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In Defense of Electricity Markets
- timeimp 3y agoI, for one, want Gen IV small-modular nuclear reactors built. They solve all our climate change-related challenges AND they eat the waste of older generation reactors. I fail to see why we're not investing in more nuclear over solar and wind (whose components are not usually recycled)
- cyberax 3y agoSmall modular reactors have almost nothing but disadvantages compared to the good old large-scale PWRs. The ONLY advantage of SMRs is that they are easier to build because only a handful of companies in the _world_ possess technology to build reactor vessels for large-scale PWRs. And none of them are in the US.
- pstuart 3y agoWe have yet to see, as they've yet to truly enter the market. So far, the record's not been good for large plants -- they tend to go way over budget and schedule. Case in point: Vogtle.
- Animats 3y agoNuScale's price has already gone 60%-70% over budget, and they haven't even built anything yet.[1] [1] https://oilprice.com/Alternative-Energy/Nuclear-Power/Are-Small-Scale-Modular-Reactors-Becoming-Too-Expensive.html https://oilprice.com/Alternative-Energy/Nuclear-Power/Are-Sm...
- pstuart 3y agoThe factors cited were inflation and higher interest rates, which are going to be universally applicable. Cost overruns at Vogtle and others had inflation as a partial factor but the bigger issues, per the DOE: "Work began with incomplete designs and managers repeatedly failed to realistically schedule tasks. Experienced workers were in short supply and defective work often had to be redone. Workers quit for other jobs and the COVID-19 pandemic led to high absenteeism." So a pass on Covid impact but the rest is the result of building a huge bespoke power plant. SMRs change all of that to units of mass production. I'm sure there's still issues to solve there but if nuclear has a future competing against low cost renewables then that SMRs seem to be the only way forward.
- fodkodrasz 3y agoThat is mostly because there are no more large scale nuclear investments, lot of knowhow has been lost, everything is custom built now on every level of implementation (which SMRs promise to solve), and because people care about the initial investments, not for the TCO. Oh, and politically motivated NIH red-tape for getting some votes on the cost of whole society.
- cinntaile 3y agoNuclear benefits from stable output, but the world we're in doesn't require stable output so the economics become difficult.
- fodkodrasz 3y agoThis is not true.
- cinntaile 3y agoYou really refuted my argument there.
- fodkodrasz 3y agoI'm simply tired of wasting time on renewable-energy-battery-storage fan service. We need stable power output.
- cinntaile 3y agoI don't get it, I didn't mention any of that? You're refusing to answer due to an imaginary reason you yourself came up with... Alright then.
- kwhitefoot 3y agoYou didn't make an argument, you merely stated something that the respondent disputes. There is a very stable base load in most countries that can be well provided with nuclear. This is especially the case when there are good interconnections between neighbouring countries.
- cyberax 3y agoRosatom is exporting nuclear power plants within budget and (mostly) on time. It's simply a question of expertise and experience. The US and Europe have ignored nuclear power for so long, that most expertise was lost long ago. And each new nuclear power plant becomes a unique snowflake.
- asynchronous 3y agoSince they’re small they can be placed far closer to urban hubs and other places that suck electricity. The last design plans I saw one could fit within a single city block, buried under ground with only 1 story exposed.
- cyberax 3y ago> The last design plans I saw one could fit within a single city block, buried under ground with only 1 story exposed. This is a completely unrealistic plan, designed to lure investors. An SMR meltdown will produce enough radioactive contamination to make a small city unlivable, at least for a while. So you'll need a full containment building. You'll need emergency generators, coolant pumps, etc. Then you have a question of security, an easily accessible reactor will provide a great target for terrorism. So you'll need a perimeter around it with armed guards. Then there's a question of control. A working reactor requires at least two trained nuclear engineers on duty at all times. So each reactor will likely need around 15 highly specialized engineers. That will have to live within a commuting distance. Sounds bad already. But that's not all. There's also a question of inspections, something like the NRC can be reasonably expected to regulate several hundred reactors. They are not prepared to inspect many thousands of reactors. And the last thing I personally want is a "self-regulating" nuclear industry. Any _realistic_ SMR power plant will look just like a regular large nuclear plant, except that it'll have multiple reactor units instead of just one large reactor.
- kwhitefoot 3y agoThere are designs for modular reactors that are inherently safe. Using subcritical reactors and a particle beam. See Aker Solutions: https://www.neimagazine.com/features/featureaker-s-ads-uses-thorium https://www.neimagazine.com/features/featureaker-s-ads-uses-... Haven't seen any news from them recently though.
