
A Texas Utility Offers a Nighttime Special: Free Electricity - hvo
http://www.nytimes.com/2015/11/09/business/energy-environment/a-texas-utility-offers-a-nighttime-special-free-electricity.html?hp&action=click&pgtype=Homepage&module=first-column-region&region=top-news&WT.nav=top-news
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ams6110
_Deregulation in Texas has spurred intense competition for customers._

Huh. Who'd a thunk it.

 _made possible by the nearly universal distribution in recent years of
residential smart meters_

This is key. Demand-based metering and pricing has been available for
industrial customers for a long time but residential customers had dumb
mechanical meters that only recorded total kilowatt-hours. This sort of thing
will also become important as electric cars become more mainstream, to
encourage people to charge cars at low-demand times. Otherwise everyone
plugging in their car at 6pm when they get home from work, while also cooking
dinner and turning on the A/C is going to stress the grid.

~~~
jjoonathan
>> Deregulation in Texas has spurred intense competition for customers.

> Huh. Who'd a thunk it.

Anyone familiar with Enron. Or Comcast & Time Warner. Or any of a million
other companies in a hundred other industries that has miraculously managed to
avoid the purportedly inevitable race to the bottom. Of course, in this case
"deregulation" isn't the full story:

> The incumbent utility in the area still owns and maintains the local power
> lines (and is the company to call in the event of a power outage) and is not
> subject to deregulation.

and "intense competition for customers" isn't the full story either:

> TCAP found that the average consumer living in one of the areas that opted
> out of deregulation, such as Austin and San Antonio, paid $288 less in 2012
> than consumers in the deregulated areas.

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

~~~
Animats
Deregulated utilities will figure out some new way to screw their customers.
Probably "plans", like cellular, where you pay a flat rate plus overage
charges plus surge pricing, but have unlimited off-peak kilowatts up to your
feeder capacity.

~~~
Menge
Very true, but I wouldn't blame the utilities for understanding the basics of
the US.

This model is really the US standard to screw lower social classes that plays
out elsewhere, i.e. credit cards as the national payment system instead of
payer initiated direct transfer like in most(all?) of Europe.

Richer people will tend to have strategies and resources (i.e. the money and
rights to modify their residence, control over their work schedule, etc) to
pay bellow average which will make them richer. People under stress will have
to pay whatever the spot rates are.

This is the only defensible position for businesses as the ones with resources
and time to invest in organization are the ones who have the resources to use
the political system as a tool against anyone who would have them pay their
full share.

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ryanmcgarvey
9pm - 6am sounds like prime Bitcoin crunching time.

It was my understanding that the limiting factor, or rather the "cost" of
mining bitcoints, ultimately comes down to power consumption. Effectively if
$/kWh * kWh/bitcoint < bitcoint value, you can turn a profit.

~~~
zachrose
Indeed. I wonder how long this can last before the surplus wind power is used
up by bitcoin miners and residential aluminum smelters.

~~~
sitkack
Or water purification. Why not just bank the power in batteries and feed it
back during peak load?

~~~
msandford
> Why not just bank the power in batteries and feed it back during peak load?

What's the retail cost of electricity in Texas during the day, and what do you
pay per kWh for your batteries: capital costs and ongoing costs?

If you pay more per kWh for batteries than retail power prices then any
consumer is a fool to engage in the battery scheme. And even if a consumer
might be able to make money, the wholesale price is definitely lower than
retail. I seem to remember calculating that batteries cost about $0.06/kWh all
in in the last ~6mo but wholesale power in TX is more like $0.05 and retail
it's usually below $0.12.

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vishaldpatel
Imagine having more electricity than we need in California, especially from
wind. We could desalinate water from the ocean all night long.

~~~
maerF0x0
why not solar instead of wind? So many farms dont have water, may as well
cover them over with panels or mirrors, no ?

