
Solar sends energy prices below zero in middle of day - jacquesm
http://reneweconomy.com.au/2014/solar-sends-energy-prices-below-zero-in-middle-of-day-63767
======
Animats
This was just a brief price spike into negative territory for one 5-minute
period. It just means that some plants are slow to shut down. Within 10
minutes, enough generation had shut down to bring the price back into positive
territory. It's unusual to see this in the daytime, but it's not that unusual
late at night. Areas with a lot of hydro power often get into this situation
when there's extra water to be let out of dams. It's often easier to keep the
generators running than to bypass them and shut them down, only to have to do
a restart in an hour or two. The same is true of some nuclear plants.

One of the big issues in the power business is "ramp rate", or how fast a
generating station can change its output. Gas turbines have very fast ramp
rates; coal-fired plants vary, and some hydro plants are slow. Wind turbines
have to feather and brake to a stop. Solar can be turned off quite fast if
needed, because a solar cell is a voltage source and is unbothered by lack of
load.

Read "PJM 101" for an introduction to how generation management works for the
biggest grid in the US, the US east coast:
"[http://pjm.com/Globals/Training/Courses/ol-
pjm-101.aspx"](http://pjm.com/Globals/Training/Courses/ol-pjm-101.aspx"). Load
changes by about 3x during a 24 hour period, and huge plants start up and shut
down every day to follow the load. So this is all routine. You can watch the
PJM power grid operate at
"[https://edata.pjm.com/eData/index.html"](https://edata.pjm.com/eData/index.html"),
which gives you a huge Flash-based dashboard intended that will make little
sense until you've read PJM 101. PJM has a power glut at some times of the day
right now. Their active messages include "PJM is issuing a Minimum Generation
Advisory for the valley periods 10/04/2014 through 10/06/2014 . This advisory
is being issued to provide advanced warning that due to mild weather and light
loads, PJM may be entering into Min Gen Alerts and possibly Min Gen Actions
during these periods."

In other words, a price spike into negative territory for a few minutes is a
normal operational event.

~~~
Someone
But that may just be a sign of things to come.
[http://energytransition.de/2014/05/german-power-prices-
negat...](http://energytransition.de/2014/05/german-power-prices-negative-
over-weekend/) shows that Germany had negative prices for an entire afternoon
in May.

~~~
Animats
That was a wind power problem. They had a really good day for wind on a low
load day. With solar, you get peak generation and peak air conditioning load
around the same time. With wind, it's totally random. Wind power over the PJM
or CAISO regions varies as much as 4:1 over a day, completely unrelated to
load.

There are wind enthusiasts who claim that if you average wind over a large
enough area, it's more constant. Experience does not bear this out. CAISO
covers all of California and part of Nevada. PJM covers Delaware, Illinois,
Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio,
Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.
Both see 4:1 wind variation over a day. Maybe over an entire continent, the
variance might reduce, but not over any practical grid area.

------
rwcarlsen
This kind of thing is actually a real problem from a grid stability point of
view. The unpredictability of wind and solar and the lack of a way to store
their output effectively make dealing with these intermittent renewables
challenging (and a thorn in the side) for grid management. Due to the way
electricity dispatch markets often work
([http://www.eia.gov/todayinenergy/detail.cfm?id=7590](http://www.eia.gov/todayinenergy/detail.cfm?id=7590)),
base-load style power plants (e.g. coal, nuclear, etc.) end up not being able
to run or even paying to run. This becomes a strong disincentive for the
construction and operation of these plants that are vital for steady,
dependable electricity supply. The market structure in addition to the
regulatory environment in the U.S. (e.g. requiring utilities to purchase all
provided wind energy at higher than natural market price) are both part of the
problem. Cheap natural gas also hasn't helped. The Vermont Yankee nuclear
plant closed due to energy prices being too cheap
([https://en.wikipedia.org/wiki/Vermont_Yankee_Nuclear_Power_P...](https://en.wikipedia.org/wiki/Vermont_Yankee_Nuclear_Power_Plant#2013)).

