8 ms·

An explanation of the mechanics of how I'd have to pay somebody else to take my electricity (e.g., a negative rate) would be helpful. As prices approaches 0, I

An explanation of the mechanics of how I'd have to pay somebody else to take my electricity (e.g., a negative rate) would be helpful. As prices approaches 0, I could take the excess electricity and say, mine cryptocurrency. Is nobody considering the arbitrage opportunities here? Take the 0-cost electricity, move water up a hill, and convert it back to electric when it's needed, etc.

dwd 7y ago
They mentioned moving water uphill with the Wivenhoe pumped hydro which is about 3000km away in Qld. This is also where the NSW interconnect will help as most pumped hydro is in NSW.
DevoidSimo 7y ago
People do, we have snowy hydro who normally correct these negative prices by pumping water uphill into a dam. They then double dip on profits by generating when the cost is positive. Very profitable operation although the initial infrastructure cost is high.
wyxuan 7y ago
Can’t they discharge it for free? Why do they have to pay to send it into the grid? The crypto one won’t work because there would only be free electricity half of the time, and the water idea is good but it takes immense capex and time to make
- steve19 7y ago
  The grid has to finely balance supply and demand. You can't just dump power into the grid. If you did the grid frequency would increase out of spec and it could damage connected equipment and machinery. Water storage would only work if there is a steep mountain or big hill nearby. Another way to look at negitive pricing is the grid is paying industrial users to burn as much power as they can.
  - thaumasiotes 7y ago
    I think the dominant question here is, "I have this machinery that produces electricity, and it's hooked up to the grid. Why can't I also hook it up to the ground, and -- during periods of negative prices -- send the electricity into the ground instead of the grid?" Nobody charges you to ground your wires.
    - duckymcduckface 7y ago
      The ground is a poor load and also there's a finite amount of energy you can dump into it because every watt that goes in gets turned into heat, you'd liquify the ground very quickly at the multi MW scale.
      - thaumasiotes 7y ago
        We routinely dump lightning bolts right into the ground and they go well beyond multiple megawatts. They're very brief, but if lightning took ten seconds to strike, it would still provide several dozen megawatts of power. How quickly would we be melting the ground at the multi-MW scale? How many lightning bolts would it take before the ground around my house melted and flowed downhill?
        Scarblac 7y ago
        Lightning bolts do in fact melt the ground (see fulgurite), and they take at most about 0.2 seconds.
        eecc 7y ago
        Yes very localized and for a very short amount of time and most of the energy radiated away into the surroundings, including the atmosphere
      - qiqitori 7y ago
        Well, I don't know. Let's think about how you would turn off solar panels. I remember hearing about solar panels (~10 years ago?) that would actually break under very-sunny-but-zero-load conditions, so I did some research using queries like 'solar panels without load' and am led to think that this isn't usually a huge problem (with regular/modern panels?). But physically speaking, unless you cover the solar panels with a blanket, the amount of incoming sunlight won't decrease, and when you aren't turning that into electric power, it'll turn into some more heat. If your solar panels are on an open circuit with no way to generate electric power, I guess the amount of heat produced in the panels would be roughly equivalent to the heat produced by other dark objects -- which may or may not be too hot. If you keep turning the sunlight into power to route some of that energy into the ground, that may be a lot if you're doing that in a single spot, but I don't think it would be impossible to come up with a workable grounding system. That said, I'd be very interested to hear how a large solar farm like this turns off their panels.
- droithomme 7y ago
  > Can’t they discharge it for free? Yes they can and should and that's why they have to pay since there is a mitigation cost to handling the excess. > Why do they have to pay to send it into the grid? Because it's bad when there is a glut of overproduction.
lugg 7y ago
The grid needs to maintain supply within certain levels. If you produce more than your share, someone else needs to shutdown. Shutting down certain power sources (e.g. coal) comes at a non zero cost. Someone still has to pay the power plant that needs to shutdown or send people home unexpectedly. These plants might be have pre secured contracts to sell at a given price over a given time period further adding to the cost of shutting off their supply. Some more info here: https://www.epexspot.com/en/company-info/basics_of_the_power_market/negative_prices https://www.epexspot.com/en/company-info/basics_of_the_power...
glamp 7y ago
