked up our
electricity markets something shocking.

------
brownbat
Storage is definitely the wise answer here, as the article mentions.

The fun answer here is giant crypto farm.

~~~
rosege
Yeah I had thought surely they can find a use for free electricity rather than
just turning it off

~~~
Aperocky
Free electricity that turns off half the time and run basically randomly for
the other half? Without a battery it’s useless, and you have to pay for that
battery. Treating the electric grid as a battery shouldn’t be free. It’s just
in this case they found the cost of battery to be greater than the value of
the electricity they’re creating.

~~~
netsharc
This island uses water as a battery:
[https://www.youtube.com/watch?v=eG4Q4kXal_U](https://www.youtube.com/watch?v=eG4Q4kXal_U)
, when there's a lot of wind spinning the wind turbines, they pump up water up
a mountain, and when it's less windy they let the water fall through a
hydroelectric plant...

------
jillesvangurp
The solution is to deregulate the market and allow multiple companies to buy
and sell electricity. The problem here is not an over supply but poorly
regulated demand that causes energy to be priced higher than is justified;
mainly to protect expensive sources of energy such as coal and gas plants.

The basic issue is not that there is no demand but that it is unevenly spread.
People turn on their ACs when they get home after work. Peak demand is in the
evening when the sun is about to go behind the horizon. Peak supply is in the
late morning and early afternoon when people are at work.

So, all you need is tuneable demand. Say you had a web service that simply
announces the current price of electricity that updates in real time based on
your production capacity and a whole bunch of things that can turn themselves
on/off based on that price. Whenever there is excess demand it just continues
to drop that price until demand picks up. Now say you have an apartment
complex with a lot of batteries in the basement and a bit of simple
electronics that controls the charging behavior based on the price several
energy providers (why limit to one). Now basically you have an energy sink
that charges cheaply that automatically picks the cheapest provider.

Now imagine that battery has some overcapacity that can be sold back to the
grid when prices are highest (aka. demand is high). Now you have an apartment
building that buys energy when it is cheap and sells energy when it is
expensive and it has enough capacity to serve its own needs.

Add EVs to the mix and battery to the grid technology and you have a mobile
battery capacity that when it is not driving around can be plugged in to act
both as an energy source and sink as well.

Now make the rest of the energy available to industrial users that can install
their own solar panels and you have even more supply and demand.

The key bottleneck in this system is the current oligarchy that controls
prices: the existing energy companies. They make the most profit when prices
are high. They don't mind buying in some excess capacity cheaply but they have
no incentive to do that when they don't need it. And since they control the
market, there's nobody else to sell it to. Worse, since they have fixed cost
associated with legacy plants, they have to keep prices high to prevent those
becoming loss leaders. The whole system is geared towards protectionism rather
than efficiency. Once you create an open market for energy, that's no longer
sustainable.

~~~
ThrustVectoring
Your analysis completely ignores the capital costs associated with building
out a variable demand system. Every battery built will tie up a certain amount
of money into fixing grid pricing variability, as well as depreciate in value
and usefulness over time.

If electric overproduction is an infrequent enough condition, it may well be
cheaper to waste energy than to build a battery that just sits there 300+ days
a year doing nothing.

~~~
jillesvangurp
It doesn't ignore it but the premise of capital cost is that it then gives you
access to potential gains. That breaks down if you are dependent on selling to
a monopolist that sets prices based on their own needs rather than the market
needs. In this case, local energy providers get protective about their more
costly infrastructure when faced with homeowners supplying cheaper energy to
the point where they charge negatively.

Right now the power market is weird because people are deliberately installing
less solar than they need/want because their local energy providers are simply
refusing to buy the excess energy beyond a certain number of kwh. And since
they are the only party you could feasibly sell to, a lot of homeowners simply
install less capacity.

Think about it, you've got engineers on the roof to install solar panels,
wires, inverters, etc. and the panel cost is only a small portion of the
overall cost. Why would you cap your installation at 4kwh when your needs are
closer to 10 kwh and you have room for 20 kwh? That's exactly what's happening
in a lot of places.

------
ISL
Sounds like someone needs a small aluminum smelter?

~~~
Scoundreller
Or hydrolysis.

~~~
ISL
That's even better -- I imagine that those systems can turn on and off much
more quickly than smelters.

------
LAMike
Might want to buy some of the Power Miners:

[https://powerminingshop.com/](https://powerminingshop.com/)

As chips reach the limits of the cutting edge tech, the only advantage will be
how expensive your electricity is rather than replacing chips every 12 months

~~~
nosuchthing
Why waste energy on a system that's designed to grow increasingly inefficient
over time (Crypto PoW mining), when you could simply store the energy or use
it on something that is helpful to the local community, as in food or
manufacturing?

~~~
Udik
Because the whole premise is that you don't really have a way to store or use
that energy in other ways. Then converting it into cryptomoney makes sense-
then you can use that crypto to buy things which are helpful to the local
community- even things that are produced on the other side of the world, where
your energy could never reach.

An interesting thought is that of using that crypto _exclusively_ to buy
energy when the prices are non-negative. But I'm not sure that makes sense
from an economic point of view, it's a snake biting its tail.

~~~
dnpp123
Depends of your investment. You could always deploy on those sites old miners
where the ROI is already paid off - so it's always better than them being
thrown away.

