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If demand is low then the highest price can be negative. When prices are negative Generators have to pay for the power they produced, for the privilege of not

If demand is low then the highest price can be negative. When prices are negative Generators have to pay for the power they produced, for the privilege of not shutting down their process be it nuclear, coal etc. presumably hydro and natural gas would shut down in response to negative prices.

ars 9y ago
This doesn't happen. If you shut down every fast responding power source, then there is not enough power and the price will not go negative. For example the article talks about wind. Wind generators have no problem shutting down. No, it's not about the privilege of not shutting down, it's what I said: it's simply the bottom of the order book, not the actual flow of money.
- snowwindwaves 9y ago
  The article is about this just happening in the UK. For 5 consecutive hours the price was minus $25. It also happens in Ontario, and maybe elsewhere but I don't know as much about how other markets deal with oversupply. Wind generators generally have fixed price contracts for as much as they can produce so they carry on generating even if the price is negative and they get the same positive price. Or if they do have to shut down for system reliability they will get paid even though they didn't generate any power. That is called being constrained off. If the price is negative it is because generators would rather pay than go offline. The nuclear plants in Ontario will bid negative because they have real costs if they have to alter their output. I maintain that the price is negative because the highest selected bid was negative, and any generators producing during those 5 hours had to pay $25 for every MWH they produced. are you in the power business in the UK? I used to work on software that implemented the market settlement rules in Ontario in order to calculate a distribution utility's cost of power every day, and I've also spoken at length with an economist who wrote market rules, and examined the behavior of the market participants for compliance with the rules, but it is possible that the uk and Ontario markets differ in this regard, although the article indicates the price was negative.
deleted 9y ago
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ars 9y ago

This doesn't happen. If you shut down every fast responding power source, then there is not enough power and the price will not go negative. For example the article talks about wind. Wind generators have no problem shutting down. No, it's not about the privilege of not shutting down, it's what I said: it's simply the bottom of the order book, not the actual flow of money.

snowwindwaves 9y ago
The article is about this just happening in the UK. For 5 consecutive hours the price was minus $25. It also happens in Ontario, and maybe elsewhere but I don't know as much about how other markets deal with oversupply. Wind generators generally have fixed price contracts for as much as they can produce so they carry on generating even if the price is negative and they get the same positive price. Or if they do have to shut down for system reliability they will get paid even though they didn't generate any power. That is called being constrained off. If the price is negative it is because generators would rather pay than go offline. The nuclear plants in Ontario will bid negative because they have real costs if they have to alter their output. I maintain that the price is negative because the highest selected bid was negative, and any generators producing during those 5 hours had to pay $25 for every MWH they produced. are you in the power business in the UK? I used to work on software that implemented the market settlement rules in Ontario in order to calculate a distribution utility's cost of power every day, and I've also spoken at length with an economist who wrote market rules, and examined the behavior of the market participants for compliance with the rules, but it is possible that the uk and Ontario markets differ in this regard, although the article indicates the price was negative.

deleted 9y ago

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