On the grid there are lots of different types of producers (solar, diesel, wind, nuclear, etc.). Each has its strengths/weaknesses. A big weakness of nuclear plants is that it's very expensive to turn them off. So much so that when electricity demand temporarily goes down (and with it prices), it is actually more profitable for them to continue keep the plant running but pay someone to offset their excess production. There are people that arbitrage this--moving water up a hill is actually how many of them do it. This stuff is really confusing. My brother trades electricity and has explained it to me numerous times and it's still a little fuzzy.
- dv_dt 7y ago
  The problems are also not always technical. In CA I've read articles with descriptions of similar moments where power needs to be shutoff from renewable sources and/or offloaded from the grid, but in part because contracts locked in priority for some fossil-fuel peaking plants over renweable sources.
pabs3 7y ago
The article mentions there are pumped hydro projects that could be used soon and others that are coming online. OTOH perhaps you are talking about smaller-scale pumped hydro on individual farms with access to enough water. I suppose the viability of that would depend on how easy it is for the farms to access real-time prices and turn on the pumps based on prices.
apendleton 7y ago
Anything you could do it with it would have capital costs. Maybe it's transient enough that that money would be better invested elsewhere. Like, if you only run your cryptocurrency mining when the price is negative, your capital is stuck in an idle asset most of the time, and if you run it all the time, it's the average price you want to consider, not the minimum price (even if the minimum price is negative), and my guess is that Australian electricity isn't cheaper on average than other kinds of power other places (especially places with lax environmental regulation). Another way to think about it: uses like those you propose that can soak up excess energy in the grid are exactly why energy markets are allowed to float, and even to go negative. If there's a surplus, they want you to use it, and if it were economical to store it and sell it back to the power company later, both they and you would benefit. That this isn't common suggests that it isn't economical.
- londons_explore 7y ago
  Multi-megawatt electric heaters don't cost much. In fact, I could make a backyard megawatt power sink in an afternoon for just a few hundred bucks. 1 mile of 22 AWG bare copper wire strung through the air should do the job. When turned on, watch the whole lot glow red hot like a big space heater. The reason people don't do this is that the cost of a grid interconnect (the paperwork, approvals, etc.) outweighs the profit from the very short periods of time the price really is negative.
- solotronics 7y ago
  There are older bitcoin ASIC miners that aren't nearly as efficient but if you are getting totally free electricity... definately an opportunity here.
  - bseidensticker 7y ago
    Yes this happens.
  - iknowalot 7y ago
    Yea shutting off anything that is producing free electricity to keep a market price stable is moronic....
manicdee 7y ago
Executive Summary (drastically oversimplified): In a wholesale electricity market we have a market operator who estimates the demand for the near term future and opens the market up to bids for supply. Suppliers bid a certain capacity for each period, with the operator typically accepting firm supply offers, contingency supply offers, and ancillary service offers in advance. Since some suppliers are “baseload” (ie: unable to adjust output to suit the current level of demand) they will typically bid low to always be paid for their supply. Everyone else will be affected by these bids because the “baseload” operators are typically not only inflexible but also have huge capacity. In periods where total demand is low relative to total supply capacity, the wholesale bids will drop to low prices. For the baseload suppliers, they would prefer to pay for someone to use their excess power rather than damage their equipment by either turning it off or reducing output below certain minimums. A baseload supplier might, for example, be facing a maintenance cost of a million dollars versus paying the market a hundred thousand to create extra demand for surplus energy. So rather than turn off equipment they will bid negative prices on the wholesale market. A second cause of negative wholesale prices is established players with large war chests waging economic war against new entrants. They know solar farms have razor thin margins, so it is worth spending a few tens of million dollars to drive the solar farm bankrupt. Enough negative pricing periods during peak solar capacity means the solar farm is not making any money. If the baseload operator knows roughly the breakeven point for the solar farm, they will know how much they have to spend in order to shut the solar farm out of the market and bankrupt them. There are no rules against this kind of activity in the Australian energy market.
- steve_gh 7y ago
  And what happens when a solar farm goes bankrupt? Its major operating overhead is servicing the loans for the initial capital cost. So all that will happen is that the bank will take possession of the solar farm. It will still be producing cheap power, and it will now be owned by an organisation with very deep pockets!
- JMTQp8lwXL 7y ago
