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That's not how electricity markets work such as the CAISO market. Generators bid in their short run marginal cost for energy and the cost to provide certain re

That's not how electricity markets work such as the CAISO market. Generators bid in their short run marginal cost for energy and the cost to provide certain reserve services and the unit commitment and economic dispatch algorithms choose which resources to turn on and what level they run at based on some cost minimization function. Before markets, the incumbent utility would run all their nukes and coal as base load. Now with regional markets you have lots of utilities and private entities competing. Once massive amounts of cheap renewables (armed with subsidies to boot) entered the supply mix, it pushed out the most expensive generation to where instead of running ~24/7, they began running far less. Go look at any nuke plants capacity factor (percentage of the year running) in the US by year (you can Google it). You'll see a rather sharp drop. It can only go so low before the plant has to be retired as the cost to run it is greater than the break even point. CAISO operators obviously don't want that, but absent some kind of side payment from the state (unpopular with economists), it's the inevitable outcome. I just wanted to make the distinction that the entity running the market and making sure the grid doesn't blackout usually doesn't make any decisions regarding what the rate payers at the retail level pay for. Even if they know a plant is required for reliability, it's a difficult process to figure out how to accommodate the plant outside the market. It could be argued that these markets in the US need to figure out how to better quantify the risk from losing these nukes and reflect that as part of the price (as well as other technologies). So far that hasn't occurred. Some areas have long-term capacity markets (example: PJM), but California does not (I don't think). Even then, the capacity markets have had many issues.

AnthonyMouse 5y ago
> Now with regional markets you have lots of utilities and private entities competing. Once massive amounts of cheap renewables (armed with subsidies to boot) entered the supply mix, it pushed out the most expensive generation to where instead of running ~24/7, they began running far less. What this really means is that their cost function is broken. Power plants really have three types of costs. The first is the construction cost. This is a sunk cost for anything that already exists. The second is fixed operating costs. This is things like property tax and security and maintenance, which you could save if you shut down the plant permanently, but you don't save at all by having it run at e.g. 50% capacity. The third is variable operating costs. The cost of generating the incremental MWh, given that the plant is operational. For fossil fuel plants this is dominated by fuel. For nuclear plants (and renewables) this is basically zero. Only the second and third should be a factor in whether a plant that already exists gets shut down. But more importantly, only the third should be a factor in where you buy power. If you have a nuclear power plant which you're paying to keep operational but not consuming 100% of its output, you did the math wrong. (Or your electricity prices are regularly zero or negative.)
- 7thaccount 5y ago
  Electricity markets have been exhaustively researched for ~2 decades (the type we have in the US) and even longer for economic power systems in general. All that to say the way things are done are not perfect, but they have had a lot of brilliant people looking into them for a long time. There is a lot of economic theory out there on the usage of short run marginal costs for offers and renewables are insanely cheap in comparison to most other technologies. When you talk about paying for a nuke plant, but not consuming 100% of it's output, that's not exactly what I'm talking about. I would guess that many nukes simply have to run and can't be committed/decommitted like many other conventional technologies. They essentially become a price taker at that point and whatever they are making is likely not enough to cover what they need to stay in business. I hope that's more clear. Also, zero or negative prices are indeed becoming increasingly common in certain parts of the US. Edit: the capacity factors I saw posted publicly for nukes in 2020 weren't near as bad as I thought. Regardless, there are still a lot of planned retirements as I understand it, in the next few years. With Southern Company's Vogtle way over budget and behind schedule, I can't imagine another nuke being built in the US of that kind anytime soon either.
  - rsj_hn 5y ago
    > Electricity markets have been exhaustively researched for ~2 decades (the type we have in the US) and even longer for economic power systems in general. Do you think these cost functions properly price disruptions? I'm saying this because the US is an order of magnitude less reliable than in Europe, and most of these costs are pushed onto consumers. E.g. When the power goes out and I have to throw away food or lose a day of work, PG&E has never compensated me for that. It's externalized. Now imagine a scenario where lots of people rely on the grid to charge their cars. I'm really skeptical of the obsessive hyper-optimization that's going on. If you have a situation where there is an extremely cheap energy provider that is highly unreliable, it could drive out of business the more expensive, reliable provider, and that needs to be taken into account. The zero or negative spot prices that were common in Texas as a result of windpower look to be an example of that pathology at work.
    - 5y ago
avidphantasm 5y ago
Seems like they could essentially reserve a block of capacity (provided by the nukes) as being outside of the market, no? If the nuke plant has a planned or unplanned outage of some or all capacity, that reserve capacity could temporarily be reduced to give a larger slice to the market. Seems like a fairly straightforward way to accommodate the need to ensure for reliability.
- 7thaccount 5y ago
  Easy to do on paper, but probably hard in reality. If you do that, pretty soon you don't have a market. It can also suppress prices as well by having too much capacity online I think. There's a lot of moving parts. One question to ask yourself is who is going to pay for this block of nuke capacity? It would be very expensive to pay for that on a 24/7 basis "just in case". The market already clears reserves for a variety of contingency events and it's certainly a balancing act to ensure you have enough without over paying for something you'll only need in ultra rare occasions. Part of the market philosophy is also not to signal out any one technology. You put in some requirements and let the economics find the cheapest solution. So you could ask for more reserves, but they probably wouldn't just come from nuke.

