In Australia the complete opposite happens. Extremely hot days cause coal and gas plants to fail https://www.theguardian.com/commentisfree/2019/jan/31/what-h...
Whereas renewables have been causing power prices to occasionally fall to $0. https://reneweconomy.com.au/electricity-prices-across-the-gr...
The people building the capital will make a profit over the year, so consumers will make up for the 0s with higher prices when there is not enough energy. And over the long term $0 prices potentially lead to building less infrastructure leading to blackouts.
Basically we know the average price is not going to be 0. Therefore, 0 prices signals variance. Variance is pretty much always risky and expensive in big infrastructure; and the electricity market is a good example. It can hopefully be managed to only be a minor inconvenience but it is certainly not a positive for anyone.
It does signal that there is a golden window to, eg, run a desalination plant. If anyone takes advantage of that opportunity then it would be a win, but the symptom of that happening would be non-0 prices.
EDIT
Also, coal plant failures in hot weather are probably a symptom of them not being maintained. Australia has already seen a Labor-Green coalition in federal politics; you'd have to be an idiot to spend money maintaining a coal plant in that political environment. Better to let them run down and try to extract money from the government in a crisis situation which seems to be the current strategy.
High prices mean "we need more", low prices mean "carry on", $0 means "don't produce this stuff, please". Negative prices mean "We're begging you, turn it off, it is hurting".
It seems like, if this distinction was meaningful, renewable operators would be turning off generation capacity when prices dropped this low. There's some economic, effort, or technological incentive to keep the spiggots on (i.e., either the marginal costs of producing this power are so low there's no incentive for operators to stop, or the costs/risks of stopping it are too high to bother).
Ignoring storage tech, it's also a signal that demand is too inflexible to redistribute power consumption (that is, an opportunity...).
The economics are pretty simple; electricity is about as pure a commodity as it is possible to get. The timeframes this plays out in are the 1-10 year windows where people make big long-term capital decisions.
> It seems like, if this distinction was meaningful, renewable operators would be turning off generation capacity when prices dropped this low.
In the short term people ignore market signals for all sorts of good reasons. I can ignore market signals all day if I want to. If they ignore a signal all year they will start to go bankrupt.
But the fact that renewable are ignoring a market signal is not a positive benefit to cite when talking about "energy industry FUD". When market signals get ignored; consumers pay more. This has played out in Germany, and it is playing out in Australia. $0 wholesale prices mean high retail prices over the year.
> Ignoring storage tech, it's also a signal that demand is too inflexible to redistribute power consumption (that is, an opportunity...).
Massive opportunity. If prices are $0; nobody is seizing the opportunity. It is waste. If someone were making use of this they would be being charged a low but positive number.
- Part of redistributing less time-sensitive forms of consumption around the grid/clock is demonstrating quantity and stability of cheap power at those times. One possibility is the producer is just being subsidized or obligated into production they wouldn't undertake without a distortion. But it seems like low/negative prices are also how you'd prove the supply. - In responsive real-time energy markets, driving prices down should force higher-cost producers to reduce output. Over time, that signal should take less-competitive producers completely offline. It's not obvious to me that they're ignoring market signals if their strategic decision-making function could more complicated than just "produce when the rate is profitable."
The things you are talking about here seem to be details of very short term decision making. There are a lot of complications in the small picture, and unless one of us works in an actual power plant we are probably going to get them wrong.
But the big picture has some basic balance laws that have to hold: a company cannot consistently give away product for free and stay in business. Even if it is theoretically possible, it just happens to be a well known fact that that isn't how electricity markets work for any of the participants. The electricity isn't a by-product or anything strange; this is electricity produced to be be sold for money. We know that the average price has to be positive.
Therefore it is misleading to point out "renewables have been causing power prices to occasionally fall to $0" as though that were any sort of positive. The falls to $0 are balanced by rises to some larger positive number so that over the full year the total price is positive. These falls do represent an opportunity, but they represent an opportunity that nobody is taking advantage of yet. Those prices signal strongly that there is energy being produced that isn't useful to anybody (or they would, y'know, be willing to pay for it). When somebody finds a use for this power that is presently being basically dumped then prices will rise to some low-but-positive value and that will probably be a very good sign.
Some people have pointed out that maybe there are subsides for renewables; in which case governments are paying renewables to produce something nobody is using which is also not a positive for renewables.
The big issue is we've seen exactly this situation play out in Germany. The game changes slightly from normal because we know that the renewable producers don't have the sort of control over when they supply powers as conventional power; periods of 0 wholesale prices leading to anomalously high retail prices at the end of the year as the intermediaries deal with the problem of uncontrolled generation. Those $0 prices are a likely a tell that things are getting expensive. They are not a good sign. Hopefully they are a neutral sign.
