10 ms·

Maximizing Battery Storage Profits via High-Frequency Intraday Trading

283 points by doener 1y ago

dachworker 1y ago
I'm not at all familiar with this whole field, but why would you publish a trading strategy if it has potential? Why not sell it to a hedgefund, at least? Or is this research formally publishing what industry is already doing?
- h4kor 1y ago
  This isn't a trade "just on paper". You need real hardware integrated into the grid.
- throw-qqqqq 1y ago
  Seemingly profitable strategies are actually published all the time in finance literature. Some also work (usually only for a short amount of time if profitable), most don’t really work at all for various technical reasons (lookahead bias, model doesn’t account for slip/trading costs or assume infinite liquidity or a portfolio too large to realistically rebalance etc.) and some again work, but have unfavorable risk-adjusted return profiles compared to simpler strategies.
  - deleted 1y ago
    [deleted]
  - yxhuvud 1y ago
    Or in the case of batteries: Requires a whole lot of hardware to be bought to get a reasonable economy of scale.
    - throw-qqqqq 1y ago
      True and batteries have their own characteristics. They do not last forever, have inefficiency/loss (order(s) of magnitude larger than slippage/fees) etc. It can seem like the Wild West with many opportunities for arbitrage, but there are practical challenges. Many countries prefer to improve energy infrastructure through private initiatives, and this is one of the incentives as I see it: If you get a foothold, profitable trades can be made with only limited competition. This should also help decrease volatility of electricity-prices, as predictable fluctuations gets evened out from arbitrageurs.
- Gys 1y ago
  Is the trading strategy making substantial returns (at least a few percent) on the full investment (batteries, electronics, subscriptions)? Otherwise this is only relevant for battery owners that benefit already by other means (using the battery at night for home owners, for example).
- Energiekomin 1y ago
  The authors are from universities. Publicly funded. And its not like they can just do that and get rich. Its particular for/with battery storage systems. Basically making battery storage systems more interesting for investors to invest into.
- loehnsberg 1y ago
  There‘s still a lot of work left to do to go from an academic prototype to live trading: real-time data, market access, SCADA, compliance & legal, security, … Also you must be a physical player that owns the battery and/or right to use it and not just do paper trading.
  - 7thaccount 1y ago
    There is "virtual" (paper) trading in the day ahead markets in the US, but it's just for amounts of energy. You can't make a fake battery for the grid operator to optimize.
- chardz 1y ago
  On top of what others have mentioned, this paper also sidesteps forecasting electricity prices, which is already a very complicated problem (particularly in U.S markets where we have zonal pricing) needed to build profitable battery systems that actually operate on the grid. I've had a few chats with some folks working on battery startups, and I think the more conventional approach is to forecast prices + run an optimization to find optimal storage decisions. You could measure the system's performance by looking at how well the algorithm does when it has perfect information about prices (obviously, when you have perfect information about prices it is trivial to optimize the battery).
  - dschaurecker 1y ago
    Our two follow-up papers are addressing exactly this (for Europe)! We are extending our high-frequency continuous intraday approach (CID) with a forecast-based day-ahead bidding stage, and subsequent CID forecast updates. I'd also be quite interested in strategies for grid-scale BESS trading in the US' real-time markets. Do you know more about it, or could forward me to someone who would be willing to talk about it? ;)
    - chardz 1y ago
      I'm afraid I'm not too familiar with BESS in particular, and the people I spoke to are probably not too keen on sharing much (which is generally true of those who work in U.S markets). Unfortunately it's all very opaque. I'd be happy to provide you the names of the firms I spoke to over email, if that would be of use!
      - dschaurecker 1y ago
        Yes thank you, that would be at least slightly more refined than me just randomly writing companies which might be relevant! My email is dschaurecker(at)gmail.com, thanks again :)
- dschaurecker 1y ago
  Most real-world optimizations for flexible storage assets currently work across multiple markets, sometimes also with more sophisticated boundary conditions. What we show is that high-frequency trading on the continuous intraday market is relevant, especially when training for more optimal parametrized strategies. It also seems like a sensible idea to publish details and theories about an idea, not necessarily a finished trading product though ;)
- mhh__ 1y ago
  1) It doesn't actually work 2) It's worth more to your career 3) Selling a strategy to a hedge fund as a stranger is, unless they hire you, probably a good few months of umming and ahhing and paperwork.
buu700 1y ago
This sounds similar to something I suggested at one point: https://news.ycombinator.com/item?id=38669706 https://news.ycombinator.com/item?id=38669706 Imagine software that could run on EVs, Powerwall-type batteries, computers/tablets/smartphones, and so on, which would automatically charge and discharge for passive income. Essentially algorithmic trading, but with power instead of stock. You'd just have to configure any necessary time ranges and charge percentages, e.g. maybe your EV needs to be at 25% by 8am and again by 5pm on weekdays in order to make your daily commute. Maybe some EVs will start to come with built-in crypto miners to burn negatively priced power when the battery is at capacity. Maybe Lyft/Uber and Waymo/Cruise will take advantage of it by increasing and lowering rates based on the price of power (if they don't already).
- Energiekomin 1y ago
  Thats what bi-directional charging is for and its already becoming political to force the industry to support this. And we already have energy provider which provide a tarif for exactly this. The only idea i hate is the mentioning of crypto. Not only is it waste, it converts the energy in heat which needs to get disipated and potentially wastes even more energy to get this heat away from the current location (ac).
