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It could be partially your neighbor's solar panels or batteries. A lot of domestic power that gets contributed to the grid never leaves the neighborhood. These

It could be partially your neighbor's solar panels or batteries. A lot of domestic power that gets contributed to the grid never leaves the neighborhood. These things aren't always as clear cut. The key to lower prices on the grid is more flexible and localized pricing. Power suppliers don't like this because it favors cheaper sources of power that push their more expensive legacy generation out of the market. But it would create price incentives for demand and supply to align better. A good example is the UK, which has national energy pricing and a lot of excess wind power in Scottland that is often being curtailed at the same time gas plants further south need to power up to power local demand there. End result: the Scottish pay the same high rate even though they are literally discarding energy they don't know what to do with. If they had local energy pricing, their rates would go down a lot because they have a lot of wind power most of the time. And further south, people would either invest in local power generation (instead of far away in Scottland) or actually relocate data centers and other energy intensive businesses to where the power is cheap. As opposed to e.g. Slough.

Skeime 2y ago
Yeah, it’s the same in Germany. (And to add insult to injury, people in places with renewable generation often pay higher grid fees due to the investments necessary to connect all the new plants.)
- baridbelmedar 2y ago
  Yes, but that's partly a consequence of how the German electricity market operates and the neglected state of its infrastructure, isn't it? Wind power and other intermittent sources create grid instability, which drives up costs. And to my knowledge, Germany has chosen not to have different bidding markets within the country (or has at least kept prices consistent across its four markets) to protect vital industries in the west?
  - thrw42A8N 2y ago
    This is how the energy grid operates everywhere, it's not some uniquely German mistake. Renewables require an incredibly huge grid investment - it's the same story they keep telling about external costs, only this time they don't want to hear it. I don't want to subsidize others' cheaper energy, I don't have any place to put my panels and batteries, I was happy with how it was before. But they would do anything to avoid the fees when they can.
    - jillesvangurp 2y ago
      Would you buy wind power if somebody provided that close to where you live? The way the system currently works is that you see no benefit at all if wind towers are close to where you live. Because somebody on the complete opposite side of the country only has access to gas power and the national prices are set for the highest price needed anywhere in the country. You are effectively subsidizing those people. Not the other way around. Your rates are high because gas is expensive and has to be shipped in in LNG form these days. No matter where you live in the country.
      - thrw42A8N 2y ago
        Gas is expensive because stable demand has been replaced by spikes based on renewable availability. I don't have any opportunity to get any renewable power - it's cold and there's no space for grid scale wind or solar.
        fsh 2y ago
        This doesn't make any sense. Germany has storage for more than a season's worth of natural gas. The price went up because Russia stopped selling cheap gas to western Europe after its attack on Ukraine.
        rrr_oh_man 2y ago
        > The price went up because Russia stopped selling cheap gas to western Europe after its attack on Ukraine. Is that really an honest way to frame this?
brylkarim 2y ago
I don’t think it’s as simple as that. Expensive legacy gas and nuclear plants provide base load power at scale. Something renewables don’t really do. These have to be built and the cost distributed across everyone who takes power from the grid. The shared model is what makes it more resilient and reliable.
- jillesvangurp 2y ago
  It is actually that simple. The current pricing system was created for a grid that no longer exists. There is now lots of wind generation, solar, battery power, etc. And growing rapidly. Both on the grid and domestic. And soon large amounts of batteries with wheels capable of powering houses and delivering power to the grid. All this means lots of fluctuations in power availability and cost. Pretending that it costs the same all the time everywhere is irrational. If you give people incentives to adapt to these fluctuations, they will. Energy providers like Octopus prove that at scale. They by the way are a big proponent of more localized power. Because it's just more optimal. Price incentives cause people and companies to adapt their behavior. Including when to to use power and where to use power. Likewise, it incentivizes power companies to invest in power generation where the demand is instead of where the NIMBY's are not (like Scottland). Speaking of NIMBY's, if they could benefit from lower pricing, they'd probably love wind power a lot more. Buy more electric cars, do the laundry when it's windy, etc. As for base load. Nobody ever specifies a number in GW or GWH. It's a very fuzzy notion that people just assert is needed in huge (unspecified) amounts. If you put actual numbers on it, you would be able to have a sane discussion on (much) cheaper alternatives. But that never happens. Most discussions around base load center on the notion that we allegedly need a lot of it. What's the budget we need to reserve for that? How much? When? Where? Why? Are there any alternatives? The debate is mostly completely irrational and hand wavy on this. There is a basic notion that power companies don't mind charging the same rate nationally because that means they make lots of money charging for mostly cheap power available everywhere except in a handful of places. The way the system works is that everybody pays the highest price on the system. Localized prices would introduce lots of variation and cause lots of reasons for power companies to optimize their power delivery and pricing. High prices mean unhappy customers voting with their feet. They are being shielded from that currently. It's a big reason they are resisting changes on this front. In some cases they actually get paid to not generate power or discard it. That's wasteful. Scottland has plenty of base load. They are exporting their power surplus most of the time.
jonatron 2y ago
To reduce curtailment, more transmission is required. However, the planning process is absolutely ridiculous, so multiple years of consultations are required before there's a chance anything might actually get built.
- barbegal 2y ago
  Which is why the UK is putting in subsea cables between Scotland and England despite the added cost.
  - samwillis 2y ago
    Yep, there are on-shore plans, but there is a lot of NIMBYism that results a resistance to these necessary projects.
    - seszett 2y ago
      Well I find it understandable. I was recently looking for a terrain to build a house and I didn't choose the one that was within the area for the new high voltage power line that they're planning. I bought another terrain in a slightly less interesting place nearby, but that is definitely not on the path of the power line. I think it's a normal reaction.
- yodelshady 2y ago
