5 ms·

Here in Texas a lot of people could get access to spot prices and it didn't work out as well as they'd hoped.

bluGill 6y ago
Most people have too much depend that is fixed for spot prices to make sense. If you have two meters putting one on spot might make sense - but that only works if there is something is stopping you from changing what meter is active.
- Scoundreller 6y ago
  Depends on what you’re doing. All I really need is for my technology to work, and all-in that’s under 100w. Each light bulb is ~4-6w. Too many people think about the above two because it’s easier to see/feel/touch while it’s really thermal loads that are the bulk of household loads. If I have to go down to 15C or deal with 30C, delay my shower/dishwasher/clothes washer/dryer to save enough bucks when it could really count, I’d do it. Meanwhile on fixed pricing, I turn things off when prices are negative (that’s bad!) and indifferent to high prices when I have zero incentive to do differently.
  - rhodozelia 6y ago
    How much would you have to save? For me it is thousands I can’t be bothered to delay kids bath times to save five bucks!
    - bluGill 6y ago
      My parents in 1988 put their water heater on an overnight mode. Even with 4 kids taking baths we ran out of hot water twice that I remember (so about once every 5 years), and I can assure you as kid we weren't worried about conservation. 200 gallons (800 liters) of storage turns out to be plenty for all the baths people take in a day. I know my parents got half price electric for water heating, but I don't know how much they actually saved.
      - rhodozelia 6y ago
        A 60 gallon tank is considered large around here, so no wonder you had a 200 gal tank if it only heated at night!
        bluGill 6y ago
        The electric company gave us the tanks for free to us to sign up. Though the need for larger tanks to pull this off is important.
dan-robertson 6y ago
Yeah the problem is that what people actually want is not exposure to volatility in the energy market so much as cheaper energy prices. And energy looks cheaper if you just get wholesale prices because you are not paying for the insurance against high prices that your energy provider is probably buying. It isn’t easy to convince people that they are picking up pennies in front of a steamroller, so I’m not sure I would actually like to see it becoming easy to get wholesale prices.
- Scoundreller 6y ago
  With smart enough appliances, we could smooth out that volatility. Shed the pool heater/cleaner, beer fridge and the hot water heater when things get incredibly expensive. Put the washer/dryer in slow-mo when prices are high. Ultra-chill the freezer and A/C when prices go low/negative. Turn on a resistive heater and shut off the gas heat when things are negative... Instead we want complicated too-big-to-fail grid storage systems instead.
  - rhodozelia 6y ago
    the grid is quite reliable in most of the world and provides as much power as you want whenever you want. I much prefer simple dumb appliances than smart crap that is garbage after 5 years. If the price is high like in Texas recently I can decide to not use the dryer.
  - dan-robertson 6y ago
    So one difficulty is that the future price of electricity is hard to predict. There is a whole lot of money that goes into trying to make probabilistically accurate predictions about the future prices of things. If it were easy then there wouldn’t be such a large industry around solving these problems. Because it is hard to predict future prices, it is hard to know if prices have temporarily changed (ie if prices are high/low) or if prices are going to continue changing and will stay that way for a while (ie if prices are currently lower/higher than they soon will be). For example, if you had a smart home that cut off heating in the recent Texas event when it saw prices rising (because it assumed prices would revert soon allowing for cheaper heating a little later) it would end up having to pay even more later when prices turned out to continue rising. I don’t really think smart appliances are a sufficient solution for ordinary people because there is too much power usage that is fixed (or worse, correlated with high demand/low supply) and I don’t think consumers are actually signing up for the price volatility on their fixed usage. It feels like you are suggesting that it’s ok to have everyone picking up pennies in front of steamrollers because they can speed up a bit if the steamroller gets too close or go and pick up more pennies if it is further away. But I say that this won’t be good enough if the steamroller starts going faster and they get too tired running away. It’s especially bad because many people merely thought they were picking up pennies and didn’t realise they were being chased by a steamroller. I feel like this analogy is pretty strained by now but the recent events in Texas showed a lot of people getting squashed without realising that they had been spending years running around in front of steamrollers.
Scoundreller 6y ago
And a lot of Texas power utilities charged fixed rates but had to buy at spot prices. It didn’t work as well as they’d hoped, especially if they didn’t have generation capacity themselves.
- floatrock 6y ago
  Power companies tend to buy hedges and other financial instruments to offset the risk. The ones that went bankrupt like Griddy were strict wholesale passthrough. That's not say someone isn't eating the cost of the high spot prices, it's just a lot of that cost is borne by sophisticated professionals who's job it is to price risk and black swan events. The problem with wholesale passthrough rates is consumers are rarely sophisticated enough to understand the details of energy markets and the financial instruments to offset the risk.
  - Scoundreller 6y ago
    There’s been 2 others that sold fixed rates: “Just Energy” and another cooperative. Reality is, electricity distribution corps are more tolerant of risk than individuals because generators have to sell, but the distributor can always file for bankruptcy if it suddenly becomes very unprofitable.
sliken 6y ago
Yes a lesson has been learned, not particularly hard to mitigate though. I'm sure sales of generators, battery storage, and software/hardware capable of disconnecting from the grid when prices are insane are brisk in Texas.