- cyberax 3y agoThey are not "inherently safe". Reactors that produce power (in large quantities) are dangerous because fission products are radioactive, and they produce energy even after the chain reaction stops. So once cooling is lost, these fission products can melt through the reactor vessel and escape the confinement. Also, accelerator-driven reactors are just bonkers. They make no freaking sense for power generation. They are being investigated because they can produce very energetic neutrons, in quantities that are large enough to transmute some long-lived nuclear waste.
- rgmerk 3y agoThis has almost nothing to do with the topic at hand, which was a commentary on the value of a functioning market for electricity (I hesitate to call it a "free" market because any electricity market ends up having a lot of rules). I personally think Gen IV nuclear reactors have stuff-all chance of competing in such a market, but if somebody believes otherwise and wants to put up the dollars to try, all power to them.
- fragmede 3y agoI wouldn't say that a technology which would dump a ton of supply, affecting, if not disrupting the market, has "almost nothing to do with the topic at hand". it's unfortunately a bit of a fantasy and years out from being possible due to a natural disaster setting the industry back by yet another a decade but it's totally relevant for a threaded forum.
- rgmerk 3y agoSMRs are going to have relatively high capital costs and (hopefully) low but non-zero operating costs. They will probably have similar ramping characteristics to coal. As such, they will probably operate like coal - generating most of the time when able to and get their lunch eaten by zero-marginal-cost solar in the middle of the day. One thing SMRs will absolutely not be used for is as peakers, which is where market design matters is most important for keeping the lights on at an affordable cost.
- mythhabit 3y agoBoth France and Germany have nuclear plants with load following capabilities to the tune of 5% change per minute. That is 50-100MW change every minute for a single powerplant. It might not be peak-peak, but it is certainly going to handle the vast majority of all electricity generation with very small delay.
- rgmerk 3y agoSure, I get that you can ramp nuclear plants, technically, but it’s highly unlikely to be economically attractive to build new ones with the intention of ramping them a lot. If SMRs are built, I’d expect many of them to be accompanied by batteries (either co-located or elsewhere on the grid) to be used as an alternative to ramping.
- ok_dad 3y agoIt’s money. Look at the cost of nuclear, the real cost with mining, development, construction, maintenance, and decommissioning. It’s way more than the market can bear, and it won’t get any cheaper. You also need a guaranteed pipeline of nuclear operators and an iron clad corporate safety culture to ensure there aren’t any mistakes ever. I love nuclear tech, but it’s just not feasible today compared to other tech.
- bee_rider 3y agoInvest in both, I don’t think nuclear is the future but wouldn’t mind being wrong. To pay for it, raise taxes on fossil fuels.
- baq 3y agoIt doesn’t look like we have any alternatives in the next three decades until fusion is viable :wink:
- bee_rider 3y agoYea it always seems like there’s some technology right around the corner that’s a better plan than the renewables we could be installing right now. Might as well use petrochemicals for another couple quarters!
- jillesvangurp 3y agoInvest proportional to the risk. Nuclear is a very risky investment. But it might pay off. The financial risk level is why it is so dependent on state subsidies and tax payer money. Without that, nuclear operators would be going bankrupt and no sane investor would risk their money on it. The risks include lengthy delays, cost overruns, policy issues, safety related cost, and much more. Some of those things might be fixable. But there are no guarantees. And without prices for nuclear energy coming down substantially, the resulting technology is not viable in the market. It might happen but it's not looking like that would happen before there's a few more tw more renewable capacity online in the next few decades. Solar, wind, and other renewables are very popular investments right now. There are very clear learning effects visible when implementing them resulting on year on year cost reductions. These investments have a very reliable ROI. A very predictable and quick implementation. And they are easy to scale. That's why so much new capacity is coming online vs. the absolutely pitiful amounts of nuclear being added to the grid. The price gap is basically an order of magnitude and growing. You get about 10x more capacity in renewables for the same money. The realized capacity gap also is much larger for the same reason.
- RandomLensman 3y agoNuclear so far is very expensive and hasn't shown a great price trajectory. It remains unclear if new designs would realize better price points if they were to become reality.
- stephen_g 3y agoPart of the reason is because they none have actually been built yet, and there would take even longer to perfect them. You could say that that is a reason for that is under-investment, but you can't say things like "they solve all our climate change-related challenges" about something that doesn't exit yet...
- anjel 3y agoThey make nifty hard targets in military conflicts as a certain dictator who likes invading sovereign countries recently innovated.