AnthonyMouse 5y ago

> Now with regional markets you have lots of utilities and private entities competing. Once massive amounts of cheap renewables (armed with subsidies to boot) entered the supply mix, it pushed out the most expensive generation to where instead of running ~24/7, they began running far less. What this really means is that their cost function is broken. Power plants really have three types of costs. The first is the construction cost. This is a sunk cost for anything that already exists. The second is fixed operating costs. This is things like property tax and security and maintenance, which you could save if you shut down the plant permanently, but you don't save at all by having it run at e.g. 50% capacity. The third is variable operating costs. The cost of generating the incremental MWh, given that the plant is operational. For fossil fuel plants this is dominated by fuel. For nuclear plants (and renewables) this is basically zero. Only the second and third should be a factor in whether a plant that already exists gets shut down. But more importantly, only the third should be a factor in where you buy power. If you have a nuclear power plant which you're paying to keep operational but not consuming 100% of its output, you did the math wrong. (Or your electricity prices are regularly zero or negative.)

7thaccount 5y ago
Electricity markets have been exhaustively researched for ~2 decades (the type we have in the US) and even longer for economic power systems in general. All that to say the way things are done are not perfect, but they have had a lot of brilliant people looking into them for a long time. There is a lot of economic theory out there on the usage of short run marginal costs for offers and renewables are insanely cheap in comparison to most other technologies. When you talk about paying for a nuke plant, but not consuming 100% of it's output, that's not exactly what I'm talking about. I would guess that many nukes simply have to run and can't be committed/decommitted like many other conventional technologies. They essentially become a price taker at that point and whatever they are making is likely not enough to cover what they need to stay in business. I hope that's more clear. Also, zero or negative prices are indeed becoming increasingly common in certain parts of the US. Edit: the capacity factors I saw posted publicly for nukes in 2020 weren't near as bad as I thought. Regardless, there are still a lot of planned retirements as I understand it, in the next few years. With Southern Company's Vogtle way over budget and behind schedule, I can't imagine another nuke being built in the US of that kind anytime soon either.
- rsj_hn 5y ago
  > Electricity markets have been exhaustively researched for ~2 decades (the type we have in the US) and even longer for economic power systems in general. Do you think these cost functions properly price disruptions? I'm saying this because the US is an order of magnitude less reliable than in Europe, and most of these costs are pushed onto consumers. E.g. When the power goes out and I have to throw away food or lose a day of work, PG&E has never compensated me for that. It's externalized. Now imagine a scenario where lots of people rely on the grid to charge their cars. I'm really skeptical of the obsessive hyper-optimization that's going on. If you have a situation where there is an extremely cheap energy provider that is highly unreliable, it could drive out of business the more expensive, reliable provider, and that needs to be taken into account. The zero or negative spot prices that were common in Texas as a result of windpower look to be an example of that pathology at work.
  - 5y ago

avidphantasm 5y ago

Seems like they could essentially reserve a block of capacity (provided by the nukes) as being outside of the market, no? If the nuke plant has a planned or unplanned outage of some or all capacity, that reserve capacity could temporarily be reduced to give a larger slice to the market. Seems like a fairly straightforward way to accommodate the need to ensure for reliability.

7thaccount 5y ago
Easy to do on paper, but probably hard in reality. If you do that, pretty soon you don't have a market. It can also suppress prices as well by having too much capacity online I think. There's a lot of moving parts. One question to ask yourself is who is going to pay for this block of nuke capacity? It would be very expensive to pay for that on a 24/7 basis "just in case". The market already clears reserves for a variety of contingency events and it's certainly a balancing act to ensure you have enough without over paying for something you'll only need in ultra rare occasions. Part of the market philosophy is also not to signal out any one technology. You put in some requirements and let the economics find the cheapest solution. So you could ask for more reserves, but they probably wouldn't just come from nuke.