[edit] grammar and paste fixes

~~~
brc
It's also a long term capital investment problem. Power generation is hugely
capital intensive, and there are disincentives for investing in such a
volatile market.

However, the demand is nowhere near as volatile as the supply can be, and you
can't keep power as inventory, so it's anyones guess how this all plays out.
Certainly we can't become reliant on solar/wind supply as this would be
disastrous.

One thing is for sure, we need to level the playing field and remove all
subsidies and regulations so that cost effective power can be reliably
created. I fear the direction we are going right now is in the complete
opposite of how things should be going.

~~~
crdoconnor
>Power generation is hugely capital intensive, and there are disincentives for
investing in such a volatile market.

Only nuclear power is outrageously capital intensive. Solar and wind are much,
much less capital intensive.

>Certainly we can't become reliant on solar/wind supply as this would be
disastrous.

Oh yea, running fully on renewable energy would be _terrible_ :/

~~~
jacquesm
> Only nuclear power is outrageously capital intensive. Solar and wind are
> much, much less capital intensive.

The way to look at capital in this respect is to look at $/W of installed
power. So even if in absolute numbers you don't require a huge amount of $ to
put a solar plant into production versus putting a (small) nuclear plant into
production the capital costs are still considerable when you compare apples
with apples. Also, nuclear scales better in this respect than solar. So
capital costs are not per-se the best way to compare solar, wind and nuclear.

Endless volumes have been written about this, one of the biggest benefits in
my opinion is that solar and wind put fewer apples into many more baskets
which should - if properly implemented, which currently they are not - in
theory result in a more resilient power infrastructure.

~~~
crdoconnor
>So even if in absolute numbers you don't require a huge amount of $ to put a
solar plant into production

This is exactly what not being capital intensive means. You can start small
and scale up. By contrast, you cannot build a small nuclear power plant and
scale up to a larger one. You build a large, expensive source of power or you
build nothing at all.

>Also, nuclear scales better in this respect than solar.

Nuclear is good for generating baseload but it cannot be scaled up or down
easily, it is VERY capital intensive, it comes with significant risks (placed
squarely on the public's shoulders) and is not significantly cheaper as a
source of energy.

------
waylonk
The problem with wholesale prices driving towards zero is how do you recover
costs associated with security of supply. It's great that solar makes
wholesale prices zero throughout the day. But if generators can't recover the
cost of their investments, then they'll eventually decommission those plants.

There are different types of power plants such as Peaker Plants
([http://en.wikipedia.org/wiki/Peaking_power_plant](http://en.wikipedia.org/wiki/Peaking_power_plant))
that can start quickly (within minutes) to provide security of supply against
renewables. However, they are quite a bit more expensive to operate, which
means wholesale prices will need to increase in order to make money with them.

Source - I work for one of New Zealand's largest electricity generators.

~~~
crdoconnor
>The problem with wholesale prices driving towards zero is how do you recover
costs associated with security of supply. It's great that solar makes
wholesale prices zero throughout the day. But if generators can't recover the
cost of their investments, then they'll eventually decommission those plants.

Well, if that's a coal burning plant then that's good news.

------
startupfounder
When prices dip below $0 the electricity generators have to pay to put power
on the grid.

Many choose to just put their generators on standby mode to avoid these costs
or "maintain output by offering to pay wholesale buyers to take their
electricity"[0]

As more wind and solar comes online these events will occur more often and for
longer periods. "Old" operators are less willing to ramp up and down
production as these negative pricing scenarios increase from 5 minutes per day
to 60 minutes to 240 minutes.

As the costs to develop solar decrease and as economies of scale increase, the
acceleration of this effect will only increase.

This is great for renewables and for storage companies who are willing to play
this game. As solar becomes cheaper (say sub $2/watt) operators will be more
willing to pay out during increasingly longer negative pricing scenarios (and
internalizing it into their operating budget).

These storage companies will be buying kWh at -$0.02 and then selling them
back to the grid at $0.05/kWh at night undercutting fossil fuel operators
(accelerating the process even more) and bringing in the equivalent of
$0.07/kWh.

As the cost of solar goes from $3/watt to $2/w to $1/w the price storage
companies will be "buying" their electricity will only get better and profits
only increase.

I personally think that we will be plugging our houses into our battery packed
cars at night to keep the lights on and get paid to take kWh off the grid
during peak hours.

[0]
[http://www.eia.gov/todayinenergy/detail.cfm?id=6730](http://www.eia.gov/todayinenergy/detail.cfm?id=6730)
(as @rwcarlsen pointed out)

------
ghouse
Alt headline: coal plants don't have operating flexibility to reduce output,
driving prices negative momentarily.