- 7thaccount 1y ago
  Sorry to be the bearer of bad news, but this isn't novel and something that's been talked about for a long time. The industry term I've most heard is "prices to devices". You of course need retail to participate more in the wholesale markets, but there are a lot of barriers - some technological, some regulatory. Some companies did this in ERCOT, but there was a big backlash when customers got $20k bills after Winter Storm Uri as they didn't understand what they were signing up for. The FERC passed Order 2222 which is a bigger step in that direction by forcing the regional wholesale markets to allow aggregators to aggregate up the smaller stuff that is normally considered noise.
  - buu700 1y ago
    Interesting, thanks. That doesn't sound like bad news at all.
amluto 1y ago
> However, because it is physically not possible to charge and discharge the battery at the same time, such trades have to be prevented. The authors are observing that, if electricity prices are negative and your battery is not perfectly efficient, then you would like to charge and discharge simultaneously to get paid for wasting energy, but you can’t. This is a silly limitation. Surely the power electronics or even just the control algorithms in a BESS could be slightly modified to consume power, get warm, and not transfer any current to or from the battery cells, effectively taking advantage of the BESS’s heat sink to sink excess power and sell that service. More seriously, in a world with occasional negative prices, you would want your battery to be able discharge itself, without exporting power, in a controlled and power-limited manner so as to avoid overheating. And the optimization algorithms should factor this in. I wonder if real grid-scale BESS systems have this capability.
- fluorinerocket 1y ago
  Find area near shore, stick two big electrodes in water a mile apart, energize circuit when price is negative, profit!
  - idiotsecant 1y ago
    I am in the power generation industry and I have honestly wondered why nobody does this. I figure getting the interconnect big enough to make meaningful money is both prohibitively expensive and a lengthy delay.
    - CoastalCoder 1y ago
      Or put them closer together and generate all of the chlorine gas, H2, and O2 a girl could want!
- triceratops 1y ago
  If you have free energy the obvious thing to use it for is carbon capture.
elzbardico 1y ago
Jesus! Why finance people are so hell-bent in extracting rent from every single thing, pervert it, make sure the incentives are all pointed to the shortest run while socializing all the costs to the rest of us?
- lazide 1y ago
  Smart People with money are willing to give it to people if they can make them more money. Why would anyone give them money if they were just going to throw up their hands and go ‘well, nothing we can do I guess!’. There is of course the risk that the money gets burned instead of more money getting made, which is the risk in risk/reward. Rent seeking type behavior tends to happen when there are no obvious ‘green field’ type endeavors to invest in. Or when risk appetites are trending negative. Note - many of those people with money that want to use it to make more money are retirees, pension funds, etc.
- ic_fly2 1y ago
  More money made with batteries means more batteries installed. How is that a bad thing?
  - cess11 1y ago
    Profit motive commonly has obscene consequences, like destroying food instead of using it to feed the hungry.
    - yxhuvud 1y ago
      While true that it happens in certain cases, the onus of showing that it would be the case in this specific case is still on you.
      - cess11 1y ago
        I basically just did, that's how markets of this kind work. If it is more profitable to warm the wind along a mountain side than some cold person, then that person will stay cold. Poverty and misery in the world are mainly caused by this kind of mechanism.
mellow_observer 1y ago
A world where individuals are incentivized to use some wasted space to place low maintenance automated trading batteries to make a little money on the side seems like it'd be an interesting solution to the renewable energy storage problem. Put a few units in otherwise useless locations like on roofs or in between highways and make some cash, sounds like a decent investment. Would there be any expected problems in doing such distributed power storage on a very large scale around the grid that you'd have to account for? Perhaps issues with synchronization, power flow or the possibility of large scale drops in avaialble stored power at times?
- fifilura 1y ago
  Or preferably your EV? Requires no extra space or extra investment...
- soared 1y ago
  Outside of the grid level, maintenance, security, and safety of batteries is important. Many Americans have a garage to securely store their $30k+ car, bike/etc - similar security may be necessary (literally or for the feels) for expensive batteries.
  - deleted 1y ago
    [deleted]
asdffdsalkj 1y ago
[dead]
ic_fly2 1y ago
I have programmed batteries / algos to do this in some European markets. This is being done right now. The yield you could make from batteries in the UK dropped from double digits to 2% in 8months once some hedge funds figured out how to build and bid (or commission companies like my employer) batteries in the UK short term reserve market. There are a few firms in northern Jutland and London specialised in this sort of trading.
- Horffupolde 1y ago
  That’s yield over what base?
- baq 1y ago
  At least the grid is better off and it’s not all approximately zero sum…
  - bob1029 1y ago
    I'd make the same argument for the other markets they operate in.
    - baq 1y ago
      The REIT ones e.g. are much less clearly positive than this and e.g. the variance swap and co. folks at least have the decency to be so exotic that nobody cares either way.
  - friendzis 1y ago
    That's a very bold statement. Huge part of the reason why negative prices exist in the first place is separation of generation and transmission. With pay-as-clear model negligible-variable-costs generators (i.e. renewables) can bid at zero and pump more into the grid than the local segment can drain, requiring artificial balancing sinks. However, the cost of artificial sinks fall on the grid as transmission costs and are not reflected in the wholesale market.