  Why do they have to pay someone to take the electricity? I could take a dollar bill and rip it in half (perhaps not legally, but besides the point). I understand there's costs to shutting down a system. So, they might keep it running. But what I don't get: the electricity producer has to pay someone to take the excess electricity off their hands? The producer can't route the excess to, well... nowhere?
droithomme 7y ago
> An explanation of the mechanics of how I'd have to pay somebody else to take my electricity (e.g., a negative rate) would be helpful. Sure. Let's say you have a million people producing a glut of electricity on sunny days from 11am to 2pm, when there is not a lot of demand. So there's massive overproduction and you need to create a financial incentive to incentivize the overproducers to pull back. So you have negative rates. It's as simple as that. How much you can charge has nothing to do with your cost. Your amortized cost of providing excess power every sunny mid-day might be extravagant. That is no matter as far as the market is concerned. Solar energy production still costs a lot. But there's tons of articles claiming that it's now cheaper than pretty much every other energy source. Yes, it's cheaper to buy at noon in sunny areas during some months because of economics. That doesn't mean it's cheaper to produce and supply though.
- wisdomdata 7y ago
  South Australian here - In South Australia keep in mind commercial scale solar is also generating against residential rooftop solar which is sold back via a feed in tarrif to the generator at a contracted fixed rate. The generators have to pay for (and take) this power. In some cases 20 year contracts where signed some time ago with feed-in tariffs much higher than what they ever should have been. This has resulted in early adapters making thousands in cash every year from residential solar (and still doing so). Everyone else is paying for it of course. Feed-in tarrifs available for contracts signed today are much lower, but some of these contracts still have a few years to run. Without more storage solar will continue to reduce reliability and add costs.
ramraj07 7y ago
Did you read the article? It goes into reasonable detail on why they don't necessarily do that.
Iv 7y ago
tl;dr: the Australian grid is working on a faulty system because of politics. This is not a technical limitation there.
- synchro77 7y ago
  I'm not sure I understand, in what system would this not happen? You can say that the goverment should store the extra electricity but that's not as easy as it sounds. Most things need very specific geographical or technical conditions for pumped hydro, compressed air energy storage, boreholes, hydrogen, molten salts. So in what system wouldn't this happen?
  - Iv 7y ago
    If you suppose a well-designed grid, I really doubt that free electricity is something that clients would refuse. Electricity is valuable, at any time of the day. There is no reason for it to go below zero. Sure, storing energy is hard but spending it is easy. Hell, give me free electricity and I will be running a pyrolysis rig, making biofuel for free.
    - iguy 7y ago
      No, it's not always valuable. If you get free electricity for an hour, some days of the week, then your giant biofuel plant spends a lot of time sitting idle. It's not obvious that your mostly-idle plant is a better business than a much smaller one which runs all the time. The costs of building and maintaining the thing are real too. (Not to mention needing to design the plant to ramp up to full production in minutes, while a more traditional one might spend a day warming up all the pieces to operating temperature.)
      - Iv 7y ago
        > It's not obvious that your mostly-idle plant is a better business than a much smaller one which runs all the time. This process is usually not profitable because of the energy cost it requires. This is why I am proposing it as a way to absorb energy surplus. But I am only talking about what would happen if you got electricity at zero cost. At negative costs, even crazier things would happen. The reality, is that, to my knowledge, the Australian grid does not "sell" electricity for negative prices, it only "buys" it. If it were to pay clients to absorb electricity, I would just dissipate heat in well ventilated radiators, make a ton of steam, and make a show of giant tesla coils. Radiators can be made out of scrap metal, it really is a small investment that can lie dormant at no cost if negative electricity prices only happen 5% of the time.
Terretta 7y ago
> convert it back to electric when it's needed FTA: "Tailem Bend is also considering a battery storage..." and links to https://reneweconomy.com.au/tailem-bend-solar-farm-officially-opens-now-for-second-stage-and-battery-77313/ https://reneweconomy.com.au/tailem-bend-solar-farm-officiall... which adds "Vena Energy also has plans for a Tailem Bend Battery Energy Storage Project."
nabla9 7y ago
It happens when high inflexible power generation meets low demand. Some power sources can’t be shut down and restarted in a quickly and cost-efficiently. If the cost of stopping and restarting their plant is higher than the costs of selling energy at a negative price for some time, prices go negative.

