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I do this today. My energy provider bills me based on live fluctuating rates. It’s no big deal, on most days prices fluctuate less than they would on a regular

I do this today. My energy provider bills me based on live fluctuating rates. It’s no big deal, on most days prices fluctuate less than they would on a regular peak/off peak pricing scheme. Some days there are short periods of high demand that cause price spikes, I’m given ample warning and can choose whether to adjust my behaviour during that spike. That might mean being more gentle with AC during a heatwave, or pre-cooling the house before the spike hits. (Price spikes can be 10x or even 100x typical rates.)

joosters 6y ago
Why does this make sense to do on an individual level? If there is ample warning of price spikes, shouldn't we be expecting the power companies to do the energy hedging? Why make thousands of people do the job instead of the one single entity? If we are trying to make the energy system smart, shouldn't the power companies be the ones trying to add smarts to the system? (e.g. better energy storage for peak usage, etc)
- sjwright 6y ago
  You make it sound like an economics problem when it's ultimately an engineering problem. Energy companies already do many things to keep the grid stable, but you can't rely entirely on supply side solutions else you are forced to over-engineer the grid to handle extreme demand, a cost that's inevitably passed onto consumers. This is going to become more important as electric cars become mainstream—without some incentive for consumers to delay charging their vehicles during extreme peaks, we're going to be paying for some fairly hefty upgrades to keep electric grids stable. Focusing on demand saves everyone money, because it means we can do more with existing infrastructure. In my case, if I'm willing to react to price spikes, I can reduce my annual energy cost by literally hundreds of dollars. For me, it just means occasionally delaying use of the dishwasher or dryer by an hour or so. And by occasionally I mean a handful of times every year. It's far less onerous than the regular peak/off peak pricing I've dealt with in prior decades.
- freetime2 6y ago
  There is a large cost to building out excess capacity to handle peak demands. That cost gets passed on to customers, and everyone ends up paying more for electricity. There’s also an environmental cost, as “peaker” plants typically burn fossil fuels. Even building grid-scale storage solutions would have a fairly large environmental impact (assuming that’s even feasible at all on the scale necessary). It makes sense to target both the supply and demand sides of energy consumption.

joosters 6y ago

Why does this make sense to do on an individual level? If there is ample warning of price spikes, shouldn't we be expecting the power companies to do the energy hedging? Why make thousands of people do the job instead of the one single entity? If we are trying to make the energy system smart, shouldn't the power companies be the ones trying to add smarts to the system? (e.g. better energy storage for peak usage, etc)

sjwright 6y ago
You make it sound like an economics problem when it's ultimately an engineering problem. Energy companies already do many things to keep the grid stable, but you can't rely entirely on supply side solutions else you are forced to over-engineer the grid to handle extreme demand, a cost that's inevitably passed onto consumers. This is going to become more important as electric cars become mainstream—without some incentive for consumers to delay charging their vehicles during extreme peaks, we're going to be paying for some fairly hefty upgrades to keep electric grids stable. Focusing on demand saves everyone money, because it means we can do more with existing infrastructure. In my case, if I'm willing to react to price spikes, I can reduce my annual energy cost by literally hundreds of dollars. For me, it just means occasionally delaying use of the dishwasher or dryer by an hour or so. And by occasionally I mean a handful of times every year. It's far less onerous than the regular peak/off peak pricing I've dealt with in prior decades.
freetime2 6y ago
There is a large cost to building out excess capacity to handle peak demands. That cost gets passed on to customers, and everyone ends up paying more for electricity. There’s also an environmental cost, as “peaker” plants typically burn fossil fuels. Even building grid-scale storage solutions would have a fairly large environmental impact (assuming that’s even feasible at all on the scale necessary). It makes sense to target both the supply and demand sides of energy consumption.