- deleted 1y ago
  [deleted]
ada1981 1y ago
If anyone is interested in Batteries, I highly recommend following NAATBATT.org on LinkedIn and joining their newsletter. Obama set this org up as a senator to help bring lithium ion batteries supply chain to the US and it since evolved into the trade association for all things batteries. https://www.linkedin.com/company/naatbatt-international/ https://www.linkedin.com/company/naatbatt-international/
saltspork 1y ago
In Australia 5 minute spot pricing is now accessible to many residential customers via retailers like Amber electric. With volatile pricing and a large home battery subsidy from the re-elected government, batteries can quickly pay for themselves through arbitrage alone. EMHASS is an interesting tool to perform the optimisation.
- jakewins 1y ago
  Similarly in Europe; spot market with a big single pay-as-cleared spot auction for every quarter-hour, and then a continuous auction for the same periods closer to delivery, similar to the normal stock market. Millions of residential devices are traded there right now
- philjohn 1y ago
  Yep, been using EMHASS for the last couple of years in the UK. I have a large array (12.8kWp east/west split) but a low export limit of 5kW. In the winter it's charging overnight at 7p per kWh (Intelligent Octopus Go) and then using that stored energy during the day to avoid importing at peak rates, and in the summer it makes sure to discharge most of the battery before the peak generation hours so that battery charges from power which would otherwise be curtailed (discharge to minimise import on my SolarEdge system, but charge from clipped power would also work).
  - deleted 1y ago
    [deleted]
potatoicecoffee 1y ago
seems dumb to have electricity needing to be wasted when there is seawater to desalinate
- Majromax 1y ago
  > seems dumb to have electricity needing to be wasted when there is seawater to desalinate That's a much more complicated problem. On an energy market, you have only one price to look at, and the battery operator can always buy, sell, or hold energy. The article here talks about optimizing this problem at 5-minute to several-hour intervals. If you drop excess power into desalination, however, now you have two prices to worry about: energy and water. I also doubt we have 5-minute spot markets for water, so the operator must probably commit to some medium-term water delivery regardless of price. This means that a desalinating firm takes on much more risk. This might still be profitable, but it's a long-term play based on a deep model of expected energy prices (i.e. knowing that energy is "always" almost free at noon in summer) rather than short-term time-shifting.
  - mikeyouse 1y ago
    Desal plants are also extraordinarily expensive and need to operate at very high 'capacity factors' in order to payoff the capital investment that was required to build them. Operating for a a few hours every day because your operating costs are low/negative only works if you don't have a hugely expensive piece of infrastructure depreciating as you wait for those prices to come down.
    - amoshebb 1y ago
      could we build them different if the goal is just to waste excess energy? Why couldn’t it just be a giant heating element and some sort of steam condenser at the top and some way to flush it periodically? It might burn some laughable 3kWh per kg of water, but who cares? every water utility on the coast could add a few megawatts of tea kettles and get opportunistic little splashes of water in volumes small enough they can probably already handle them and the brine discharge would be so small, disperse, and infrequent it’d be easier to deal with, and it’d basically cost nothing
brilee 1y ago
For those of you suggesting we use the extra energy for $pet_topic I suggest reading https://www.moderndescartes.com/essays/factobattery/ https://www.moderndescartes.com/essays/factobattery/ Tldr: most applications of free energy have capital costs that far outweigh the free energy harvest potential.
thelastgallon 1y ago
Just use EVs. EVs are primarily energy storage devices, some people get to drive them about 20 - 30 mins/day. The remaining 23 hours, it is a energy storage device. It can absorb excess power when price is negative, and can even supply power back to the grid when prices are high!
- bee_rider 1y ago
  This seems like building more batteries (just, with extra hardware). An EV could be good for this sort of thing, but I guess it would have to sit around at less than 100% charge, to have the capacity.
  - bufferoverflow 1y ago
    We almost never charge our EV to 100%, to not degrade the battery faster.
    - bee_rider 1y ago
      But, if you are going to offer “absorbing energy from the grid as a service” the capacity you have to offer can only be <absolute max that you are willing to charge your battery to> - <minimum that you are willing have your battery sitting at> There definitely could be some gap there, but it does depend on the car sitting at less than “full” (however you define full).
- two_handfuls 1y ago
  Yes, exactly this has been proposed with "smart car chargers," along with other things you can do if the grid operator has some control over a bunch of grid-connected equipment. It hasn't taken off as far as I know, probably because that means the car battery wears out more. The "virtual power plants" are the closest thing to this idea that is actually done in practice. That's individuals who own batteries joining some collective that then sells to the grid the ability to reduce demand a bit. Tesla did a pilot program with its Powerwalls iirc.
- rafaelmn 1y ago
jillesvangurp 1y ago
