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I can imagine a future where energy is priced in real time. The only reason it hasn't been done so far is that it wasn't technically practical until recently. I

I can imagine a future where energy is priced in real time. The only reason it hasn't been done so far is that it wasn't technically practical until recently. Imagine if you could tell your Nest to optimize the comfort of your house and keep it below a projected budget. If battery technology progresses, the Nest could even one day store energy at low points and use the battery at more expensive times.

tedsanders 12y ago
There are many reasons it hasn't been done besides technical practicality. Besides the obvious issues of market manipulation (ala Enron) and information security (sending false prices to cause blackouts), there is a giant problem with customer acceptance. Most people don't like bills that are unpredictable, they don't like bills that are hard to understand, and they don't like change. I'm a big fan of real-time energy pricing but you have to understand that the technical problems are really quite minor compared to the market design and consumer acceptance problems. I'm also somewhat skeptical of personal batteries being used to save on your electric bill. If it's worth it to peak-shave with batteries, it's almost certainly going to be more effective for companies to do it at scale and with expertise. The only reason it might make sense for consumers to do it is because of the retail-wholesale pricing difference, but if home batteries become popular, you can bet that loophole will be closed. Source: I used to work at a utility P.S. Another big problem is systems control. It is very hard to predict how decentralized actors will work side by side. For example, you don't want to change the price of electricity by a cent and then have 10 MW of demand instantly come on across the state just because everyone's Nest price threshold was hit. There are many plausible sounding solutions to this problem (price fuzzing, delays, subpenny pricing), but they have difficult edge cases as well.
- paulyg 12y ago
  I agree that there would be economies of scale to saving up energy at off peak times for use on peak. But the only way I know of this happening on the MW scale is pumped storage. Utility pumps water up into a reservoir all night and then let's it back down through Hydroelectric generators the next day. But the ability to do this is limited by geography. Maybe we are at a turning point. The island of Ohau recently put out an RFQ for a large energy storage system. Will be interesting to see if and who bids.
  - lutorm 12y ago
    Maybe http://www.lightsail.com/ http://www.lightsail.com/ ?

tedsanders 12y ago

There are many reasons it hasn't been done besides technical practicality. Besides the obvious issues of market manipulation (ala Enron) and information security (sending false prices to cause blackouts), there is a giant problem with customer acceptance. Most people don't like bills that are unpredictable, they don't like bills that are hard to understand, and they don't like change. I'm a big fan of real-time energy pricing but you have to understand that the technical problems are really quite minor compared to the market design and consumer acceptance problems. I'm also somewhat skeptical of personal batteries being used to save on your electric bill. If it's worth it to peak-shave with batteries, it's almost certainly going to be more effective for companies to do it at scale and with expertise. The only reason it might make sense for consumers to do it is because of the retail-wholesale pricing difference, but if home batteries become popular, you can bet that loophole will be closed. Source: I used to work at a utility P.S. Another big problem is systems control. It is very hard to predict how decentralized actors will work side by side. For example, you don't want to change the price of electricity by a cent and then have 10 MW of demand instantly come on across the state just because everyone's Nest price threshold was hit. There are many plausible sounding solutions to this problem (price fuzzing, delays, subpenny pricing), but they have difficult edge cases as well.

paulyg 12y ago
I agree that there would be economies of scale to saving up energy at off peak times for use on peak. But the only way I know of this happening on the MW scale is pumped storage. Utility pumps water up into a reservoir all night and then let's it back down through Hydroelectric generators the next day. But the ability to do this is limited by geography. Maybe we are at a turning point. The island of Ohau recently put out an RFQ for a large energy storage system. Will be interesting to see if and who bids.
- lutorm 12y ago
  Maybe http://www.lightsail.com/ http://www.lightsail.com/ ?