Most people have too much depend that is fixed for spot prices to make sense. If you have two meters putting one on spot might make sense - but that only works if there is something is stopping you from changing what meter is active.

Scoundreller 6y ago
Depends on what you’re doing. All I really need is for my technology to work, and all-in that’s under 100w. Each light bulb is ~4-6w. Too many people think about the above two because it’s easier to see/feel/touch while it’s really thermal loads that are the bulk of household loads. If I have to go down to 15C or deal with 30C, delay my shower/dishwasher/clothes washer/dryer to save enough bucks when it could really count, I’d do it. Meanwhile on fixed pricing, I turn things off when prices are negative (that’s bad!) and indifferent to high prices when I have zero incentive to do differently.
- rhodozelia 6y ago
  How much would you have to save? For me it is thousands I can’t be bothered to delay kids bath times to save five bucks!
  - bluGill 6y ago
    My parents in 1988 put their water heater on an overnight mode. Even with 4 kids taking baths we ran out of hot water twice that I remember (so about once every 5 years), and I can assure you as kid we weren't worried about conservation. 200 gallons (800 liters) of storage turns out to be plenty for all the baths people take in a day. I know my parents got half price electric for water heating, but I don't know how much they actually saved.
    - rhodozelia 6y ago
      A 60 gallon tank is considered large around here, so no wonder you had a 200 gal tank if it only heated at night!
      - bluGill 6y ago
        The electric company gave us the tanks for free to us to sign up. Though the need for larger tanks to pull this off is important.

dan-robertson 6y ago

Yeah the problem is that what people actually want is not exposure to volatility in the energy market so much as cheaper energy prices. And energy looks cheaper if you just get wholesale prices because you are not paying for the insurance against high prices that your energy provider is probably buying. It isn’t easy to convince people that they are picking up pennies in front of a steamroller, so I’m not sure I would actually like to see it becoming easy to get wholesale prices.

Scoundreller 6y ago
With smart enough appliances, we could smooth out that volatility. Shed the pool heater/cleaner, beer fridge and the hot water heater when things get incredibly expensive. Put the washer/dryer in slow-mo when prices are high. Ultra-chill the freezer and A/C when prices go low/negative. Turn on a resistive heater and shut off the gas heat when things are negative... Instead we want complicated too-big-to-fail grid storage systems instead.
- rhodozelia 6y ago
  the grid is quite reliable in most of the world and provides as much power as you want whenever you want. I much prefer simple dumb appliances than smart crap that is garbage after 5 years. If the price is high like in Texas recently I can decide to not use the dryer.
- dan-robertson 6y ago
  So one difficulty is that the future price of electricity is hard to predict. There is a whole lot of money that goes into trying to make probabilistically accurate predictions about the future prices of things. If it were easy then there wouldn’t be such a large industry around solving these problems. Because it is hard to predict future prices, it is hard to know if prices have temporarily changed (ie if prices are high/low) or if prices are going to continue changing and will stay that way for a while (ie if prices are currently lower/higher than they soon will be). For example, if you had a smart home that cut off heating in the recent Texas event when it saw prices rising (because it assumed prices would revert soon allowing for cheaper heating a little later) it would end up having to pay even more later when prices turned out to continue rising. I don’t really think smart appliances are a sufficient solution for ordinary people because there is too much power usage that is fixed (or worse, correlated with high demand/low supply) and I don’t think consumers are actually signing up for the price volatility on their fixed usage. It feels like you are suggesting that it’s ok to have everyone picking up pennies in front of steamrollers because they can speed up a bit if the steamroller gets too close or go and pick up more pennies if it is further away. But I say that this won’t be good enough if the steamroller starts going faster and they get too tired running away. It’s especially bad because many people merely thought they were picking up pennies and didn’t realise they were being chased by a steamroller. I feel like this analogy is pretty strained by now but the recent events in Texas showed a lot of people getting squashed without realising that they had been spending years running around in front of steamrollers.

Scoundreller 6y ago

And a lot of Texas power utilities charged fixed rates but had to buy at spot prices. It didn’t work as well as they’d hoped, especially if they didn’t have generation capacity themselves.

floatrock 6y ago
Power companies tend to buy hedges and other financial instruments to offset the risk. The ones that went bankrupt like Griddy were strict wholesale passthrough. That's not say someone isn't eating the cost of the high spot prices, it's just a lot of that cost is borne by sophisticated professionals who's job it is to price risk and black swan events. The problem with wholesale passthrough rates is consumers are rarely sophisticated enough to understand the details of energy markets and the financial instruments to offset the risk.
- Scoundreller 6y ago
  There’s been 2 others that sold fixed rates: “Just Energy” and another cooperative. Reality is, electricity distribution corps are more tolerant of risk than individuals because generators have to sell, but the distributor can always file for bankruptcy if it suddenly becomes very unprofitable.

sliken 6y ago

Yes a lesson has been learned, not particularly hard to mitigate though. I'm sure sales of generators, battery storage, and software/hardware capable of disconnecting from the grid when prices are insane are brisk in Texas.