5 ms·

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

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.
      - yxhuvud 1y ago
        If it is profitable to produce heat, it means prices are negative. If prices are negative, then that is true also for cold people. On the other hand if prices are high, and someone has sells electricity that was bought when prices were close to zero, then the cold people will get warm for cheaper than if there wasn't a battery. Sorry, but you really make no sense.
        cess11 1y ago
        Manufactured scarcity and related phenomena are really, really common. You should probably look into themes like the tendency of the rate of profit to fall and planned obsolescence and so on, and then explain why this specific case of coked yuppie market would be immune to them.
        yxhuvud 1y ago
        Again, more players in the market (both batteries and the renewables they enable) and the base fact that batteries pull prices toward the mean means that if anything, they would be exactly one of the mechanisms to avoid manufactured scarcities.
        cess11 1y ago
        Why would this specific application of this type of market be immune to rent seekers, manufactured scarcity, wasting or withholding resources for profit, oligopolies and so on? What makes this application of this social regime so different from e.g. food or medicine?
        ajsnigrutin 1y ago
        In many countries, energy production was (and still is) owned by the countries and power prices are regulated. In cases of total system failures (eg. look at ukraine), power usage is restricted by shutting down different parts of the country at different times, so your area has power from 4pm to 6pm, other area has it from 6pm to 8pm, etc, industry gets partially shut down, partially works at night if it's needed. Everybody gets to cook and wash in their timeslots, and the rest of the time, they're equally without power. In case of some failure of the system you're proposing, the prices would skyrocket, the poor would not get power at all, and the rich would have power all the time but for a very high price. Economically speaking, that's great for investors in batteries and supporting systems, socially speaking, it's a horible world to live in. And the system is very unstable already, in portugal it already failed horribly not long ago.
  - rcxdude 1y ago
    This tends to more to do with food supply security and costs of distribution than anything else (as well as political opposition to socialising food supply). i.e. if we want to avoid food shortages, we need to overproduce the raw goods and therefore waste some. Transporting and transforming those raw goods into food that someone can eat still costs money, it's not just so farmers can get paid. We probably should still actually make sure no-one goes hungry, but that does actually involve some cost and effort on the part of the government, and the challenge there is mainly political elements who don't like the idea of someone getting something for free.
    - ajsnigrutin 1y ago
      Yep, that's why we pay farmers to keep half their fields empty, because in case we need those fields (eg. war somewhere), we still have farmers with all the machines and infrastructure needed to produce food, that can expand onto the now-empty fields.
- aitchnyu 1y ago
  No need of speculators. A utility purchases cheap off peak power and extremely costly peak power and pass the costs to the consumer. If the utility pays homeowner with BESS something comparable to peak power rate, they can recover their investment quickly.
  - yxhuvud 1y ago
    Such an utility would be a speculator.
yxhuvud 1y ago
If this was implemented in full scale, then it would .. stabilize energy prices towards the mean, and make the energy transmission more stable and resilent in general. I'd happily pay some overhead for that, as it also mean the network can accept more cheap energy sourced from wind and solar.
baq 1y ago
Capitalism is the only form of communism that works on longer time frames. Periodic resets are still needed, otherwise the monopolist becomes the ruler.
driverdan 1y ago
Except this is exactly what you want to happen. The reason electricity prices range is because of supply and demand. Batteries help smooth out the supply curve. In the short term adding more batteries may allow someone to generate income using this strategy but long term what it will do is push electricity prices down and prevent power generation from being overwhelmed. As the battery "market" gets crowded profit margins will fall and everything will reach an equilibrium. This is a great demonstration of how capitalism works and why it's beneficial.
formerly_proven 1y ago
Negative prices are mostly caused by unreasonable terms towards generation plants. E.g.: requiring the grid to take every kWh generated and paying a fixed price over a 20-year term. This of course encourages capacity to be built with no flexibility. Why not dump your solar power into the grid? You're getting paid, the state guarantees for that... the negative prices are someone's elses problem.
rcxdude 1y ago
This is the kind of thing that is funding the massive expansion in renewable energy build-out at the moment. The whole reason there's an energy transition happening is that solar and wind and batteries are cheap enough you can make a lot of money building them, and that'll remain true until basically the whole grid is renewable (finally kicking out the expensive gas turbines), and the average price drops to reach cost of supply. (And the kind of optimisation that happens with this kind of paper is really in the margins stuff. It generally helps the predictive power of the grid, and usually doesn't make much money once more than one group starts doing it, since it's pretty cheap to run and the margins shrink quickly)

