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Comment by beefield | Hacker News Reader

> A negative price in the wholesale electric markets does not mean the electricity is "less than free."

I find this a bit confusing. That is exactly what a negative price means. There are points in time when you are paid to consume electricity (you need to take into account the transmission costs obviously). What is that if not less than free?

> In a grid with adequate storage capacity, negative prices would be extremely rare.

And to get more storage capacity into the grid, we need a price signal to incentivize for that, which, again, negative prices are.

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You are misunderstanding the wholesale price that the utility companies pays with the price they ultimately charge the consumer. For the consumers, the electricity was not free nor negative. They were charged their regular rate.

But yes, negative prices incentivize large scale batteries or other ways to make the supply and demand match up better.

But of course there are large scale industrial customers that do transact directly in the wholesale market and not through a retailer, and of course they were paid to use the electricity.

Then it is up to you and your retailer if you have a fixed rate or a rate that adjusts with the market prices if you are able to utilize the cheap electricity.

> I find this a bit confusing. That is exactly what a negative price means.

For whom? Somebody is still paying to generate and store electricity and to maintain the grid. A mismatch between storage and demand therefore doesn't mean you get a refund. It means there is an economic imbalance that will result in costs some other unexpected way.

> For whom?

For the parties transacting in the electricity markets with negative prices. The one producing electricity is paying positive amount of money to the one that consumes electricity. Of course, transmission costs need to be taken into account, and of course, that is not a long term equilibrium, but at that time, yes, very much, electricity is "less than free" with any sensible meaning of the words.

"electricity" and "free" are ambiguous terms. Overall, electricity has positive cost. Due to accounting practices and the cost of waste diposal, some electronics are negative priced for the user.

A better way to phrase it is that during short time periods "the cost of disposing electrons is greater than the cost of creating electrons" (and for technical reasons it's impossible to stop creating electrons in the short term) , so consumers can make money by offering electron disposal services to cover their electron consumption expenses.

Imagine if the prices on bananas went negative because grocers ordered too much and couldn’t deal with a bunch of rotting bananas in their warehouses. Nobody would say “bananas are free,” or that “it’s a good thing for consumers.” It’s simply a signal we’ve made too much of something and are now paying people to haul it away.

With the grocery, it's different, because consumers may be more than happy to take a profit from a supermarket's bad investment. (See also: Venture Capital backed startups). so it's "good for the banana consumer", but not "free" from the perspective of the overall system. Someone has to "pay the piper", some day, as you've noted in other comments.

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