------
jhoechtl
I think there is a fundamental flaw in the whole discussion. We are doing
alternative energy for two reasons:

1\. As a means for alternative cheap energy; 2\. As a means to gain
independence from imported energy (oil, coal); 3\. As a means to protect the
environment

If a solar farm has to be switched off, because the power can not be sold,
apparently 1.) has dominance over 2 and 3. If environment protection would
have precedence, consumers should be forced to consume higher priced energy?

------
teamonkey
Question: what happens to the solar energy when PVs are disconnected? I
presume reflected or absorbed as heat, but is a PV under load cooler/less
reflective?

~~~
icebraining
Yes, a disconnected panel runs slightly hotter.

------
jmpman
Would it be cost effective to have vats of aluminum oxide sitting idle,
waiting for these negative pricing events? The raw material is cheap, and the
electrodes are only worn away when actively smelting. With interest rates so
low, the idle capital may not be a major impact to profitability.

------
growlist
I'll add my ideas to the others for using the excess power:

1\. drill a big storage hole of some kind. Surely Australia could use a
gigantic underground reservoir 2\. install a plant next to the solar farm and
make compressed gases from the atmosphere

------
lightedman
It's a PV farm, they could just take parts of the PV grid offline instead of
playing arbitrage games such as paying others to take their power or trying to
build storage systems (though any half-smart PV solar farm has some minor
storage on-site.) It's not like the entire system is hooked to a singular
large MPPT controller. They aren't bound by the typical issues of energy
generation which nuclear or constant hydro-electric have.

BTW: Did you know solar panels can self-immolate if seriously defective during
manufacture?

~~~
qtplatypus
It isn’t the PV farm that is paying people to take there power. It is the
baseline coal generators.

~~~
lightedman
The article makes it abundantly clear that this is not the case. The first
three paragraphs alone have most of the effective article impact.

"When Australia’s renewable energy portfolio reached its important milestone
on Wednesday of providing 50 per cent of the main grid’s demand for the first
time, one solar farm couldn’t be part of the fun, and had to look on from the
sidelines.

The sight of wind and solar farms being switched off when wholesale
electricity prices fall into negative territory has become increasingly common
over the last few months, particularly in Queensland and South Australia.

But the facility that appears to have been affected the most has been the 95MW
Tailem Bend solar farm in South Australia, owned by Vena Energy and operating
since earlier this year."

Further reading shows that coal plants rarely need to shut down as evidenced
by:

"It’s common to see wind and solar farms switch off when prices go into
negative territory, or get close to zero. It happens either because their off-
take agreements oblige them to do so, or because they are “merchant”
facilities that take the spot price and don’t want to be paying other parties
to take their output if prices do go negative."

Coal generators almost NEVER pay for arbitrage in Australia because of various
specific agreements (and limits to the arbitrage that is possible in many
areas.) It is almost the exclusive domain of wind and solar plants.

------
pbreit
This doesn't make a ton of sense and the article is so poorly written it's
hard to understand what's going on.

------
lazyjones
Buy some Tesla Megapacks, install some DC fast chargers on-site and sell
electricity for 0.2$/KWh or so all day long.

~~~
emirp
[https://www.abc.net.au/news/2018-04-06/tesla-battery-
outperf...](https://www.abc.net.au/news/2018-04-06/tesla-battery-outperforms-
coal-and-gas/9625726)

"The world's biggest lithium-ion battery — built by tech billionaire Elon
Musk's company Tesla last year — has survived its first summer in South
Australia's mid-north."

"And according to a new report by the Australian Energy Market Operator
(AEMO), it's outperforming coal and gas generators on some key measures."

"AEMO says the Hornsdale Power Reserve is capable of charging at a rate of 80
megawatts and discharging at 100 megawatts."

"It has a storage capacity of 129 megawatt hours."

"That means it could operate for about 75 minutes at full capacity."

------
g82918
It seems almost silly that we can generate more energy than we can use some,
but not all of, the time.

~~~
movedx
What's more annoying is we can provide that energy for virtually free, but
because it doesn't make someone else profits it gets switched off.

EDIT: just to clarify: I mean I wish that solar could be socialised and made
into a social commodity.

We're becoming increasing dependent on electricity as time passes, almost to
the point it'll be difficult to live well without it. If that ever becomes the
case, I would want to see a social effort to ensure electricity becomes
available to all, just like health care and drinking water.

I also understand that there are costs involved with providing these services,
but again: social commodity. That means taxes and everyone chips in to ensure
we have these resources available to all so that all can benefit and live
equally.

~~~
dev_dull
why would they _pay_ for someone else to use their energy? It just eats into
their profits and means that their normal customers have to pay _more_ for the
solar energy.

~~~
movedx
I think the power grid should be socialised and electricity handed out for
free, especially given our increasing dependency on it. Solar is technically
"free" energy given there's nothing to setup and maintain except the
infrastructure, versus coal/oil/gas which requires mining, refining and
transportation of materials before you get to the generating and delivery
parts of the process.

~~~
icebraining
It may be almost free to produce the energy with the infrastructure you have,
but it's still limited: there's only so much power available. So how would you
allocate it?

------
alex_duf
I think this is a great news, there's now a financial incentive to invest into
storage

------
tinus_hn
‘Solar farm can switch off every second day in case of negative prices’

------
aussieguy1234
Instead of switching off, why not just mine crypto?

~~~
dbrgn
Probably because crypto miner ASICs are not cost effective when run only every
once in a while.

