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This is energy industry FUD In Australia the complete opposite happens. Extremely hot days cause coal and gas plants to fail https://www.theguardian.com/commen

by jb_s 7y ago

This is energy industry FUD In Australia the complete opposite happens. Extremely hot days cause coal and gas plants to fail https://www.theguardian.com/commentisfree/2019/jan/31/what-happened-to-our-electricity-system-in-the-heat-coal-and-gas-plants-failed https://www.theguardian.com/commentisfree/2019/jan/31/what-h... Whereas renewables have been causing power prices to occasionally fall to $0. https://reneweconomy.com.au/electricity-prices-across-the-grid-fall-to-zero-as-renewables-reach-44-share-77635/ https://reneweconomy.com.au/electricity-prices-across-the-gr...

roenxi 7y ago
Prices falling to 0 isn't a good thing; it means there is too much power and nothing to use it for. Nobody wants that, it is pointless. The people building the capital will make a profit over the year, so consumers will make up for the 0s with higher prices when there is not enough energy. And over the long term $0 prices potentially lead to building less infrastructure leading to blackouts. Basically we know the average price is not going to be 0. Therefore, 0 prices signals variance. Variance is pretty much always risky and expensive in big infrastructure; and the electricity market is a good example. It can hopefully be managed to only be a minor inconvenience but it is certainly not a positive for anyone. It does signal that there is a golden window to, eg, run a desalination plant. If anyone takes advantage of that opportunity then it would be a win, but the symptom of that happening would be non-0 prices. EDIT Also, coal plant failures in hot weather are probably a symptom of them not being maintained. Australia has already seen a Labor-Green coalition in federal politics; you'd have to be an idiot to spend money maintaining a coal plant in that political environment. Better to let them run down and try to extract money from the government in a crisis situation which seems to be the current strategy.
- ianai 7y ago
  All it takes is a reasonable storage of that energy for later use. I saw a crane design that didn’t require any major tech.
  - roenxi 7y ago
    If we had reasonable storage the price wouldn't be 0. Or negative. It would just be low, because the storers would be competing to buy near-0 energy. High prices mean "we need more", low prices mean "carry on", $0 means "don't produce this stuff, please". Negative prices mean "We're begging you, turn it off, it is hurting".
    - abathur 7y ago
      Not sure the economics here are this simple? It seems like, if this distinction was meaningful, renewable operators would be turning off generation capacity when prices dropped this low. There's some economic, effort, or technological incentive to keep the spiggots on (i.e., either the marginal costs of producing this power are so low there's no incentive for operators to stop, or the costs/risks of stopping it are too high to bother). Ignoring storage tech, it's also a signal that demand is too inflexible to redistribute power consumption (that is, an opportunity...).
      - andromeduck 7y ago
        Usually when this happens it's because the producers have fixed/guaranteed price contracts so there's just no to stop producing.
      - roenxi 7y ago
        > Not sure the economics here are this simple? The economics are pretty simple; electricity is about as pure a commodity as it is possible to get. The timeframes this plays out in are the 1-10 year windows where people make big long-term capital decisions. > It seems like, if this distinction was meaningful, renewable operators would be turning off generation capacity when prices dropped this low. In the short term people ignore market signals for all sorts of good reasons. I can ignore market signals all day if I want to. If they ignore a signal all year they will start to go bankrupt. But the fact that renewable are ignoring a market signal is not a positive benefit to cite when talking about "energy industry FUD". When market signals get ignored; consumers pay more. This has played out in Germany, and it is playing out in Australia. $0 wholesale prices mean high retail prices over the year. > Ignoring storage tech, it's also a signal that demand is too inflexible to redistribute power consumption (that is, an opportunity...). Massive opportunity. If prices are $0; nobody is seizing the opportunity. It is waste. If someone were making use of this they would be being charged a low but positive number.