I'd it a bad thing that the market price for the air that we are currently breathing is 0$?
If we lived in a utopia where electricity was produced without any human intervention whatsoever then a $0 price would be fine. Producing electricity does require human action. Maintaining solar farms requires human action. Maintaining wind farms requires human intervention. Acquiring fuel requires human action. These are not charities; free is going to turn out to be quite expensive.
We do it with water. I'm not sure why the GP leapt to "crane" rather than "pump" but for sure we can achieve that. As for objects, a few designs spring to mind but they all seem less efficient than just pumping fluids.
It is pretty much basic physics and math:
1. Power supply must balance power consumption. 2. No one wants blackouts. 3. Intermittent power sources must be backed up by non-intermittent power sources. 4. You have to pay for the intermittent power generation as well as the backup power generation. 5. Cost of providing power goes up because your capitol costs have increased.
Also, energy prices can be higher on average than elsewhere and dip to zero in some circumstances.
Thus, with renewable sources, you need to have the capital investments of both the renewable plant and the backup plant(s).
The identifying characteristic of capital cost is: does not change over small time intervals, it is fixed up front and amortized over the lifetime of the asset.
This article and OP are talking about price spikes which are a symptom of short term (days, hours, minutes) market dynamics.
The reason that prices spike has nothing to do with capital cost and everything to do with short term demand/supply fluctuations.
The connection in my mind is that if you shift your mix of generation plants towards renewables then you have less ability to respond to outages of any kind. Could be cloudy days, windless days, failed transmission lines, and so on.
The advantage of a coal/gas/hydro/nuclear plants is that you can control the amount of power they are producing. That isn't true with wind/solar. You certainly can't turn them up and I think (but I'm not sure) it is difficult to shed power that they generate (i.e. turn them down).
Those price spikes are last ditch attempts to purchase power to meet demand before moving to brown/blackouts. Just another side-effect of not having an appropriate mix of generation capacity.
Re#1: Storing water in a reservoir behind a set of generators is a pretty good solution.
R&D isn't needed. Energy storage is not rocket science or necessarily expensive. You just use excess energy to lift something high ... pump it or railroad it uphill, or stack it. Reverse to power generators. Of course that's just a boring, cheap, low-tech, well-proven solution.
Re#2: Of course if you try rewewables in the wrong place, you get unsatisfying results. With a big enough reservoir,'days or weeks' isn't hard ... and so you don't need backup plants. Even then, while costs of backup plant fuels are high. renewable fuel costs are nearly zero. At the right sites, the average costs are at least competitive.
https://www.nytimes.com/interactive/2018/07/24/business/ener...
Couple this with water shortages exacerbated by global warming and hydrostatic storage is by no means a panacea.
We need to use all of them.
AFAIK it's a combination of massively overbuilding the networks (due to privatisation and crappy/most likely corrupt energy regulator allowing companies to decide to overbuild while taking huge profits) plus a whole heap of coal and gas stations being quite decrepit and nearing end of life, with associated high costs of maintenance.
Renewable energy isn't really in the picture.
To add to this, a massive battery array was installed in South Australia in conjunction with Tesla which helped even out power distribution capacity in the event of drops in power output caused by coal/gas plants struggling during heatwaves, which otherwise would have caused blackouts.
>Generators were “gaming” the system: using their power in concentrated markets to create artificial scarcity of supply and so force prices up.
It is not so much physics and math (which of course do not apply in australia), but politics. The line costs are also separated from supply costs (which is why more than 50% of my bill is not actually for power). The scale of the price gouging outweighes anything physics could throw at the costs. In SA they have had spot pricing of -1k to +14k inside of the 30min pricing window.
Your comments do not reflect reality, are poorly researched and contradict the op's entirely true statement.
It is simple supply and demand. Electricity generation at any given point in time must be sufficient to meet demand for electricity, otherwise blackouts occur. When you introduce intermittent generation sources into the market, like solar and wind, it becomes more difficult for this matching to occur as generation output is weather dependent. Consequently, you get times in the wholesale market where a confluence of factors momentarily drive up wholesale prices: wind stops blowing, sun stops shining and demand spikes due to it being the middle of a hot summer day (e.g. middle of the day in January, which is summer in Australia, so everyone turns on their A/C). Prices shoot up until it entices other generators to make up the shortfall (e.g. gas turbine operators).
When the wind is blowing and the sun is shining, renewables can provide lots of power no matter what the live price is. (The cost of renewables is 100% installation, 0% operation. Any price above 0 is good as far as a wind turbine is concerned.)
When the wind is not blowing and the sun is not shining, no price signal is going to change that. What the price signal DOES do, however, is incentivize a response on the demand side.