3 ms·

Negative prices make storage very practical

andrewxdiamond 2y ago
And de-incentivizes supply. A real solution need to be available to balance the supply and demand of power such that the rates on both ends are predictable. A market where a good fluctuates between profitable and not is not one very attractive to investment. Playing the video game Victoria 3 has taught me a lot about healthy markets. You have to play both sides of supply and demand to get to the prices you need
- topper-123 2y ago
  Negative prices do incentivize storage, because storage will alliw sellers to sell at a time with higher prices (i.e. when demand is greater relative to supply).
  - thecosas 2y ago
    I could see this then pushing more consumers to have their own batteries to store energy when it's inexpensive. Interesting market playing out with energy storage :-)
- bryanlarsen 2y ago
  Why? If you make a sufficient amount of money in the 5-8pm peak period it can make you strongly profitable despite losing money at noon.
  - Gare 2y ago
    And solar plants, unlike most other plants can be easily and quickly shut off so you don't even need to sell at negative prices.
    - nawitus 2y ago
      Empirically this doesn't seem to happen.
- bastawhiz 2y ago
  > A market where a good fluctuates between profitable and not is not one very attractive to investment. This is the most wild thing I've ever read on this website. Pick just about any security and you'll see that buying and selling it over time fluctuates between profitable and not profitable. If something was always profitable everyone would do it and get infinitely rich. Arbitrage wouldn't exist. Economies would shut down.
jerf 2y ago
Unfortunately you've got a massive term mismatch. You have negative prices today, but a lot of reason to believe that by the time you could bring your storage online the problem will already have resolved itself. Oil briefly went negative a few years ago. If you decided to build a storage business dependent on negative oil prices for profit, you might just be coming online around now, and very much poorer than you were before. (Of course you would in fact have stopped a long time ago.)
- AaronFriel 2y ago
  Oil prices went negative due to an exogenous, rare event shocking demand. No one expected that would recur. (And indeed, many people did try to figure out how to store oil in one-off vessels, short term leases for storage, etc., though I don't know if anyone succeeded.) Solar panel production on the other hand is exponential and growing much faster than overall power consumption. It can be very, very favorable to build batteries and that's why grid scale battery production is taking off. There is in fact a storage business dependent on energy arbitrage over time, it's lucrative, and all indications suggest it will continue to be lucrative for many years to come.
- toomuchtodo 2y ago
  OP is correct. Negative prices stokes battery storage deployment. See California and their ~52GW storage target (currently @ ~10GW), because of negative prices and the duck curve. California utility scale storage soaks up solar during the day (when spot prices approach zero or go negative), and discharges most profitably right after sunset for ~4 hr (but occasionally, right before sunrise when demand is ramping before the sun is up). If spot prices rise during daylight hours, you add more solar generation to push them back down. https://www.gov.ca.gov/2024/04/25/california-achieves-major-clean-energy-victory-10000-megawatts-of-battery-storage/ https://www.gov.ca.gov/2024/04/25/california-achieves-major-... https://www.energy.ca.gov/data-reports/energy-almanac/california-electricity-data/california-energy-storage-system-survey https://www.energy.ca.gov/data-reports/energy-almanac/califo... https://cleantechnica.com/2024/06/02/solar-passes-100-of-power-demand-in-california/ https://cleantechnica.com/2024/06/02/solar-passes-100-of-pow... https://futurism.com/the-byte/california-solar-electricity-prices-negative https://futurism.com/the-byte/california-solar-electricity-p... https://app.electricitymaps.com/zone/US-CAL-CISO?wind=false&solar=false https://app.electricitymaps.com/zone/US-CAL-CISO?wind=false&...

And de-incentivizes supply. A real solution need to be available to balance the supply and demand of power such that the rates on both ends are predictable. A market where a good fluctuates between profitable and not is not one very attractive to investment. Playing the video game Victoria 3 has taught me a lot about healthy markets. You have to play both sides of supply and demand to get to the prices you need

topper-123 2y ago
Negative prices do incentivize storage, because storage will alliw sellers to sell at a time with higher prices (i.e. when demand is greater relative to supply).
- thecosas 2y ago
  I could see this then pushing more consumers to have their own batteries to store energy when it's inexpensive. Interesting market playing out with energy storage :-)
bryanlarsen 2y ago
Why? If you make a sufficient amount of money in the 5-8pm peak period it can make you strongly profitable despite losing money at noon.
- Gare 2y ago
  And solar plants, unlike most other plants can be easily and quickly shut off so you don't even need to sell at negative prices.
  - nawitus 2y ago
    Empirically this doesn't seem to happen.
bastawhiz 2y ago
> A market where a good fluctuates between profitable and not is not one very attractive to investment. This is the most wild thing I've ever read on this website. Pick just about any security and you'll see that buying and selling it over time fluctuates between profitable and not profitable. If something was always profitable everyone would do it and get infinitely rich. Arbitrage wouldn't exist. Economies would shut down.

jerf 2y ago

Unfortunately you've got a massive term mismatch. You have negative prices today, but a lot of reason to believe that by the time you could bring your storage online the problem will already have resolved itself. Oil briefly went negative a few years ago. If you decided to build a storage business dependent on negative oil prices for profit, you might just be coming online around now, and very much poorer than you were before. (Of course you would in fact have stopped a long time ago.)

AaronFriel 2y ago
Oil prices went negative due to an exogenous, rare event shocking demand. No one expected that would recur. (And indeed, many people did try to figure out how to store oil in one-off vessels, short term leases for storage, etc., though I don't know if anyone succeeded.) Solar panel production on the other hand is exponential and growing much faster than overall power consumption. It can be very, very favorable to build batteries and that's why grid scale battery production is taking off. There is in fact a storage business dependent on energy arbitrage over time, it's lucrative, and all indications suggest it will continue to be lucrative for many years to come.
toomuchtodo 2y ago
OP is correct. Negative prices stokes battery storage deployment. See California and their ~52GW storage target (currently @ ~10GW), because of negative prices and the duck curve. California utility scale storage soaks up solar during the day (when spot prices approach zero or go negative), and discharges most profitably right after sunset for ~4 hr (but occasionally, right before sunrise when demand is ramping before the sun is up). If spot prices rise during daylight hours, you add more solar generation to push them back down. https://www.gov.ca.gov/2024/04/25/california-achieves-major-clean-energy-victory-10000-megawatts-of-battery-storage/ https://www.gov.ca.gov/2024/04/25/california-achieves-major-... https://www.energy.ca.gov/data-reports/energy-almanac/california-electricity-data/california-energy-storage-system-survey https://www.energy.ca.gov/data-reports/energy-almanac/califo... https://cleantechnica.com/2024/06/02/solar-passes-100-of-power-demand-in-california/ https://cleantechnica.com/2024/06/02/solar-passes-100-of-pow... https://futurism.com/the-byte/california-solar-electricity-prices-negative https://futurism.com/the-byte/california-solar-electricity-p... https://app.electricitymaps.com/zone/US-CAL-CISO?wind=false&solar=false https://app.electricitymaps.com/zone/US-CAL-CISO?wind=false&...