~~~
jcampbell1
Alt headline: Solar generation has no operating flexibility, thus solar
generators must pay to shut down load following capacity, driving prices
negative momentarily.

~~~
Thimothy
Err... You are quite wrong. Solar generation has all the operating flexibility
of the world. As they are voltage generators they can be disconected from the
charge with zero consecuences for the generator, contrary to coal generators.

------
blazespin
Now just imagine if everyone had a huge battery rack, solar panels, and API
access to that pricing information. Add full ability to feed back in at cost
and that is the sound of utility companies shuddering...

~~~
Qantourisc
Current battery racks sound not so good for the environment (unless we
actually start recycling this waste). Still waiting on those liquid energy
storage batteries:

[https://en.wikipedia.org/wiki/Molten_salt_battery](https://en.wikipedia.org/wiki/Molten_salt_battery)
[https://www.google.com/search?q=liquid+metal+battery](https://www.google.com/search?q=liquid+metal+battery)
(coudn't find a good single link to refer to.)

However they are bit tricky to deploy at home :(

~~~
crdoconnor
>Current battery racks sound not so good for the environment (unless we
actually start recycling this waste)

Why wouldn't we?

~~~
Qantourisc
Usually cost, also people often need to pay to get them recycled this often
causes problems.

------
sgnelson
And this is where I shall set up my bitcoin operation...

~~~
manicdee
You, the consumer, do not benefit from negative pricing of wholesale
electricity. Especially not when it's a small spike on one particularly
favourable day :)

~~~
joezydeco
Some of us do. In Chicago you can opt-in to real time electricity pricing. The
price is computed hourly based on the average of the 5-minute wholesale price.

Sometimes when the peakers are running and/or a high usage factory goes
offline overnight, the price can go negative. Here's an example:

[https://rrtp.comed.com/live-
prices/?date=20141001](https://rrtp.comed.com/live-prices/?date=20141001)

(In actuality the price has to go _really_ negative before consumers actually
pay negative prices due to the utility's delivery charges and etc, but you get
the idea).

~~~
Omniusaspirer
Am I missing something or is that unbelievably cheap electricity? What is the
actual billable cost per kWh?

~~~
joezydeco
For ComEd, delivery and taxes etc come to about 8.5c/kWh over the electricity
price. Non real-time customers pay about 13c/kWh out the door.

But yeah, our electricity is a little cheaper here compared to the coasts.
Lots of nuclear power and many connections to other grids.

[http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm...](http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a)

------
jcampbell1
Does this mean that solar generates power when no one is willing to pay for
it?

I can't figure out these charts... probably because I am too stupid.

I can't wrap my head around the consequences of having a power supply that
doesn't follow demand.

~~~
krschultz
Power supply already doesn't follow demand. Large scale power plants (coal,
nuclear, even gas to some extent) run at a very steady output. It's a big
system to get started & stopped, you need to get every part of the system to
the proper temperature for quality steam, there are a bunch of lossy startup
processes, etc. You can't just throttle them up and down at will. The timeline
is longer than a day for most of them.

Because of that they sell electricity at a discount at night. Large industrial
users will schedule their entire operations around this. For example ski
mountains do their snowmaking at night because the power is the greatest
expense (even more than labor) and the discount is enormous. I also believe
that aluminum and steel foundries do some form of this.

The renewables change this dynamic a bit, but there are many loads that can be
time shifted. I could imagine an electric car connected to the internet and
plugged in all night at home and all day at work could optimize its charging
cycle to match the lowest energy prices of the day. Of course this requires
major changes to metering and billing, but there is no technical reason why it
couldn't happen, it is all a business and infrastructure problem.

~~~
jessaustin
_...ski mountains do their snowmaking at night because the power is the
greatest expense..._

Well, also, it's usually colder at night, which also helps the snowmaking. b^)

~~~
wiredfool
And their paying users are more likely to be on the slopes in the daytime.
Snow guns are loud and unpleasant to be around.