  Those transmission components are expected to cost the taxpayer at least £54 bn (https://www.bbc.co.uk/news/business-62085297 https://www.bbc.co.uk/news/business-62085297). Transmission, of course, doesn't solve storage, which, to quote the article, "can’t really be stored or stockpiled on an industrial scale". Because it can't. Batteries are orders of magnitude less than what is needed, as is hydro. Do you think anyone would be building mammoth turbines in the North of Scotland without access to the Southern markets? Oh yes please, I really want to invest several billion pounds in order to serve Ullapool and Wick, that makes my capitalist bones tingle. But "nuclear expensive", and of cause that isn't to do with the planning process at all. Not if you have a competing product to sell. The UK has the most expensive electricity in the developed world, and approximately 10 times the CO2 footprint per kWh of France, or of France since the 1980s. If the goal of the renewable energy policy was to be a world leader, it has dramatically failed.
paulhart 2y ago
You make an excellent point - so much so that it already exists today at the wholesale level in many markets. What you're describing is Locational Marginal Pricing (LMP) - a reasonable introduction is here: https://www.enverus.com/blog/an-intro-to-locational-marginal-pricing/ https://www.enverus.com/blog/an-intro-to-locational-marginal... In the wholesale market the biggest consideration is transmission capacity - if I can generate 100MW of electricity at $15/MW but the transmission line between me and the demand can only carry 20MW, and another generator can generate 100MW for $30/MW with excess transmission capacity to the demand, the price at the demand will lean heavily towards the $30/MW price. The same model could be applied to local grids as a way to "manage" residential solar installations for example; overcapacity is penalized through pricing signals (but if you throw in batteries so you can shift the release of electricity...).
xattt 2y ago
How is this partitioning implemented? Local “production-generation” can make sense at some level, but the mental model breaks down when you go back to the “water-in-a-lake” way of considering the grid. I assume that there is less electricity being moved on one end of a winding of some downstream transformer, but it could also be that we really don’t know.
- Retric 2y ago
  The grid can’t move infinite power through any one point. Substations and long distance transmission lines make local production a meaningful thing with real upsides. The overall grid avoids losses when power isn’t going through long distance transmission lines. Further as heat increases transmission losses and transmission losses produce heat, lowering the power sent through a long distance transmission line makes it more efficient.
TacticalCoder 2y ago
> Power suppliers don't like this because it favors cheaper sources of power that push their more expensive legacy generation out of the market. Meanwhile a common scam in several EU countries consists in having the power supplier that is either fully state-owned or officially a private company but actually state-ran behind the scenes and... They force you to give back any excess power for free to the grid. At the same time ofc they pass crazy laws mandating most of the energy generated to be sold for pennies on the dollar to other state ran companies, while then reselling it based on the price of... natural gas. It's quite the wonderful state-ran scam. Some politicians denounced that scam when electricity prices skyrocketted in France etc. a few years ago. So not only do they steal people's produced energy but they also make sure to resell it at an inflated price, while their little friends in fake privately owned companies are lining up their pockets (the scheme is very probably complete with illegal kickbacks to the politicians). I know not one but two person who have powering on on-demand... Cryptocurrency mining equipment (for some GPU based ones)! This way they make sure to not give back for free electricity to the state. Sucks but it's what it is. Wouldn't be that way if these people were paid for that excess energy. They simply don't want to encourage this government ran electricity scam.
- pclmulqdq 2y ago
  Yes, one of the problems of renewables is that they are highly correlated as to when they generate power, so the value of the power they produce (per kWh) is much lower than it would be if they were uncorrelated with each other. Since we have all invested so heavily in renewables, there is generally a huge amount of excess power generated at these peak times that has to be burned. The correct marginal price of those joules that have to be burned is $0. Providing that power back to the grid for free is about the right price for the power, and if you would like to be the one to burn it instead (because that is what the grid is doing with a lot of that power), I assume you are free to do so.
- UltraSane 2y ago
  "They force you to give back any excess power for free to the grid." If the power being generated is in excess of what the grid is consuming then it is worthless. I've seen people suggest installing bitcoin mining hardware directly inside wind turbines so they can consume excess electricity and make a profit.
belorn 2y ago
Two major problems that need to be considered with using localized pricing are sudden bidding wars and partitioning. Let's say locally you have a few factories when a sudden drop in supply occurs in the energy market. The biggest costs of those factories are personnel, equipment and building, so rather than shutting down they will be willing to pay much more for energy than what is rational in the market in order to continue producing and maintain contracts in the short term. Long term they may move away to a more energy stable and cheaper location, but for the next 10-20 years they will eat the occasional spike in price. Everyone else who locally live there can't eat a sudden 100x in energy costs, with the result that they will vote into office politicians that protect against such situations, and those politicians will in turn spread out the problem over a wider area where areas with stable supply of energy can help through funding (higher energy price) and transmit energy to areas with less stable energy. Alternatively they can pay their citizens' bills directly, as happened during the energy crisis a couple years ago, money that then get taken from the general budget (paid through taxes). The other issue is partitioning. The more local zones you get, the more borders you get between those zones. People living on the border will see a unreasonable price difference depending if their house/town/city happened to land on one side or the other. This feels unfair, which results in upset citizens, resulting in people voting in politicians that can fix the situation. Politicians then feel a pressure to even out the prices among the zones, using things like adjusting local taxes. As a general rule, the voting population want stable energy availability, stable prices and fair prices that are similar to everyone else.
- pclmulqdq 2y ago
  Power demand is often inelastic. There are many places in summer where people would pay $200/kWh to run a small air conditioning unit, for example, when their normal price of power is $0.10/kWh. There is no reason to shift toward generation sources that have price uncertainty when demand is inelastic like this. See the exact same thing in healthcare. The proper solution to this economic problem at a societal level is to have a predictable low price of available power.
  - sbierwagen 2y ago
    There are "many" places where people would pay US$200 to run an air conditioner for one hour?