Battery production rates are creeping up to multiple twh/year now. This is accumulating to a lot of battery sitting around in vehicles, domestic storage, grid storage, etc. Mostly the goal of these batteries of course isn't supporting the grid but some other use case. But if it's plugged in, it could potentially be available for selling power. Right now, most EVs can't contribute power. But that's something that is starting to change. Small experiments with thousands or tens of thousands of vehicles have already been done and seem to work fine. Now imagine tens of millions of vehicles being part of the grid. That's a serious amount of stand by power for absorbing excess power or dispatching power when needed. Another interesting aspect is that as grid demand fluctuates, a lot of cables are under utilized at least some of the time. Which means there is plenty of capacity for charging batteries provided there is excess generation and cable capacity. A lot of that power currently gets discarded instead. Batteries allow better use of this excess power. And having a lot of local battery means that cable capacity can be freed up as well when needed and then recharged when demand reduces. And then finally battery prices are coming down. With sodium ion cell production ramping up in several places, things could get quite a bit cheaper. These don't depend on scarce metals or materials. And they last quite long as well (relative to NMC).
- mschuster91 1y ago
  > That's a serious amount of stand by power for absorbing excess power or dispatching power when needed. ... and a serious issue should one of the few large manufacturers or remote-control dispatcher/trader companies get hacked. The outage in Spain a few weeks ago was just a small warning, probably caused by a technical malfunction. But now imagine this being used as a side track in an act of war? The first day of the Russian invasion of Ukraine was accompanied by the hack of Viasat satellites, which led to 5.800 wind turbines shutting down due to a lack of remote control capabilities [1]. Now imagine the large Chinese inverter and power bank controller vendors that often enough just white-label for other brands? That's a whole lot of a different game now. [1] https://en.wikipedia.org/wiki/Viasat_hack https://en.wikipedia.org/wiki/Viasat_hack
  - toast0 1y ago
    > and a serious issue should one of the few large manufacturers or remote-control dispatcher/trader companies get hacked. The outage in Spain a few weeks ago was just a small warning, probably caused by a technical malfunction. If everyone agrees, you can use grid frequency/phase to coordinate, and not a separate realtime communication system. Grid interactive demand/response is a proven way to manage supply and load. When your section of the grid is stressed, supply power or abstain from charging; when your section of the grid is abundant, charge. Coordination is useful too, of course; predictive charging is helpful, and you wouldn't get that only by monitoring the grid; you also want to know somehow that a supply or load is scheduled to be added or removed at time X, or was unexpectedly removed and will not be reconnected for some time. And the system operator would want to know about capacity in many dimensions.
Aeroi 1y ago
pretty sure nodal energy market trading, duck curve arbitrage is the whole profit play for the tesla power wall/autobidder and the Base Power startup coming out of ERCOT. There is definitely a land rush from energy firms and GIS guys to front run land purchasing near solar buildouts and to build as much grid scale battery storage as possible. The percent swings can be huge. Also a huge rush for this in the Northeast now that the offshore wind contracts have been cancelled.
- ccheney 1y ago
  I find Autobidder fascinating, they've been at this for awhile. When I saw this HN post I thought the paper may have come from Tesla themselves. https://www.tesla.com/support/energy/tesla-software/autobidder https://www.tesla.com/support/energy/tesla-software/autobidd... https://www.tesla.com/support/energy/tesla-software https://www.tesla.com/support/energy/tesla-software
msgodel 1y ago
Energy futures you say? Oh boy I've heard this one before...
- NooneAtAll3 1y ago
  explain?
  - msgodel 1y ago
    That's what the infamous company Enron was running: simultaneous energy futures brokerage and market making. Their market making part blew up and they hid it from everyone for a while until the rest of the company did. It was a massive scandal. It was pretty similar to what FTX was doing just with energy instead of crypto.
- Dylan16807 1y ago
  That kind of association is why you can buy futures in just about every crop except onions. The fact that you can structure fraud around a specific kind of future doesn't make them special or a bad idea. One major fraud should not bias us forever.
dschaurecker 1y ago
Thank you all for the interest in our paper, it is cool to see that people are interested in the topic!
b0a04gl 1y ago
> “Our method is able to solve over 24 million optimization problems in less than 90 minutes.” that line is doing heavy lifting. sounds insane until you look closer they batch out embarrassingly parallel, lowdimensional problems no live latencies, no network I/O, no grid API jitter. just hammering a static dataset in memory. real markets stall, disconnect, price slippage, queue delays. none of that here. so yeah, 24 million looks cool in the abstract, but under the hood it's just cleanroom compute; feels like they optimised the benchmark more than the actual system
- loehnsberg 1y ago
  Assuming you add all the annoying details that algo trade execution brings, the algorithm still provides the answer on which position to take within a few microseconds, which is what you want if you trade in a limit order book.
  - b0a04gl 1y ago
    true, you want microsecond decisions at the core, no doubt ; but that’s only half the game. an ideal action in clean memory isn’t the same once it hits fragmented liquidity, stale quotes, partial fills. if the algo doesn’t account for execution drift or book pressure post-placement, the microsecond edge fades fast. so yeah, fast compute’s necessary but not sufficient without modelling the messy tail end too
    - dschaurecker 1y ago
      This is also why we make the strong argument of why this method is useful mainly for backtesting new parametrizations or forecasts. Actually trading live below the second-mark, currently does not seem to be very beneficial on the continuous intraday market (even in a sterile backtesting scenario).
julienb_sea 1y ago
Energy overproduction is going to become a serious viability problem for baseload generators, which in time will significantly affect grid reliability. Rolling blackouts will become the norm unless we figure out a serious scalable solution to this.
adds68 1y ago
https://octopusenergy.group/kraken-flex https://octopusenergy.group/kraken-flex This is already being done at an industrial scale in the UK
1Sebastian 1y ago
[dead]

