3 ms·

> Only if customers are willing to buy at that price. Which is only true now because there are no cheaper competitors to turn to, which in turn is because the e

> Only if customers are willing to buy at that price. Which is only true now because there are no cheaper competitors to turn to, which in turn is because the entire system is operating at capacity. In other words, the price is the marginal price: at the very edge. What is the highest price consumers want to pay for X amount of electricity. You should split it up: say price of electricity is 5$. That means: Electricity produced at 1$: sells for 5$ Electricity produced at 2$: sells for 5$ Electricity produced at 3$: sells for 5$ Electricity produced at 4$: sells for 5$ Electricity produced at 5$: sells for 5$ Electricity produced at 6$: does not sell, plants get paused

merely-unlikely 4y ago
Which is exactly how I would expect it to work. Now if producers expect prices to remain high, or for there to be repeated spikes in price, I would expect the $1, $2, $3, and maybe $4 producers to invest in additional production or storage over time to capture additional marketshare and thereby profits. Of course the "over time" part is important since that process can't happen overnight and is constrained by labor and components.
maximegarcia 4y ago
not all plants can be paused quickly... Sometimes that means: Electricity produced at x$: sells for -5$ (I pay you to use it)
- merely-unlikely 4y ago
  Yea there’s a lot of forecasting, inefficiencies, and other distortions involved. Energy supply chains aren’t easy
dkjaudyeqooe 4y ago
There is some context missing there: the amount of power buyers need. So a simplified example: Buyers are willing to pay $5 to secure 100GW of power. Sellers are: 80GW Solar at $3 and 20GW Coal at $5. At 100GW the price is $5 because it's the price that will secure 100GW. If buyers only needed 80GW the price would be $3. There is only one market price and it's the price that gets the required quantity of power (as you say).

merely-unlikely 4y ago

Which is exactly how I would expect it to work. Now if producers expect prices to remain high, or for there to be repeated spikes in price, I would expect the $1, $2, $3, and maybe $4 producers to invest in additional production or storage over time to capture additional marketshare and thereby profits. Of course the "over time" part is important since that process can't happen overnight and is constrained by labor and components.

maximegarcia 4y ago

not all plants can be paused quickly... Sometimes that means: Electricity produced at x$: sells for -5$ (I pay you to use it)

merely-unlikely 4y ago
Yea there’s a lot of forecasting, inefficiencies, and other distortions involved. Energy supply chains aren’t easy

dkjaudyeqooe 4y ago

There is some context missing there: the amount of power buyers need. So a simplified example: Buyers are willing to pay $5 to secure 100GW of power. Sellers are: 80GW Solar at $3 and 20GW Coal at $5. At 100GW the price is $5 because it's the price that will secure 100GW. If buyers only needed 80GW the price would be $3. There is only one market price and it's the price that gets the required quantity of power (as you say).