dwd 7y ago

They mentioned moving water uphill with the Wivenhoe pumped hydro which is about 3000km away in Qld. This is also where the NSW interconnect will help as most pumped hydro is in NSW.

DevoidSimo 7y ago

People do, we have snowy hydro who normally correct these negative prices by pumping water uphill into a dam. They then double dip on profits by generating when the cost is positive. Very profitable operation although the initial infrastructure cost is high.

wyxuan 7y ago

Can’t they discharge it for free? Why do they have to pay to send it into the grid? The crypto one won’t work because there would only be free electricity half of the time, and the water idea is good but it takes immense capex and time to make

steve19 7y ago
The grid has to finely balance supply and demand. You can't just dump power into the grid. If you did the grid frequency would increase out of spec and it could damage connected equipment and machinery. Water storage would only work if there is a steep mountain or big hill nearby. Another way to look at negitive pricing is the grid is paying industrial users to burn as much power as they can.
- thaumasiotes 7y ago
  I think the dominant question here is, "I have this machinery that produces electricity, and it's hooked up to the grid. Why can't I also hook it up to the ground, and -- during periods of negative prices -- send the electricity into the ground instead of the grid?" Nobody charges you to ground your wires.
  - duckymcduckface 7y ago
    The ground is a poor load and also there's a finite amount of energy you can dump into it because every watt that goes in gets turned into heat, you'd liquify the ground very quickly at the multi MW scale.
    - thaumasiotes 7y ago
      We routinely dump lightning bolts right into the ground and they go well beyond multiple megawatts. They're very brief, but if lightning took ten seconds to strike, it would still provide several dozen megawatts of power. How quickly would we be melting the ground at the multi-MW scale? How many lightning bolts would it take before the ground around my house melted and flowed downhill?
      - Scarblac 7y ago
        Lightning bolts do in fact melt the ground (see fulgurite), and they take at most about 0.2 seconds.
      - eecc 7y ago
        Yes very localized and for a very short amount of time and most of the energy radiated away into the surroundings, including the atmosphere
    - qiqitori 7y ago
      Well, I don't know. Let's think about how you would turn off solar panels. I remember hearing about solar panels (~10 years ago?) that would actually break under very-sunny-but-zero-load conditions, so I did some research using queries like 'solar panels without load' and am led to think that this isn't usually a huge problem (with regular/modern panels?). But physically speaking, unless you cover the solar panels with a blanket, the amount of incoming sunlight won't decrease, and when you aren't turning that into electric power, it'll turn into some more heat. If your solar panels are on an open circuit with no way to generate electric power, I guess the amount of heat produced in the panels would be roughly equivalent to the heat produced by other dark objects -- which may or may not be too hot. If you keep turning the sunlight into power to route some of that energy into the ground, that may be a lot if you're doing that in a single spot, but I don't think it would be impossible to come up with a workable grounding system. That said, I'd be very interested to hear how a large solar farm like this turns off their panels.
droithomme 7y ago
> Can’t they discharge it for free? Yes they can and should and that's why they have to pay since there is a mitigation cost to handling the excess. > Why do they have to pay to send it into the grid? Because it's bad when there is a glut of overproduction.

lugg 7y ago

The grid needs to maintain supply within certain levels. If you produce more than your share, someone else needs to shutdown. Shutting down certain power sources (e.g. coal) comes at a non zero cost. Someone still has to pay the power plant that needs to shutdown or send people home unexpectedly. These plants might be have pre secured contracts to sell at a given price over a given time period further adding to the cost of shutting off their supply. Some more info here: https://www.epexspot.com/en/company-info/basics_of_the_power_market/negative_prices https://www.epexspot.com/en/company-info/basics_of_the_power...

