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What is the situation where people are being paid to sustainably consume power? Genuinely curious - seems like a ripe arb situation so I’m curious why it isn’t

What is the situation where people are being paid to sustainably consume power? Genuinely curious - seems like a ripe arb situation so I’m curious why it isn’t being taken advantage of.

pmorici 4y ago
People using flair gas from oil wells for example to power a generator. The alternative is just burning the gas.
- foepys 4y ago
  Why would is this energy go to waste now if it was so cheap?
  - latchkey 4y ago
    Because large scale electricity transmission is very very expensive and depending on how remote, sometimes impossible. If you can burn the gas in a generator (which is a lot more efficient and less environmentally damaging than flare burning it) and convert that into value directly, that seems like a better outcome.
  - skybrian 4y ago
    One reason is if it's "stranded" energy in some remote place. Building power lines or pipelines (for natural gas) can be expensive. Maybe they're at capacity, or still under construction. As a result, the power is only going to be useful if you can move whatever consumes it to that location.
    - MarkMarine 4y ago
      I worked for a startup that tried to do this, compressing at the wellsite to capture the flared gas. It’s an extraordinary amount of gas just flared off in a year
    - majewsky 4y ago
      There are other useful things to do with "stranded energy" though. In Northern Germany, they're now building hydrolysis plants to convert excess offshore wind energy into hydrogen. And if we're talking about natural gas wells, you already have a pipeline infrastructure in place, so it's not that far of a stretch to add a hydrogen pipeline to that.
AngryData 4y ago
I would assume it has to do with how long it takes certain power plants to spool down and then back up again. It might not make sense to spend hours spooling down when you know not long after demand will jump right back up again as AC units, factories, processing facilities, ect turn ramp back up.
- RL_Quine 4y ago
  That's one way of getting extremely cheap rates, it's called "interruptible power" in supply terms, you might be expected by the utility to drop your entire load within a set amount of time with absolutely no warning- something a normal customer would be extremely unable to do, but miners can do in milliseconds.
codeflo 4y ago
I don’t know anything about particular political distortions in the US, though I wouldn’t be surprised if they exist, at least on a small scale. What I can tell you is that electric energy is traded on complicated spot markets that are designed to ensure that production and consumption are balanced at every point in time. Overproduction is as bad as underproduction, as the power grid can’t store excess energy. Fuses are tripped to prevent short-circuits, causing blackouts. This makes time-based arbitrage difficult. Since power demand isn’t entirely predictable, flexibility is rewarded in these markets. For example, if there’s a downward spike in demand that causes an imbalance, you can earn extra money by either having a power plant that can ramp down very quickly, or by being a consumer that can ramp up very quickly. I wouldn’t be surprised if mining rigs participated in these spot markets. In theory, they should be able to adjust their power consumption within seconds. BTW, it’s been theorized that overnight charging of electric cars could do the same thing and dynamically adjust the charging speed based on spot prices.
dathinab 4y ago
Texas isolated power grid design means they have no where to ship excess energy to (in relevant amounts, neither can they get missing energy). It's also under-provisioned but increasing supply is a problem because of excess energy. So they started making deals with miners where the miners act as a sponge for excess energy and in turn pay much less. Taking the same situation just more extreme (and likely more local) and being payed for handling excess energy doesn't seem absurd. (I intentionally didn't judge anything about the Texas gird here, it's just meant as an example.)
praptak 4y ago
Stopping a turbine is costly and demand has unpredictable variations. This means sometimes it makes sense to pay consumers to burn the excess power. We have no technology to quickly store and release huge amounts of energy.

What is the situation where people are being paid to sustainably consume power? Genuinely curious - seems like a ripe arb situation so I’m curious why it isn’t being taken advantage of.

pmorici 4y ago

People using flair gas from oil wells for example to power a generator. The alternative is just burning the gas.

foepys 4y ago
Why would is this energy go to waste now if it was so cheap?
- latchkey 4y ago
  Because large scale electricity transmission is very very expensive and depending on how remote, sometimes impossible. If you can burn the gas in a generator (which is a lot more efficient and less environmentally damaging than flare burning it) and convert that into value directly, that seems like a better outcome.
- skybrian 4y ago
  One reason is if it's "stranded" energy in some remote place. Building power lines or pipelines (for natural gas) can be expensive. Maybe they're at capacity, or still under construction. As a result, the power is only going to be useful if you can move whatever consumes it to that location.
  - MarkMarine 4y ago
    I worked for a startup that tried to do this, compressing at the wellsite to capture the flared gas. It’s an extraordinary amount of gas just flared off in a year
  - majewsky 4y ago
    There are other useful things to do with "stranded energy" though. In Northern Germany, they're now building hydrolysis plants to convert excess offshore wind energy into hydrogen. And if we're talking about natural gas wells, you already have a pipeline infrastructure in place, so it's not that far of a stretch to add a hydrogen pipeline to that.

AngryData 4y ago

I would assume it has to do with how long it takes certain power plants to spool down and then back up again. It might not make sense to spend hours spooling down when you know not long after demand will jump right back up again as AC units, factories, processing facilities, ect turn ramp back up.

RL_Quine 4y ago
That's one way of getting extremely cheap rates, it's called "interruptible power" in supply terms, you might be expected by the utility to drop your entire load within a set amount of time with absolutely no warning- something a normal customer would be extremely unable to do, but miners can do in milliseconds.

codeflo 4y ago

I don’t know anything about particular political distortions in the US, though I wouldn’t be surprised if they exist, at least on a small scale. What I can tell you is that electric energy is traded on complicated spot markets that are designed to ensure that production and consumption are balanced at every point in time. Overproduction is as bad as underproduction, as the power grid can’t store excess energy. Fuses are tripped to prevent short-circuits, causing blackouts. This makes time-based arbitrage difficult. Since power demand isn’t entirely predictable, flexibility is rewarded in these markets. For example, if there’s a downward spike in demand that causes an imbalance, you can earn extra money by either having a power plant that can ramp down very quickly, or by being a consumer that can ramp up very quickly. I wouldn’t be surprised if mining rigs participated in these spot markets. In theory, they should be able to adjust their power consumption within seconds. BTW, it’s been theorized that overnight charging of electric cars could do the same thing and dynamically adjust the charging speed based on spot prices.

dathinab 4y ago

Texas isolated power grid design means they have no where to ship excess energy to (in relevant amounts, neither can they get missing energy). It's also under-provisioned but increasing supply is a problem because of excess energy. So they started making deals with miners where the miners act as a sponge for excess energy and in turn pay much less. Taking the same situation just more extreme (and likely more local) and being payed for handling excess energy doesn't seem absurd. (I intentionally didn't judge anything about the Texas gird here, it's just meant as an example.)

praptak 4y ago

Stopping a turbine is costly and demand has unpredictable variations. This means sometimes it makes sense to pay consumers to burn the excess power. We have no technology to quickly store and release huge amounts of energy.