3 ms·

Can somebody explain why electricity rates would go negative? That blows my mind. Edit: also why don’t they just mine some coins?

nostromo 7y ago
Because the German government is paying for renewables, via a tax on electricity, even when there is no additional demand. They can't turn off power plants, because the renewables are ephemeral.
gsich 7y ago
You have too much energy and you need to get rid off it.
diroussel 7y ago
This happens when the electricity supply is higher than the demand. It only affects the wholesale rate, not consumer rates (at least in Uk and US) Normally supply and demand need to be matched to obtain a balance. If the supply is not enough for demand then the frequency drops below 50Hz, if it drops too low bad things happen.
- cameronh90 7y ago
  Actually there's at least one provider (octopus) that occasionally passes the negative rate onto the consumer with their dynamic plan.
olau 7y ago
While subsidies are one cause, another cause is demand response problems: Imagine you have a greenhouse factory producing strawberries. The strawberries come out of the factory on a conveyor belt. Now, you can't just turn off this factory easily since it might take a week to get it up running again and you don't have any storage, so what happens when nobody wants your strawberries for a day? You pay someone to take them. And yes, it happens to physical products too, e.g. household electronics - you need to pay someone to scrap them.
- victorNicollet 7y ago
  A better example would be plastic production. In an emergency stop, factories need to change several pipes because the plastic solidified inside. Stopping production properly takes days, and even then, resuming it also takes days.
cameldrv 7y ago
The renewable generators get a subsidy for each kWh that they pump on to the grid. The logical thing to do if electricity were oversupplied, i.e. you have to pay people to take it, would be to temporarily shut down some renewable generation, but then the renewable providers would lose out on the subsidy for those kWh.
lispm 7y ago
The electricity rate only for short-term traded electricity goes negative. Much of the volume is on long-term contracts.
Dylan16807 7y ago
> Edit: also why don’t they just mine some coins? Nobody is going to pay for mining rigs that are idle 99% of the time. If it happened enough you'd have people set up cheap resistor banks to eat all the excess, so that provides a natural cap on how much negative pricing there can be.

nostromo 7y ago

Because the German government is paying for renewables, via a tax on electricity, even when there is no additional demand. They can't turn off power plants, because the renewables are ephemeral.

gsich 7y ago

You have too much energy and you need to get rid off it.

diroussel 7y ago

This happens when the electricity supply is higher than the demand. It only affects the wholesale rate, not consumer rates (at least in Uk and US) Normally supply and demand need to be matched to obtain a balance. If the supply is not enough for demand then the frequency drops below 50Hz, if it drops too low bad things happen.

cameronh90 7y ago
Actually there's at least one provider (octopus) that occasionally passes the negative rate onto the consumer with their dynamic plan.

olau 7y ago

While subsidies are one cause, another cause is demand response problems: Imagine you have a greenhouse factory producing strawberries. The strawberries come out of the factory on a conveyor belt. Now, you can't just turn off this factory easily since it might take a week to get it up running again and you don't have any storage, so what happens when nobody wants your strawberries for a day? You pay someone to take them. And yes, it happens to physical products too, e.g. household electronics - you need to pay someone to scrap them.

victorNicollet 7y ago
A better example would be plastic production. In an emergency stop, factories need to change several pipes because the plastic solidified inside. Stopping production properly takes days, and even then, resuming it also takes days.

cameldrv 7y ago

The renewable generators get a subsidy for each kWh that they pump on to the grid. The logical thing to do if electricity were oversupplied, i.e. you have to pay people to take it, would be to temporarily shut down some renewable generation, but then the renewable providers would lose out on the subsidy for those kWh.

lispm 7y ago

The electricity rate only for short-term traded electricity goes negative. Much of the volume is on long-term contracts.

Dylan16807 7y ago

> Edit: also why don’t they just mine some coins? Nobody is going to pay for mining rigs that are idle 99% of the time. If it happened enough you'd have people set up cheap resistor banks to eat all the excess, so that provides a natural cap on how much negative pricing there can be.