283 points by doener 1y ago

I'm not at all familiar with this whole field, but why would you publish a trading strategy if it has potential? Why not sell it to a hedgefund, at least? Or is this research formally publishing what industry is already doing?

h4kor 1y ago
This isn't a trade "just on paper". You need real hardware integrated into the grid.
throw-qqqqq 1y ago
Seemingly profitable strategies are actually published all the time in finance literature. Some also work (usually only for a short amount of time if profitable), most don’t really work at all for various technical reasons (lookahead bias, model doesn’t account for slip/trading costs or assume infinite liquidity or a portfolio too large to realistically rebalance etc.) and some again work, but have unfavorable risk-adjusted return profiles compared to simpler strategies.
- deleted 1y ago
  [deleted]
- yxhuvud 1y ago
  Or in the case of batteries: Requires a whole lot of hardware to be bought to get a reasonable economy of scale.
  - throw-qqqqq 1y ago
    True and batteries have their own characteristics. They do not last forever, have inefficiency/loss (order(s) of magnitude larger than slippage/fees) etc. It can seem like the Wild West with many opportunities for arbitrage, but there are practical challenges. Many countries prefer to improve energy infrastructure through private initiatives, and this is one of the incentives as I see it: If you get a foothold, profitable trades can be made with only limited competition. This should also help decrease volatility of electricity-prices, as predictable fluctuations gets evened out from arbitrageurs.
Gys 1y ago
Is the trading strategy making substantial returns (at least a few percent) on the full investment (batteries, electronics, subscriptions)? Otherwise this is only relevant for battery owners that benefit already by other means (using the battery at night for home owners, for example).
Energiekomin 1y ago
The authors are from universities. Publicly funded. And its not like they can just do that and get rich. Its particular for/with battery storage systems. Basically making battery storage systems more interesting for investors to invest into.
loehnsberg 1y ago
There‘s still a lot of work left to do to go from an academic prototype to live trading: real-time data, market access, SCADA, compliance & legal, security, … Also you must be a physical player that owns the battery and/or right to use it and not just do paper trading.
- 7thaccount 1y ago
  There is "virtual" (paper) trading in the day ahead markets in the US, but it's just for amounts of energy. You can't make a fake battery for the grid operator to optimize.
chardz 1y ago
On top of what others have mentioned, this paper also sidesteps forecasting electricity prices, which is already a very complicated problem (particularly in U.S markets where we have zonal pricing) needed to build profitable battery systems that actually operate on the grid. I've had a few chats with some folks working on battery startups, and I think the more conventional approach is to forecast prices + run an optimization to find optimal storage decisions. You could measure the system's performance by looking at how well the algorithm does when it has perfect information about prices (obviously, when you have perfect information about prices it is trivial to optimize the battery).
- dschaurecker 1y ago
  Our two follow-up papers are addressing exactly this (for Europe)! We are extending our high-frequency continuous intraday approach (CID) with a forecast-based day-ahead bidding stage, and subsequent CID forecast updates. I'd also be quite interested in strategies for grid-scale BESS trading in the US' real-time markets. Do you know more about it, or could forward me to someone who would be willing to talk about it? ;)
  - chardz 1y ago
    I'm afraid I'm not too familiar with BESS in particular, and the people I spoke to are probably not too keen on sharing much (which is generally true of those who work in U.S markets). Unfortunately it's all very opaque. I'd be happy to provide you the names of the firms I spoke to over email, if that would be of use!
    - dschaurecker 1y ago
      Yes thank you, that would be at least slightly more refined than me just randomly writing companies which might be relevant! My email is dschaurecker(at)gmail.com, thanks again :)
dschaurecker 1y ago
Most real-world optimizations for flexible storage assets currently work across multiple markets, sometimes also with more sophisticated boundary conditions. What we show is that high-frequency trading on the continuous intraday market is relevant, especially when training for more optimal parametrized strategies. It also seems like a sensible idea to publish details and theories about an idea, not necessarily a finished trading product though ;)
mhh__ 1y ago
1) It doesn't actually work 2) It's worth more to your career 3) Selling a strategy to a hedge fund as a stranger is, unless they hire you, probably a good few months of umming and ahhing and paperwork.

buu700 1y ago

This sounds similar to something I suggested at one point: https://news.ycombinator.com/item?id=38669706 https://news.ycombinator.com/item?id=38669706 Imagine software that could run on EVs, Powerwall-type batteries, computers/tablets/smartphones, and so on, which would automatically charge and discharge for passive income. Essentially algorithmic trading, but with power instead of stock. You'd just have to configure any necessary time ranges and charge percentages, e.g. maybe your EV needs to be at 25% by 8am and again by 5pm on weekdays in order to make your daily commute. Maybe some EVs will start to come with built-in crypto miners to burn negatively priced power when the battery is at capacity. Maybe Lyft/Uber and Waymo/Cruise will take advantage of it by increasing and lowering rates based on the price of power (if they don't already).