Skeime 2y ago

Yeah, it’s the same in Germany. (And to add insult to injury, people in places with renewable generation often pay higher grid fees due to the investments necessary to connect all the new plants.)

baridbelmedar 2y ago
Yes, but that's partly a consequence of how the German electricity market operates and the neglected state of its infrastructure, isn't it? Wind power and other intermittent sources create grid instability, which drives up costs. And to my knowledge, Germany has chosen not to have different bidding markets within the country (or has at least kept prices consistent across its four markets) to protect vital industries in the west?
- thrw42A8N 2y ago
  This is how the energy grid operates everywhere, it's not some uniquely German mistake. Renewables require an incredibly huge grid investment - it's the same story they keep telling about external costs, only this time they don't want to hear it. I don't want to subsidize others' cheaper energy, I don't have any place to put my panels and batteries, I was happy with how it was before. But they would do anything to avoid the fees when they can.
  - jillesvangurp 2y ago
    Would you buy wind power if somebody provided that close to where you live? The way the system currently works is that you see no benefit at all if wind towers are close to where you live. Because somebody on the complete opposite side of the country only has access to gas power and the national prices are set for the highest price needed anywhere in the country. You are effectively subsidizing those people. Not the other way around. Your rates are high because gas is expensive and has to be shipped in in LNG form these days. No matter where you live in the country.
    - thrw42A8N 2y ago
      Gas is expensive because stable demand has been replaced by spikes based on renewable availability. I don't have any opportunity to get any renewable power - it's cold and there's no space for grid scale wind or solar.
      - fsh 2y ago
        This doesn't make any sense. Germany has storage for more than a season's worth of natural gas. The price went up because Russia stopped selling cheap gas to western Europe after its attack on Ukraine.
        rrr_oh_man 2y ago
        > The price went up because Russia stopped selling cheap gas to western Europe after its attack on Ukraine. Is that really an honest way to frame this?