gwright 7y ago
Not sure what you are talking about. Seems like prices are high in Australia: https://www.theguardian.com/australia-news/2018/jul/01/australias-high-electricity-prices-the-new-normal-report-says https://www.theguardian.com/australia-news/2018/jul/01/austr... It is pretty much basic physics and math: 1. Power supply must balance power consumption. 2. No one wants blackouts. 3. Intermittent power sources must be backed up by non-intermittent power sources. 4. You have to pay for the intermittent power generation as well as the backup power generation. 5. Cost of providing power goes up because your capitol costs have increased.
- kahnjw 7y ago
  I can't make sense of the sequence you've laid out but what do does capital cost have to do with daily (or even momentary) fluctuations in price? Also, energy prices can be higher on average than elsewhere and dip to zero in some circumstances.
  - hn_throwaway_99 7y ago
    To deal with the inherent fluctuations in renewable energy sources, you have 2 options: 1) Storage, and right now while there is a lot of R&D into large-scale energy storage, there aren't really any great solutions yet, and 2) Non-renewable backup, e.g. natural gas plants. Since it's easy to have cloudy or windless conditions for days or weeks on end, your backup plants basically need to be able to run at full capacity if you want to prevent blackouts. Thus, with renewable sources, you need to have the capital investments of both the renewable plant and the backup plant(s).
    - kahnjw 7y ago
      This does not answer my question. The identifying characteristic of capital cost is: does not change over small time intervals, it is fixed up front and amortized over the lifetime of the asset. This article and OP are talking about price spikes which are a symptom of short term (days, hours, minutes) market dynamics. The reason that prices spike has nothing to do with capital cost and everything to do with short term demand/supply fluctuations.
jamez1 7y ago
Renewables are less stable than fossil fuels, that results in too much supply at times, and too little at others. These are facts not FUD.
spangry 7y ago
Wholesale electricity price spikes happen in Australia too. For example, spot prices in Victoria hit $14,500/Mwh in January this year: https://www.aer.gov.au/communication/wholesale-electricity-price-spikes-in-victoria-and-south-australia-trigger-regulator-report-0 https://www.aer.gov.au/communication/wholesale-electricity-p... It is simple supply and demand. Electricity generation at any given point in time must be sufficient to meet demand for electricity, otherwise blackouts occur. When you introduce intermittent generation sources into the market, like solar and wind, it becomes more difficult for this matching to occur as generation output is weather dependent. Consequently, you get times in the wholesale market where a confluence of factors momentarily drive up wholesale prices: wind stops blowing, sun stops shining and demand spikes due to it being the middle of a hot summer day (e.g. middle of the day in January, which is summer in Australia, so everyone turns on their A/C). Prices shoot up until it entices other generators to make up the shortfall (e.g. gas turbine operators).
- cam_l 7y ago
  As i posted in other comment, the high spot process are entirely manufactured. The reason for the 14k spot price is because that is the cap. The energy suppliers have been gaming the market. Restricting demand for short periods in order to push up the price over the spot price period. This is entirely political (ie. Failure of regulation) and not at all about supply and demand.
ocschwar 7y ago
Renewables mean lots of BOTH for a simple reason: supply and demand. When the wind is blowing and the sun is shining, renewables can provide lots of power no matter what the live price is. (The cost of renewables is 100% installation, 0% operation. Any price above 0 is good as far as a wind turbine is concerned.) When the wind is not blowing and the sun is not shining, no price signal is going to change that. What the price signal DOES do, however, is incentivize a response on the demand side.

