3 ms·

More fuel would mean lower prices would mean more generators built to take advantage of that.

• amluto 7y ago
  At the price of peak electricity on a peak day, the cost of fuel is irrelevant. That $9k/MWh peak was about $300/therm. A therm of natural gas, retail, from PG&E is less than $2. The problem here is that the grid more or less guarantees that each customer can draw as much power as they want whenever they want, so there needs to be generation capacity to cover the maximum demand, but that means that, under normal conditions, a good fraction of the capacity is unused. A plant that only runs for a few hours a year needs to charge a lot for those few hours. In theory, demand response can help — the grid can pay certain customers to stop using power at times. Aluminum refineries are the classic example — an aluminum refinery can, in principle, be configured to turn off on demand without much loss other than the production at that time period. So an aluminum refinery that shuts off for eight hours a year generates nearly as much revenue as a refinery that operates continuously, but those eight hours can help the grid during peak load. Actually making this work requires some fancy communication with the grid operator, and this is rather new.
  • mikeash 7y ago
    Thanks for providing concrete numbers! Looks like the effect would be too small to notice even if gas were free.