Energiekomin 1y ago
Thats what bi-directional charging is for and its already becoming political to force the industry to support this. And we already have energy provider which provide a tarif for exactly this. The only idea i hate is the mentioning of crypto. Not only is it waste, it converts the energy in heat which needs to get disipated and potentially wastes even more energy to get this heat away from the current location (ac).
7thaccount 1y ago
Sorry to be the bearer of bad news, but this isn't novel and something that's been talked about for a long time. The industry term I've most heard is "prices to devices". You of course need retail to participate more in the wholesale markets, but there are a lot of barriers - some technological, some regulatory. Some companies did this in ERCOT, but there was a big backlash when customers got $20k bills after Winter Storm Uri as they didn't understand what they were signing up for. The FERC passed Order 2222 which is a bigger step in that direction by forcing the regional wholesale markets to allow aggregators to aggregate up the smaller stuff that is normally considered noise.
- buu700 1y ago
  Interesting, thanks. That doesn't sound like bad news at all.

amluto 1y ago

> However, because it is physically not possible to charge and discharge the battery at the same time, such trades have to be prevented. The authors are observing that, if electricity prices are negative and your battery is not perfectly efficient, then you would like to charge and discharge simultaneously to get paid for wasting energy, but you can’t. This is a silly limitation. Surely the power electronics or even just the control algorithms in a BESS could be slightly modified to consume power, get warm, and not transfer any current to or from the battery cells, effectively taking advantage of the BESS’s heat sink to sink excess power and sell that service. More seriously, in a world with occasional negative prices, you would want your battery to be able discharge itself, without exporting power, in a controlled and power-limited manner so as to avoid overheating. And the optimization algorithms should factor this in. I wonder if real grid-scale BESS systems have this capability.

fluorinerocket 1y ago
Find area near shore, stick two big electrodes in water a mile apart, energize circuit when price is negative, profit!
- idiotsecant 1y ago
  I am in the power generation industry and I have honestly wondered why nobody does this. I figure getting the interconnect big enough to make meaningful money is both prohibitively expensive and a lengthy delay.
  - CoastalCoder 1y ago
    Or put them closer together and generate all of the chlorine gas, H2, and O2 a girl could want!
triceratops 1y ago
If you have free energy the obvious thing to use it for is carbon capture.

elzbardico 1y ago

Jesus! Why finance people are so hell-bent in extracting rent from every single thing, pervert it, make sure the incentives are all pointed to the shortest run while socializing all the costs to the rest of us?

lazide 1y ago
Smart People with money are willing to give it to people if they can make them more money. Why would anyone give them money if they were just going to throw up their hands and go ‘well, nothing we can do I guess!’. There is of course the risk that the money gets burned instead of more money getting made, which is the risk in risk/reward. Rent seeking type behavior tends to happen when there are no obvious ‘green field’ type endeavors to invest in. Or when risk appetites are trending negative. Note - many of those people with money that want to use it to make more money are retirees, pension funds, etc.
ic_fly2 1y ago
More money made with batteries means more batteries installed. How is that a bad thing?
- cess11 1y ago
  Profit motive commonly has obscene consequences, like destroying food instead of using it to feed the hungry.
  - yxhuvud 1y ago
    While true that it happens in certain cases, the onus of showing that it would be the case in this specific case is still on you.
    - cess11 1y ago
      I basically just did, that's how markets of this kind work. If it is more profitable to warm the wind along a mountain side than some cold person, then that person will stay cold. Poverty and misery in the world are mainly caused by this kind of mechanism.

mellow_observer 1y ago

A world where individuals are incentivized to use some wasted space to place low maintenance automated trading batteries to make a little money on the side seems like it'd be an interesting solution to the renewable energy storage problem. Put a few units in otherwise useless locations like on roofs or in between highways and make some cash, sounds like a decent investment. Would there be any expected problems in doing such distributed power storage on a very large scale around the grid that you'd have to account for? Perhaps issues with synchronization, power flow or the possibility of large scale drops in avaialble stored power at times?

fifilura 1y ago
Or preferably your EV? Requires no extra space or extra investment...
soared 1y ago
Outside of the grid level, maintenance, security, and safety of batteries is important. Many Americans have a garage to securely store their $30k+ car, bike/etc - similar security may be necessary (literally or for the feels) for expensive batteries.
- deleted 1y ago
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asdffdsalkj 1y ago

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ic_fly2 1y ago

I have programmed batteries / algos to do this in some European markets. This is being done right now. The yield you could make from batteries in the UK dropped from double digits to 2% in 8months once some hedge funds figured out how to build and bid (or commission companies like my employer) batteries in the UK short term reserve market. There are a few firms in northern Jutland and London specialised in this sort of trading.