by jb_s 7y ago

roenxi 7y ago

Prices falling to 0 isn't a good thing; it means there is too much power and nothing to use it for. Nobody wants that, it is pointless. The people building the capital will make a profit over the year, so consumers will make up for the 0s with higher prices when there is not enough energy. And over the long term $0 prices potentially lead to building less infrastructure leading to blackouts. Basically we know the average price is not going to be 0. Therefore, 0 prices signals variance. Variance is pretty much always risky and expensive in big infrastructure; and the electricity market is a good example. It can hopefully be managed to only be a minor inconvenience but it is certainly not a positive for anyone. It does signal that there is a golden window to, eg, run a desalination plant. If anyone takes advantage of that opportunity then it would be a win, but the symptom of that happening would be non-0 prices. EDIT Also, coal plant failures in hot weather are probably a symptom of them not being maintained. Australia has already seen a Labor-Green coalition in federal politics; you'd have to be an idiot to spend money maintaining a coal plant in that political environment. Better to let them run down and try to extract money from the government in a crisis situation which seems to be the current strategy.

ianai 7y ago
All it takes is a reasonable storage of that energy for later use. I saw a crane design that didn’t require any major tech.
- roenxi 7y ago
  If we had reasonable storage the price wouldn't be 0. Or negative. It would just be low, because the storers would be competing to buy near-0 energy. High prices mean "we need more", low prices mean "carry on", $0 means "don't produce this stuff, please". Negative prices mean "We're begging you, turn it off, it is hurting".
  - abathur 7y ago
    Not sure the economics here are this simple? It seems like, if this distinction was meaningful, renewable operators would be turning off generation capacity when prices dropped this low. There's some economic, effort, or technological incentive to keep the spiggots on (i.e., either the marginal costs of producing this power are so low there's no incentive for operators to stop, or the costs/risks of stopping it are too high to bother). Ignoring storage tech, it's also a signal that demand is too inflexible to redistribute power consumption (that is, an opportunity...).
    - andromeduck 7y ago
      Usually when this happens it's because the producers have fixed/guaranteed price contracts so there's just no to stop producing.
    - roenxi 7y ago
      > Not sure the economics here are this simple? The economics are pretty simple; electricity is about as pure a commodity as it is possible to get. The timeframes this plays out in are the 1-10 year windows where people make big long-term capital decisions. > It seems like, if this distinction was meaningful, renewable operators would be turning off generation capacity when prices dropped this low. In the short term people ignore market signals for all sorts of good reasons. I can ignore market signals all day if I want to. If they ignore a signal all year they will start to go bankrupt. But the fact that renewable are ignoring a market signal is not a positive benefit to cite when talking about "energy industry FUD". When market signals get ignored; consumers pay more. This has played out in Germany, and it is playing out in Australia. $0 wholesale prices mean high retail prices over the year. > Ignoring storage tech, it's also a signal that demand is too inflexible to redistribute power consumption (that is, an opportunity...). Massive opportunity. If prices are $0; nobody is seizing the opportunity. It is waste. If someone were making use of this they would be being charged a low but positive number.

gwright 7y ago

Not sure what you are talking about. Seems like prices are high in Australia: https://www.theguardian.com/australia-news/2018/jul/01/australias-high-electricity-prices-the-new-normal-report-says https://www.theguardian.com/australia-news/2018/jul/01/austr... It is pretty much basic physics and math: 1. Power supply must balance power consumption. 2. No one wants blackouts. 3. Intermittent power sources must be backed up by non-intermittent power sources. 4. You have to pay for the intermittent power generation as well as the backup power generation. 5. Cost of providing power goes up because your capitol costs have increased.

kahnjw 7y ago
I can't make sense of the sequence you've laid out but what do does capital cost have to do with daily (or even momentary) fluctuations in price? Also, energy prices can be higher on average than elsewhere and dip to zero in some circumstances.
- hn_throwaway_99 7y ago
  To deal with the inherent fluctuations in renewable energy sources, you have 2 options: 1) Storage, and right now while there is a lot of R&D into large-scale energy storage, there aren't really any great solutions yet, and 2) Non-renewable backup, e.g. natural gas plants. Since it's easy to have cloudy or windless conditions for days or weeks on end, your backup plants basically need to be able to run at full capacity if you want to prevent blackouts. Thus, with renewable sources, you need to have the capital investments of both the renewable plant and the backup plant(s).
  - kahnjw 7y ago
    This does not answer my question. The identifying characteristic of capital cost is: does not change over small time intervals, it is fixed up front and amortized over the lifetime of the asset. This article and OP are talking about price spikes which are a symptom of short term (days, hours, minutes) market dynamics. The reason that prices spike has nothing to do with capital cost and everything to do with short term demand/supply fluctuations.

jamez1 7y ago

Renewables are less stable than fossil fuels, that results in too much supply at times, and too little at others. These are facts not FUD.

spangry 7y ago

Wholesale electricity price spikes happen in Australia too. For example, spot prices in Victoria hit $14,500/Mwh in January this year: https://www.aer.gov.au/communication/wholesale-electricity-price-spikes-in-victoria-and-south-australia-trigger-regulator-report-0 https://www.aer.gov.au/communication/wholesale-electricity-p... It is simple supply and demand. Electricity generation at any given point in time must be sufficient to meet demand for electricity, otherwise blackouts occur. When you introduce intermittent generation sources into the market, like solar and wind, it becomes more difficult for this matching to occur as generation output is weather dependent. Consequently, you get times in the wholesale market where a confluence of factors momentarily drive up wholesale prices: wind stops blowing, sun stops shining and demand spikes due to it being the middle of a hot summer day (e.g. middle of the day in January, which is summer in Australia, so everyone turns on their A/C). Prices shoot up until it entices other generators to make up the shortfall (e.g. gas turbine operators).

cam_l 7y ago
As i posted in other comment, the high spot process are entirely manufactured. The reason for the 14k spot price is because that is the cap. The energy suppliers have been gaming the market. Restricting demand for short periods in order to push up the price over the spot price period. This is entirely political (ie. Failure of regulation) and not at all about supply and demand.

ocschwar 7y ago

Renewables mean lots of BOTH for a simple reason: supply and demand. When the wind is blowing and the sun is shining, renewables can provide lots of power no matter what the live price is. (The cost of renewables is 100% installation, 0% operation. Any price above 0 is good as far as a wind turbine is concerned.) When the wind is not blowing and the sun is not shining, no price signal is going to change that. What the price signal DOES do, however, is incentivize a response on the demand side.