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.
    - yxhuvud 1y ago
      If it is profitable to produce heat, it means prices are negative. If prices are negative, then that is true also for cold people. On the other hand if prices are high, and someone has sells electricity that was bought when prices were close to zero, then the cold people will get warm for cheaper than if there wasn't a battery. Sorry, but you really make no sense.
      - cess11 1y ago
        Manufactured scarcity and related phenomena are really, really common. You should probably look into themes like the tendency of the rate of profit to fall and planned obsolescence and so on, and then explain why this specific case of coked yuppie market would be immune to them.
        yxhuvud 1y ago
        Again, more players in the market (both batteries and the renewables they enable) and the base fact that batteries pull prices toward the mean means that if anything, they would be exactly one of the mechanisms to avoid manufactured scarcities.
        cess11 1y ago
        Why would this specific application of this type of market be immune to rent seekers, manufactured scarcity, wasting or withholding resources for profit, oligopolies and so on? What makes this application of this social regime so different from e.g. food or medicine?
        ajsnigrutin 1y ago
        In many countries, energy production was (and still is) owned by the countries and power prices are regulated. In cases of total system failures (eg. look at ukraine), power usage is restricted by shutting down different parts of the country at different times, so your area has power from 4pm to 6pm, other area has it from 6pm to 8pm, etc, industry gets partially shut down, partially works at night if it's needed. Everybody gets to cook and wash in their timeslots, and the rest of the time, they're equally without power. In case of some failure of the system you're proposing, the prices would skyrocket, the poor would not get power at all, and the rich would have power all the time but for a very high price. Economically speaking, that's great for investors in batteries and supporting systems, socially speaking, it's a horible world to live in. And the system is very unstable already, in portugal it already failed horribly not long ago.
- rcxdude 1y ago
  This tends to more to do with food supply security and costs of distribution than anything else (as well as political opposition to socialising food supply). i.e. if we want to avoid food shortages, we need to overproduce the raw goods and therefore waste some. Transporting and transforming those raw goods into food that someone can eat still costs money, it's not just so farmers can get paid. We probably should still actually make sure no-one goes hungry, but that does actually involve some cost and effort on the part of the government, and the challenge there is mainly political elements who don't like the idea of someone getting something for free.
  - ajsnigrutin 1y ago
    Yep, that's why we pay farmers to keep half their fields empty, because in case we need those fields (eg. war somewhere), we still have farmers with all the machines and infrastructure needed to produce food, that can expand onto the now-empty fields.
aitchnyu 1y ago
No need of speculators. A utility purchases cheap off peak power and extremely costly peak power and pass the costs to the consumer. If the utility pays homeowner with BESS something comparable to peak power rate, they can recover their investment quickly.
- yxhuvud 1y ago
  Such an utility would be a speculator.

yxhuvud 1y ago

If this was implemented in full scale, then it would .. stabilize energy prices towards the mean, and make the energy transmission more stable and resilent in general. I'd happily pay some overhead for that, as it also mean the network can accept more cheap energy sourced from wind and solar.

baq 1y ago

Capitalism is the only form of communism that works on longer time frames. Periodic resets are still needed, otherwise the monopolist becomes the ruler.

driverdan 1y ago

Except this is exactly what you want to happen. The reason electricity prices range is because of supply and demand. Batteries help smooth out the supply curve. In the short term adding more batteries may allow someone to generate income using this strategy but long term what it will do is push electricity prices down and prevent power generation from being overwhelmed. As the battery "market" gets crowded profit margins will fall and everything will reach an equilibrium. This is a great demonstration of how capitalism works and why it's beneficial.

formerly_proven 1y ago

Negative prices are mostly caused by unreasonable terms towards generation plants. E.g.: requiring the grid to take every kWh generated and paying a fixed price over a 20-year term. This of course encourages capacity to be built with no flexibility. Why not dump your solar power into the grid? You're getting paid, the state guarantees for that... the negative prices are someone's elses problem.

rcxdude 1y ago

This is the kind of thing that is funding the massive expansion in renewable energy build-out at the moment. The whole reason there's an energy transition happening is that solar and wind and batteries are cheap enough you can make a lot of money building them, and that'll remain true until basically the whole grid is renewable (finally kicking out the expensive gas turbines), and the average price drops to reach cost of supply. (And the kind of optimisation that happens with this kind of paper is really in the margins stuff. It generally helps the predictive power of the grid, and usually doesn't make much money once more than one group starts doing it, since it's pretty cheap to run and the margins shrink quickly)