glamp 7y ago

On the grid there are lots of different types of producers (solar, diesel, wind, nuclear, etc.). Each has its strengths/weaknesses. A big weakness of nuclear plants is that it's very expensive to turn them off. So much so that when electricity demand temporarily goes down (and with it prices), it is actually more profitable for them to continue keep the plant running but pay someone to offset their excess production. There are people that arbitrage this--moving water up a hill is actually how many of them do it. This stuff is really confusing. My brother trades electricity and has explained it to me numerous times and it's still a little fuzzy.

dv_dt 7y ago
The problems are also not always technical. In CA I've read articles with descriptions of similar moments where power needs to be shutoff from renewable sources and/or offloaded from the grid, but in part because contracts locked in priority for some fossil-fuel peaking plants over renweable sources.

pabs3 7y ago

The article mentions there are pumped hydro projects that could be used soon and others that are coming online. OTOH perhaps you are talking about smaller-scale pumped hydro on individual farms with access to enough water. I suppose the viability of that would depend on how easy it is for the farms to access real-time prices and turn on the pumps based on prices.

apendleton 7y ago

Anything you could do it with it would have capital costs. Maybe it's transient enough that that money would be better invested elsewhere. Like, if you only run your cryptocurrency mining when the price is negative, your capital is stuck in an idle asset most of the time, and if you run it all the time, it's the average price you want to consider, not the minimum price (even if the minimum price is negative), and my guess is that Australian electricity isn't cheaper on average than other kinds of power other places (especially places with lax environmental regulation). Another way to think about it: uses like those you propose that can soak up excess energy in the grid are exactly why energy markets are allowed to float, and even to go negative. If there's a surplus, they want you to use it, and if it were economical to store it and sell it back to the power company later, both they and you would benefit. That this isn't common suggests that it isn't economical.

londons_explore 7y ago
Multi-megawatt electric heaters don't cost much. In fact, I could make a backyard megawatt power sink in an afternoon for just a few hundred bucks. 1 mile of 22 AWG bare copper wire strung through the air should do the job. When turned on, watch the whole lot glow red hot like a big space heater. The reason people don't do this is that the cost of a grid interconnect (the paperwork, approvals, etc.) outweighs the profit from the very short periods of time the price really is negative.
solotronics 7y ago
There are older bitcoin ASIC miners that aren't nearly as efficient but if you are getting totally free electricity... definately an opportunity here.
- bseidensticker 7y ago
  Yes this happens.
- iknowalot 7y ago
  Yea shutting off anything that is producing free electricity to keep a market price stable is moronic....

manicdee 7y ago

Executive Summary (drastically oversimplified): In a wholesale electricity market we have a market operator who estimates the demand for the near term future and opens the market up to bids for supply. Suppliers bid a certain capacity for each period, with the operator typically accepting firm supply offers, contingency supply offers, and ancillary service offers in advance. Since some suppliers are “baseload” (ie: unable to adjust output to suit the current level of demand) they will typically bid low to always be paid for their supply. Everyone else will be affected by these bids because the “baseload” operators are typically not only inflexible but also have huge capacity. In periods where total demand is low relative to total supply capacity, the wholesale bids will drop to low prices. For the baseload suppliers, they would prefer to pay for someone to use their excess power rather than damage their equipment by either turning it off or reducing output below certain minimums. A baseload supplier might, for example, be facing a maintenance cost of a million dollars versus paying the market a hundred thousand to create extra demand for surplus energy. So rather than turn off equipment they will bid negative prices on the wholesale market. A second cause of negative wholesale prices is established players with large war chests waging economic war against new entrants. They know solar farms have razor thin margins, so it is worth spending a few tens of million dollars to drive the solar farm bankrupt. Enough negative pricing periods during peak solar capacity means the solar farm is not making any money. If the baseload operator knows roughly the breakeven point for the solar farm, they will know how much they have to spend in order to shut the solar farm out of the market and bankrupt them. There are no rules against this kind of activity in the Australian energy market.

steve_gh 7y ago
And what happens when a solar farm goes bankrupt? Its major operating overhead is servicing the loans for the initial capital cost. So all that will happen is that the bank will take possession of the solar farm. It will still be producing cheap power, and it will now be owned by an organisation with very deep pockets!
JMTQp8lwXL 7y ago
Why do they have to pay someone to take the electricity? I could take a dollar bill and rip it in half (perhaps not legally, but besides the point). I understand there's costs to shutting down a system. So, they might keep it running. But what I don't get: the electricity producer has to pay someone to take the excess electricity off their hands? The producer can't route the excess to, well... nowhere?