brylkarim 2y ago

I don’t think it’s as simple as that. Expensive legacy gas and nuclear plants provide base load power at scale. Something renewables don’t really do. These have to be built and the cost distributed across everyone who takes power from the grid. The shared model is what makes it more resilient and reliable.

jillesvangurp 2y ago
It is actually that simple. The current pricing system was created for a grid that no longer exists. There is now lots of wind generation, solar, battery power, etc. And growing rapidly. Both on the grid and domestic. And soon large amounts of batteries with wheels capable of powering houses and delivering power to the grid. All this means lots of fluctuations in power availability and cost. Pretending that it costs the same all the time everywhere is irrational. If you give people incentives to adapt to these fluctuations, they will. Energy providers like Octopus prove that at scale. They by the way are a big proponent of more localized power. Because it's just more optimal. Price incentives cause people and companies to adapt their behavior. Including when to to use power and where to use power. Likewise, it incentivizes power companies to invest in power generation where the demand is instead of where the NIMBY's are not (like Scottland). Speaking of NIMBY's, if they could benefit from lower pricing, they'd probably love wind power a lot more. Buy more electric cars, do the laundry when it's windy, etc. As for base load. Nobody ever specifies a number in GW or GWH. It's a very fuzzy notion that people just assert is needed in huge (unspecified) amounts. If you put actual numbers on it, you would be able to have a sane discussion on (much) cheaper alternatives. But that never happens. Most discussions around base load center on the notion that we allegedly need a lot of it. What's the budget we need to reserve for that? How much? When? Where? Why? Are there any alternatives? The debate is mostly completely irrational and hand wavy on this. There is a basic notion that power companies don't mind charging the same rate nationally because that means they make lots of money charging for mostly cheap power available everywhere except in a handful of places. The way the system works is that everybody pays the highest price on the system. Localized prices would introduce lots of variation and cause lots of reasons for power companies to optimize their power delivery and pricing. High prices mean unhappy customers voting with their feet. They are being shielded from that currently. It's a big reason they are resisting changes on this front. In some cases they actually get paid to not generate power or discard it. That's wasteful. Scottland has plenty of base load. They are exporting their power surplus most of the time.

jonatron 2y ago

To reduce curtailment, more transmission is required. However, the planning process is absolutely ridiculous, so multiple years of consultations are required before there's a chance anything might actually get built.

barbegal 2y ago
Which is why the UK is putting in subsea cables between Scotland and England despite the added cost.
- samwillis 2y ago
  Yep, there are on-shore plans, but there is a lot of NIMBYism that results a resistance to these necessary projects.
  - seszett 2y ago
    Well I find it understandable. I was recently looking for a terrain to build a house and I didn't choose the one that was within the area for the new high voltage power line that they're planning. I bought another terrain in a slightly less interesting place nearby, but that is definitely not on the path of the power line. I think it's a normal reaction.
yodelshady 2y ago
Those transmission components are expected to cost the taxpayer at least £54 bn (https://www.bbc.co.uk/news/business-62085297 https://www.bbc.co.uk/news/business-62085297). Transmission, of course, doesn't solve storage, which, to quote the article, "can’t really be stored or stockpiled on an industrial scale". Because it can't. Batteries are orders of magnitude less than what is needed, as is hydro. Do you think anyone would be building mammoth turbines in the North of Scotland without access to the Southern markets? Oh yes please, I really want to invest several billion pounds in order to serve Ullapool and Wick, that makes my capitalist bones tingle. But "nuclear expensive", and of cause that isn't to do with the planning process at all. Not if you have a competing product to sell. The UK has the most expensive electricity in the developed world, and approximately 10 times the CO2 footprint per kWh of France, or of France since the 1980s. If the goal of the renewable energy policy was to be a world leader, it has dramatically failed.

paulhart 2y ago

You make an excellent point - so much so that it already exists today at the wholesale level in many markets. What you're describing is Locational Marginal Pricing (LMP) - a reasonable introduction is here: https://www.enverus.com/blog/an-intro-to-locational-marginal-pricing/ https://www.enverus.com/blog/an-intro-to-locational-marginal... In the wholesale market the biggest consideration is transmission capacity - if I can generate 100MW of electricity at $15/MW but the transmission line between me and the demand can only carry 20MW, and another generator can generate 100MW for $30/MW with excess transmission capacity to the demand, the price at the demand will lean heavily towards the $30/MW price. The same model could be applied to local grids as a way to "manage" residential solar installations for example; overcapacity is penalized through pricing signals (but if you throw in batteries so you can shift the release of electricity...).

xattt 2y ago

How is this partitioning implemented? Local “production-generation” can make sense at some level, but the mental model breaks down when you go back to the “water-in-a-lake” way of considering the grid. I assume that there is less electricity being moved on one end of a winding of some downstream transformer, but it could also be that we really don’t know.