Horffupolde 1y ago
That’s yield over what base?
baq 1y ago
At least the grid is better off and it’s not all approximately zero sum…
- bob1029 1y ago
  I'd make the same argument for the other markets they operate in.
  - baq 1y ago
    The REIT ones e.g. are much less clearly positive than this and e.g. the variance swap and co. folks at least have the decency to be so exotic that nobody cares either way.
- friendzis 1y ago
  That's a very bold statement. Huge part of the reason why negative prices exist in the first place is separation of generation and transmission. With pay-as-clear model negligible-variable-costs generators (i.e. renewables) can bid at zero and pump more into the grid than the local segment can drain, requiring artificial balancing sinks. However, the cost of artificial sinks fall on the grid as transmission costs and are not reflected in the wholesale market.
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ada1981 1y ago

If anyone is interested in Batteries, I highly recommend following NAATBATT.org on LinkedIn and joining their newsletter. Obama set this org up as a senator to help bring lithium ion batteries supply chain to the US and it since evolved into the trade association for all things batteries. https://www.linkedin.com/company/naatbatt-international/ https://www.linkedin.com/company/naatbatt-international/

saltspork 1y ago

In Australia 5 minute spot pricing is now accessible to many residential customers via retailers like Amber electric. With volatile pricing and a large home battery subsidy from the re-elected government, batteries can quickly pay for themselves through arbitrage alone. EMHASS is an interesting tool to perform the optimisation.

jakewins 1y ago
Similarly in Europe; spot market with a big single pay-as-cleared spot auction for every quarter-hour, and then a continuous auction for the same periods closer to delivery, similar to the normal stock market. Millions of residential devices are traded there right now
philjohn 1y ago
Yep, been using EMHASS for the last couple of years in the UK. I have a large array (12.8kWp east/west split) but a low export limit of 5kW. In the winter it's charging overnight at 7p per kWh (Intelligent Octopus Go) and then using that stored energy during the day to avoid importing at peak rates, and in the summer it makes sure to discharge most of the battery before the peak generation hours so that battery charges from power which would otherwise be curtailed (discharge to minimise import on my SolarEdge system, but charge from clipped power would also work).
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potatoicecoffee 1y ago

seems dumb to have electricity needing to be wasted when there is seawater to desalinate

Majromax 1y ago
> seems dumb to have electricity needing to be wasted when there is seawater to desalinate That's a much more complicated problem. On an energy market, you have only one price to look at, and the battery operator can always buy, sell, or hold energy. The article here talks about optimizing this problem at 5-minute to several-hour intervals. If you drop excess power into desalination, however, now you have two prices to worry about: energy and water. I also doubt we have 5-minute spot markets for water, so the operator must probably commit to some medium-term water delivery regardless of price. This means that a desalinating firm takes on much more risk. This might still be profitable, but it's a long-term play based on a deep model of expected energy prices (i.e. knowing that energy is "always" almost free at noon in summer) rather than short-term time-shifting.
- mikeyouse 1y ago
  Desal plants are also extraordinarily expensive and need to operate at very high 'capacity factors' in order to payoff the capital investment that was required to build them. Operating for a a few hours every day because your operating costs are low/negative only works if you don't have a hugely expensive piece of infrastructure depreciating as you wait for those prices to come down.
  - amoshebb 1y ago
    could we build them different if the goal is just to waste excess energy? Why couldn’t it just be a giant heating element and some sort of steam condenser at the top and some way to flush it periodically? It might burn some laughable 3kWh per kg of water, but who cares? every water utility on the coast could add a few megawatts of tea kettles and get opportunistic little splashes of water in volumes small enough they can probably already handle them and the brine discharge would be so small, disperse, and infrequent it’d be easier to deal with, and it’d basically cost nothing

brilee 1y ago

For those of you suggesting we use the extra energy for $pet_topic I suggest reading https://www.moderndescartes.com/essays/factobattery/ https://www.moderndescartes.com/essays/factobattery/ Tldr: most applications of free energy have capital costs that far outweigh the free energy harvest potential.

thelastgallon 1y ago

Just use EVs. EVs are primarily energy storage devices, some people get to drive them about 20 - 30 mins/day. The remaining 23 hours, it is a energy storage device. It can absorb excess power when price is negative, and can even supply power back to the grid when prices are high!

bee_rider 1y ago
This seems like building more batteries (just, with extra hardware). An EV could be good for this sort of thing, but I guess it would have to sit around at less than 100% charge, to have the capacity.
- bufferoverflow 1y ago
  We almost never charge our EV to 100%, to not degrade the battery faster.
  - bee_rider 1y ago
    But, if you are going to offer “absorbing energy from the grid as a service” the capacity you have to offer can only be <absolute max that you are willing to charge your battery to> - <minimum that you are willing have your battery sitting at> There definitely could be some gap there, but it does depend on the car sitting at less than “full” (however you define full).
two_handfuls 1y ago
Yes, exactly this has been proposed with "smart car chargers," along with other things you can do if the grid operator has some control over a bunch of grid-connected equipment. It hasn't taken off as far as I know, probably because that means the car battery wears out more. The "virtual power plants" are the closest thing to this idea that is actually done in practice. That's individuals who own batteries joining some collective that then sells to the grid the ability to reduce demand a bit. Tesla did a pilot program with its Powerwalls iirc.
rafaelmn 1y ago

jillesvangurp 1y ago

Battery production rates are creeping up to multiple twh/year now. This is accumulating to a lot of battery sitting around in vehicles, domestic storage, grid storage, etc. Mostly the goal of these batteries of course isn't supporting the grid but some other use case. But if it's plugged in, it could potentially be available for selling power. Right now, most EVs can't contribute power. But that's something that is starting to change. Small experiments with thousands or tens of thousands of vehicles have already been done and seem to work fine. Now imagine tens of millions of vehicles being part of the grid. That's a serious amount of stand by power for absorbing excess power or dispatching power when needed. Another interesting aspect is that as grid demand fluctuates, a lot of cables are under utilized at least some of the time. Which means there is plenty of capacity for charging batteries provided there is excess generation and cable capacity. A lot of that power currently gets discarded instead. Batteries allow better use of this excess power. And having a lot of local battery means that cable capacity can be freed up as well when needed and then recharged when demand reduces. And then finally battery prices are coming down. With sodium ion cell production ramping up in several places, things could get quite a bit cheaper. These don't depend on scarce metals or materials. And they last quite long as well (relative to NMC).