- cyberax 3y agoCounterpoint: electricity markets are terrible for reliability. Markets are great, but there are no pricing signals for reliability. You won't know that your grid will collapse at the first strong breeze, until it happens (see: Texas). Theoretically, it can work because companies might invest in reliable generation, in the hopes of getting $$$$$$$$$ when the spot price goes up through the roof. But in practice, pretty much nobody wants to wait 5-10 years between "income events". And it's even worse in Europe. It's just a story of utter market failure.
- DeRock 3y agoThere are capacity markets, and the article spends a good portion talking about them (or more specifically why they believe energy only markets are superior).
- alphager 3y agoHow is it worse in Europe? Where in Europe is it worse? I can't remember the last time the grid failed.
- sfn42 3y agoNot sure what OP refers to but it isn't very long ago that we were paying over a dollar per kwh in Norway. We've always had extremely low energy prices due to our abundant hydroelectric power etc, but now it's all being sold to Germany or whatever and we get to buy their coal power for 30 times the price we're used to.
- theshrike79 3y agoYea, that was when we refused to buy natural gas from a dictator attacking sovereign countries. And due to how the market was built, Germany's over-reliance on Russian gas affected everyone for a good while. On the other hand I've been enjoying pretty much free electricity for about 6 months now. A few rare spikes up to 40c/kWh, but it's mostly been under 1c/kWh.
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- lysecret 3y agoElectric water heaters have long been in demand response programs, but new upgrades improve their ability to shift energy based on real-time conditions without leaving customers with cold water. Roughly 18% of household energy goes towards water heating, though many buildings still use fuels like natural gas. Would love to hear more on this point. Which companies are doing the integration?
- jillesvangurp 3y agoThere's a lot of activity around this topic in Europe. E.g. several companies with innovative products in the UK, Netherlands, and Scandinavia. Also changing regulations around gas are creating incentives for houses to modernize. A lot of home owners are spending lots of money in this new market. One company that was promoted on the Fully Charged Youtube channel a few times is Myenergi. They have a range of products around managing energy in your house. If you combine them, you can do things like defining rules for when to use solar energy from your roof to charge your battery, heat your boiler, charge your car, or sell it back to the grid. Seems like a smart solution. There are many such solutions in the market. Nice channel to check out if you want to know more about this. They regularly review products and solutions in this space.
- ZeroGravitas 3y agoMixergy is one: https://mixergy.co.uk/mixergy-tank/ https://mixergy.co.uk/mixergy-tank/
- stephen_g 3y agoFor my house, I put in a heat pump with a decently sized storage tank and all it takes is a simple timer - it comes on at 10am and heats until the tank is at least 60 degrees C (for Legionella prevention). This works to power it entirely from my solar almost all the time (I've only had it for a year, but I think in that time over 98% of my water heating would have been directly from my solar). Where I am, there tends to be surplus solar energy in the grid at that time anyway, so where I am at least, you don't even need anything super smart that tracks real-time energy pricing or anything. As long as you avoid the morning and evening peak, which this always does (it's finished heating usually well before 1pm, and the peak doesn't usually start until 4pm at the earliest in Winter).
- ggm 3y agoIts a public utility function. The problem is rationing. Both capex and opex. Money only exists in this space to try and control things. It's not actually a good profit centre, unless 100% of the profits are hypothicated to the function it implements. The assumption was the market would equipoise to the "best" outcome. Well guess what: it only sort of works. Now we're in end-times for coal and gas look at what coal and gas electricity suppliers do, maximising their profit. John Quiggin, University of Qld may be one of the last old-school economists who argue its time to walk back from this market madness. Yes, "it works, kinda" but the Kinda here is the massive amounts of market distortion which emerge to make profit, not to further the interests of the public utility function. Remember, its a public utility. And, its a regulated market. This is not a profit centre, its a function we need, which has been put to market because economists believe their own bullshit and Politicians got on board. It worked, kinda.
- ilaksh 3y agoI like the idea but not sure about the implementation. Here in deep south Texas they have electricity retailers. What they do is advertise a very low fixed rate, but make it only last for 6 months. Then if you don't switch to a new provider, you may end up being stuck with a rate that is effectively double what you originally signed up for. Not in the rate that they say they are giving you, but there is some fee that they are allowed to add supposedly related to the real electricity costs from the actual power company, and they make it as high as they can get away with, in order to max out the effective rate.
- nologic01 3y agoA sprawling read that is difficult to follow. In particular the critical design elements of an "electricity market" are never defined, let alone convincingly defended. Market dynamics is a complex interplay of market design (which influences participant behavior), market maker incentives and regulation etc. There is no single alternative to a monopoly market. Turning every nano-Watt of electricity consumption into in incessant trade and emulating money markets is the market intermediary dream but it is not necessarily optimal.