~~~
pjc50
Solar _as well as_ wind. Clearly there's no shortage of electricity at night
if it's being given away.

~~~
HiLo
That's such as simplified analysis. Perhaps there's no shortage (unlikely
given Texas' power needs), perhaps there's transportation bottlenecks creating
local oversupply? That price has to lower to send the price signal that the
arb is there and firms can make money building that transmission, at which
point, just like the other energy products in West Texas (crude), the relative
price will begin to rise again relative to the benchmark. (See: West Texas /
Midland grades of crude being priced at steep discounts that are now shrinking
due to increased pipeline capacity coming online.) It's not that Midland
crudes were "oversupplied" it's that demand was being "artificially" lowered
by transportation bottlenecks. (Economists / econometricians may argue
definitions with me on that, but from the energy trader perspective, that's
how I would approach it.)

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taspeotis
Here's a similar discussion from earlier:
[https://news.ycombinator.com/item?id=10245805](https://news.ycombinator.com/item?id=10245805)

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rince
But yet, here in Austin I don't get a choice for my energy company.

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saryant
Austin and San Antonio opted out of deregulation.

~~~
techsupporter
As did Denton (Denton Municipal Electric), Garland (Garland Power & Light),
areas served by what used to be known as the Denton County Electric
Cooperative (now CoServ), and so on.

They actually didn't opt out, they simply didn't opt in. The original law
putting deregulation in place exempted cooperatives and municipal utilities
unless they chose to join the competitive system. However, that choice is one
way and permanent. If a co-op or city opts in, it can never go back. Most of
the not-for-profit boards wanted to see if deregulation would be good for the
rest of the state before they put it on their members.

I remember when natural gas costs spiked and that sent Texas electric rates,
_especially_ in the Texas-New Mexico and Oncor/TXU service areas,
skyrocketing. Now that natural gas is less expensive, prices have dropped.
Municipal systems, on the other hand, either owned their own generating
infrastructure and were buffered or bought long-term hedge contracts that the
competitive players were scared to buy (what if they bet wrong?) or were so
new that they didn't have the credit to buy.

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mayneack
Perfect time to charge your EV.

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rshlo
It's mentioned that the "Free" electricity is partly because of federal tax
breaks. Will it still be viable option without the tax breaks?

~~~
jhayward
The tax breaks are built in for the life of the wind farms, so they don't
really expire until the farms are retired.

The culprit is not actually the PTC, it's the combination of the PTC and
insufficient transmission capacity from the wind farms to the rest of the
state. When additional transmission capacity is added the wind generation will
be absorbed (and paid for) by a much larger region and the incentive to under-
price will go away.

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hwstar
This could be especially good in the summertime if you have one of those ice-
based storage air conditioners.

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sunsu
Tesla battery pack here I come!

~~~
manicdee
Just remember to calculate the cost per kWh of electricity you extract from
your battery.

This comes down to roughly:

$/kWh = $cost of installation / (kWh capacity * cycles lifetime * efficiency)

So if the Powerwall costs $5000 for a 7kWh capacity with a lifetime of about
3600 charge cycles at 80% efficiency, you're looking at $0.25/kWh. If the
difference between lowest and highest prices is lower than that, you're better
off not buying the Powerwall in the first place.

Once the difference between minimum and maximum price per kWh of electricity
from the grid exceeds the $/kWh of the battery, you have an economic incentive
to install the battery.

As the price of batteries comes down, companies will invest in battery peaking
plants to take advantage of pricing on the energy market. Those bulk battery
installations will limit the spread of wholesale time-of-day pricing such that
it will never be economically sensible for home users to install batteries as
a cost saving device based on retail time-of-day pricing. Domestic units will
necessarily cost more per storage/output capacity than commercial units.

For the meantime, installing batteries for your home will only be useful for
people who have problems with reliable access to electricity (e.g.: you have
frequent brown-outs).

There are advances on the horizon thanks to new battery assembly technology,
and Tesla Energy's "Gigafactory" bringing economies of scale and integration
into battery manufacturing, with an aim of reducing battery manufacturing
costs around 30% for the former and 20% for the latter. There are also some
theoretical (and in some cases lab proven) technologies to extend Lithium
battery lifetimes to "forever". These all alter the numbers in the equation
above: a moderate decrease in $/kWh output will make batteries quite
attractive for many grid-connected homes.

So "watch this space," I guess.