Retric 2y ago
The grid can’t move infinite power through any one point. Substations and long distance transmission lines make local production a meaningful thing with real upsides. The overall grid avoids losses when power isn’t going through long distance transmission lines. Further as heat increases transmission losses and transmission losses produce heat, lowering the power sent through a long distance transmission line makes it more efficient.

TacticalCoder 2y ago

> Power suppliers don't like this because it favors cheaper sources of power that push their more expensive legacy generation out of the market. Meanwhile a common scam in several EU countries consists in having the power supplier that is either fully state-owned or officially a private company but actually state-ran behind the scenes and... They force you to give back any excess power for free to the grid. At the same time ofc they pass crazy laws mandating most of the energy generated to be sold for pennies on the dollar to other state ran companies, while then reselling it based on the price of... natural gas. It's quite the wonderful state-ran scam. Some politicians denounced that scam when electricity prices skyrocketted in France etc. a few years ago. So not only do they steal people's produced energy but they also make sure to resell it at an inflated price, while their little friends in fake privately owned companies are lining up their pockets (the scheme is very probably complete with illegal kickbacks to the politicians). I know not one but two person who have powering on on-demand... Cryptocurrency mining equipment (for some GPU based ones)! This way they make sure to not give back for free electricity to the state. Sucks but it's what it is. Wouldn't be that way if these people were paid for that excess energy. They simply don't want to encourage this government ran electricity scam.

pclmulqdq 2y ago
Yes, one of the problems of renewables is that they are highly correlated as to when they generate power, so the value of the power they produce (per kWh) is much lower than it would be if they were uncorrelated with each other. Since we have all invested so heavily in renewables, there is generally a huge amount of excess power generated at these peak times that has to be burned. The correct marginal price of those joules that have to be burned is $0. Providing that power back to the grid for free is about the right price for the power, and if you would like to be the one to burn it instead (because that is what the grid is doing with a lot of that power), I assume you are free to do so.
UltraSane 2y ago
"They force you to give back any excess power for free to the grid." If the power being generated is in excess of what the grid is consuming then it is worthless. I've seen people suggest installing bitcoin mining hardware directly inside wind turbines so they can consume excess electricity and make a profit.

belorn 2y ago

Two major problems that need to be considered with using localized pricing are sudden bidding wars and partitioning. Let's say locally you have a few factories when a sudden drop in supply occurs in the energy market. The biggest costs of those factories are personnel, equipment and building, so rather than shutting down they will be willing to pay much more for energy than what is rational in the market in order to continue producing and maintain contracts in the short term. Long term they may move away to a more energy stable and cheaper location, but for the next 10-20 years they will eat the occasional spike in price. Everyone else who locally live there can't eat a sudden 100x in energy costs, with the result that they will vote into office politicians that protect against such situations, and those politicians will in turn spread out the problem over a wider area where areas with stable supply of energy can help through funding (higher energy price) and transmit energy to areas with less stable energy. Alternatively they can pay their citizens' bills directly, as happened during the energy crisis a couple years ago, money that then get taken from the general budget (paid through taxes). The other issue is partitioning. The more local zones you get, the more borders you get between those zones. People living on the border will see a unreasonable price difference depending if their house/town/city happened to land on one side or the other. This feels unfair, which results in upset citizens, resulting in people voting in politicians that can fix the situation. Politicians then feel a pressure to even out the prices among the zones, using things like adjusting local taxes. As a general rule, the voting population want stable energy availability, stable prices and fair prices that are similar to everyone else.

pclmulqdq 2y ago
Power demand is often inelastic. There are many places in summer where people would pay $200/kWh to run a small air conditioning unit, for example, when their normal price of power is $0.10/kWh. There is no reason to shift toward generation sources that have price uncertainty when demand is inelastic like this. See the exact same thing in healthcare. The proper solution to this economic problem at a societal level is to have a predictable low price of available power.
- sbierwagen 2y ago
  There are "many" places where people would pay US$200 to run an air conditioner for one hour?