- littlestymaar 3y agoBelow is the fundamental hypothesis behind electricity markets: > Efficient plants with low fuel/opportunity costs usually set the price, and prices rise slightly to bring on less efficient plants during peak hours. You'll see it everywhere someone discusses electricity markets. The only problem is that this hypothesis is wrong in practice … It's not so much the marginal price that sets which energy source start and stop, but mostly the technical flexibility of the produce mean. First of all, marginal price doesn't really exist in the first place[1], and different means of electricity production have very different ramp-up delay and costs, which is totally unaccounted by the marginal price hypothesis. [1] and this isn't just the case in the electricity market, but pretty much everywhere: marginal price is a economic concept that just doesn't refer to anything existing in the real world, as illustrated by the work of Nobel Prize winner Maurice Allais.
- ilikerashers 3y agoI don't think they can be defended. In the UK last winter, generators artificially "shut down" to drive up prices. It's a rigged game that hurts consumers: https://www.theguardian.com/business/2023/mar/23/uk-power-firms-market-energy-prices https://www.theguardian.com/business/2023/mar/23/uk-power-fi... The richest people I know (guys in their 30s worth 100 million) all made it through energy trading. Lots of hands in pockets here and is similar to most corrupt privatisation initiatives.
- frutiger 3y ago> generators artificially "shut down" to drive up prices Isn’t that an argument for having a proper market with multiple suppliers? Competitors would normally step in to provide supply at non inflated prices to generate greater revenue.
- mrtksn 3y agoI wonder how realistic is this? It probably takes multiple years to build anything that generates electricity at scale so competition must be very predictable. Then you can probably calculate your optimal profit strategy very easily and when you sell something that people have to buy, in some cases, probably just inflating the prices by reducing production is the most profitable strategy. There’s no risk of someone stepping in if it’s most profitable for everyone to just produce enough to inflate prices(if you produce one percent more you earn one percent more but if you produce one percent less and if the price go 10% up, you end up making much more money). Aren’t the oil producers doing the same?
- tails4e 3y agoThe price for all units sold is set by the highest producer at a any one moment. This led to windfall profits for generators with fixed costs like wind. It's not a functioning market. Imagine if the price of a beer everywhere in the US was set by the highest seller. Every beer sold would be immediately dearer, not cheaper, as it just takes one seller to push the price up.
- liampulles 3y ago
- Fr3dd1 3y agoWe develop software for the german energy market (just the economic parts of it). If you are interested, look the following (we germans loooove rules and specifications :D) https://www.edi-energy.de/index.php?id=38 https://www.edi-energy.de/index.php?id=38 This are just the specifications for exchanging data between participants.
- liampulles 3y agoHere in South Africa, energy production is starting to move more and more to individual households and businesses, because our government power utility is failing. We don't have electricity markets, but that seems to be changing. Hopefully we will get robust electricity markets here. Not because I think they are intrinsically a great thing, but because they are less terrible in the SA context.
- infecto 3y agoI am still a fan of the way Texas handles its energy markets. The failures that happened a couple years ago was terrible and Texas screwed up big time but I still think its markets are better. This is of course anecdotal but it always seems like most other markets in the US are not as efficient in terms of infrastructure and pricing. In Texas you have what I consider the more public utility piece, the transmission that is split between two companies. I am sure there are areas in Texas that struggle but I found Texas transmission builds and maintenance to be a lot further ahead then the other states I have lived in. I always really appreciated picking my retail energy provider. There are some shenanigans here so customers need to pay attention to the pricing BUT I appreciated how this allowed more transparent pricing on a whole for everyone. I am paying a separate company for the transmission piece and then paying the generation through a retail provider who is setting a price for me and then essentially buying that capacity on the market. In other states it always feels like a struggle for the single "public utility" company to argue their way to increase or decrease rates. So instead of having many different energy generation plants which can include solar, wind, battery storage etc, I am stuck with a single company that is publicly traded. Maybe they do need to bump up rates to serve demand or maybe they are trying to also get some more profit out of it. I also always appreciate the amount of data you could get in Texas. https://www.ercot.com/gridmktinfo/dashboards https://www.ercot.com/gridmktinfo/dashboards - Live statewide dashboard of the grid https://www.smartmetertexas.com/home https://www.smartmetertexas.com/home - You can signup can get data from your meter I think delayed 15mins.