droithomme 7y ago

> An explanation of the mechanics of how I'd have to pay somebody else to take my electricity (e.g., a negative rate) would be helpful. Sure. Let's say you have a million people producing a glut of electricity on sunny days from 11am to 2pm, when there is not a lot of demand. So there's massive overproduction and you need to create a financial incentive to incentivize the overproducers to pull back. So you have negative rates. It's as simple as that. How much you can charge has nothing to do with your cost. Your amortized cost of providing excess power every sunny mid-day might be extravagant. That is no matter as far as the market is concerned. Solar energy production still costs a lot. But there's tons of articles claiming that it's now cheaper than pretty much every other energy source. Yes, it's cheaper to buy at noon in sunny areas during some months because of economics. That doesn't mean it's cheaper to produce and supply though.

wisdomdata 7y ago
South Australian here - In South Australia keep in mind commercial scale solar is also generating against residential rooftop solar which is sold back via a feed in tarrif to the generator at a contracted fixed rate. The generators have to pay for (and take) this power. In some cases 20 year contracts where signed some time ago with feed-in tariffs much higher than what they ever should have been. This has resulted in early adapters making thousands in cash every year from residential solar (and still doing so). Everyone else is paying for it of course. Feed-in tarrifs available for contracts signed today are much lower, but some of these contracts still have a few years to run. Without more storage solar will continue to reduce reliability and add costs.

ramraj07 7y ago

Did you read the article? It goes into reasonable detail on why they don't necessarily do that.

Iv 7y ago

tl;dr: the Australian grid is working on a faulty system because of politics. This is not a technical limitation there.

synchro77 7y ago
I'm not sure I understand, in what system would this not happen? You can say that the goverment should store the extra electricity but that's not as easy as it sounds. Most things need very specific geographical or technical conditions for pumped hydro, compressed air energy storage, boreholes, hydrogen, molten salts. So in what system wouldn't this happen?
- Iv 7y ago
  If you suppose a well-designed grid, I really doubt that free electricity is something that clients would refuse. Electricity is valuable, at any time of the day. There is no reason for it to go below zero. Sure, storing energy is hard but spending it is easy. Hell, give me free electricity and I will be running a pyrolysis rig, making biofuel for free.
  - iguy 7y ago
    No, it's not always valuable. If you get free electricity for an hour, some days of the week, then your giant biofuel plant spends a lot of time sitting idle. It's not obvious that your mostly-idle plant is a better business than a much smaller one which runs all the time. The costs of building and maintaining the thing are real too. (Not to mention needing to design the plant to ramp up to full production in minutes, while a more traditional one might spend a day warming up all the pieces to operating temperature.)
    - Iv 7y ago
      > It's not obvious that your mostly-idle plant is a better business than a much smaller one which runs all the time. This process is usually not profitable because of the energy cost it requires. This is why I am proposing it as a way to absorb energy surplus. But I am only talking about what would happen if you got electricity at zero cost. At negative costs, even crazier things would happen. The reality, is that, to my knowledge, the Australian grid does not "sell" electricity for negative prices, it only "buys" it. If it were to pay clients to absorb electricity, I would just dissipate heat in well ventilated radiators, make a ton of steam, and make a show of giant tesla coils. Radiators can be made out of scrap metal, it really is a small investment that can lie dormant at no cost if negative electricity prices only happen 5% of the time.

Terretta 7y ago

> convert it back to electric when it's needed FTA: "Tailem Bend is also considering a battery storage..." and links to https://reneweconomy.com.au/tailem-bend-solar-farm-officially-opens-now-for-second-stage-and-battery-77313/ https://reneweconomy.com.au/tailem-bend-solar-farm-officiall... which adds "Vena Energy also has plans for a Tailem Bend Battery Energy Storage Project."

nabla9 7y ago

It happens when high inflexible power generation meets low demand. Some power sources can’t be shut down and restarted in a quickly and cost-efficiently. If the cost of stopping and restarting their plant is higher than the costs of selling energy at a negative price for some time, prices go negative.