mschuster91 1y ago
> That's a serious amount of stand by power for absorbing excess power or dispatching power when needed. ... and a serious issue should one of the few large manufacturers or remote-control dispatcher/trader companies get hacked. The outage in Spain a few weeks ago was just a small warning, probably caused by a technical malfunction. But now imagine this being used as a side track in an act of war? The first day of the Russian invasion of Ukraine was accompanied by the hack of Viasat satellites, which led to 5.800 wind turbines shutting down due to a lack of remote control capabilities [1]. Now imagine the large Chinese inverter and power bank controller vendors that often enough just white-label for other brands? That's a whole lot of a different game now. [1] https://en.wikipedia.org/wiki/Viasat_hack https://en.wikipedia.org/wiki/Viasat_hack
- toast0 1y ago
  > and a serious issue should one of the few large manufacturers or remote-control dispatcher/trader companies get hacked. The outage in Spain a few weeks ago was just a small warning, probably caused by a technical malfunction. If everyone agrees, you can use grid frequency/phase to coordinate, and not a separate realtime communication system. Grid interactive demand/response is a proven way to manage supply and load. When your section of the grid is stressed, supply power or abstain from charging; when your section of the grid is abundant, charge. Coordination is useful too, of course; predictive charging is helpful, and you wouldn't get that only by monitoring the grid; you also want to know somehow that a supply or load is scheduled to be added or removed at time X, or was unexpectedly removed and will not be reconnected for some time. And the system operator would want to know about capacity in many dimensions.

Aeroi 1y ago

pretty sure nodal energy market trading, duck curve arbitrage is the whole profit play for the tesla power wall/autobidder and the Base Power startup coming out of ERCOT. There is definitely a land rush from energy firms and GIS guys to front run land purchasing near solar buildouts and to build as much grid scale battery storage as possible. The percent swings can be huge. Also a huge rush for this in the Northeast now that the offshore wind contracts have been cancelled.

ccheney 1y ago
I find Autobidder fascinating, they've been at this for awhile. When I saw this HN post I thought the paper may have come from Tesla themselves. https://www.tesla.com/support/energy/tesla-software/autobidder https://www.tesla.com/support/energy/tesla-software/autobidd... https://www.tesla.com/support/energy/tesla-software https://www.tesla.com/support/energy/tesla-software

msgodel 1y ago

Energy futures you say? Oh boy I've heard this one before...

NooneAtAll3 1y ago
explain?
- msgodel 1y ago
  That's what the infamous company Enron was running: simultaneous energy futures brokerage and market making. Their market making part blew up and they hid it from everyone for a while until the rest of the company did. It was a massive scandal. It was pretty similar to what FTX was doing just with energy instead of crypto.
Dylan16807 1y ago
That kind of association is why you can buy futures in just about every crop except onions. The fact that you can structure fraud around a specific kind of future doesn't make them special or a bad idea. One major fraud should not bias us forever.

dschaurecker 1y ago

Thank you all for the interest in our paper, it is cool to see that people are interested in the topic!

b0a04gl 1y ago

> “Our method is able to solve over 24 million optimization problems in less than 90 minutes.” that line is doing heavy lifting. sounds insane until you look closer they batch out embarrassingly parallel, lowdimensional problems no live latencies, no network I/O, no grid API jitter. just hammering a static dataset in memory. real markets stall, disconnect, price slippage, queue delays. none of that here. so yeah, 24 million looks cool in the abstract, but under the hood it's just cleanroom compute; feels like they optimised the benchmark more than the actual system

loehnsberg 1y ago
Assuming you add all the annoying details that algo trade execution brings, the algorithm still provides the answer on which position to take within a few microseconds, which is what you want if you trade in a limit order book.
- b0a04gl 1y ago
  true, you want microsecond decisions at the core, no doubt ; but that’s only half the game. an ideal action in clean memory isn’t the same once it hits fragmented liquidity, stale quotes, partial fills. if the algo doesn’t account for execution drift or book pressure post-placement, the microsecond edge fades fast. so yeah, fast compute’s necessary but not sufficient without modelling the messy tail end too
  - dschaurecker 1y ago
    This is also why we make the strong argument of why this method is useful mainly for backtesting new parametrizations or forecasts. Actually trading live below the second-mark, currently does not seem to be very beneficial on the continuous intraday market (even in a sterile backtesting scenario).

julienb_sea 1y ago

Energy overproduction is going to become a serious viability problem for baseload generators, which in time will significantly affect grid reliability. Rolling blackouts will become the norm unless we figure out a serious scalable solution to this.

adds68 1y ago

https://octopusenergy.group/kraken-flex https://octopusenergy.group/kraken-flex This is already being done at an industrial scale in the UK

1Sebastian 1y ago

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