3 ms·
In addition to the other replies to you, my understanding- low prices come from a glut, simple as that. If the wind is blowing strongly at night, or the sun is
by ip26 8y ago
In addition to the other replies to you, my understanding- low prices come from a glut, simple as that. If the wind is blowing strongly at night, or the sun is shining especially brightly, there can be an excess of power, so much that there isn't enough demand to remove that power from the grid (which would damage it).
Fossil fuels have input costs, but wind & solar have zero or nearly zero operating cost, and shutting them down incurs cost. So while fossil fuel is hurting, they are happy to sell power for $0 for a few hours if that's what it takes to get someone to take it off their hands.
IMO it basically looks like what you'd expect to see in a market in need of storage operations to perform arbitrage & smooth the price curve.
- Symmetry 8y agoOr someone who has some power intensive but not capital intensive project ready to go for when electricity is cheap. Splitting water for future generation of ammonia or methane, say.
- aidenn0 8y agoAluminum smelting is the poster child for this; ~14MWh per ton of aluminum produced; managing electricity costs is the primary business of Alcoa.
- 4thaccount 8y agoNo, that is a simplistic explanation that misses the key concept. When you have a power "glut" you generally aren't decommiting many resources unless your commitment and forecast were insanely off. What happens is that the more expensive resources are sent to their minimum and are therefore no longer setting price. At that point, the cheapest units (wind and solar) are then setting price. No energy market in the US has logic to say "I don't need anymore and will then just go to zero". The linear programming problem is still looking at the cost to balance power and load (put simplistically). Storage will help solve some issues, but will likely not be the short-term panacea people are making it out to be.