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Comment by WalterBright | Hacker News Reader

If electricity is cheaper to generate when the sun is shining, the retail price of electricity should reflect that. In fact, the retail price should fluctuate minute by minute, so that demand can be shaped to match supply.

Trying to match variable supply to a fixed retail electric rate is certain to cause energy gluts and shortages.

For example, I'd be happy to charge my electric car during price minima, heat the electric water heater to the max when power is cheap, and run the A/C to the cold end of comfort when electrons are plentiful.

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The wholesale price does fluctuate minute by minute. The grid and the average consumer/retail user is not yet sophisticated to take advantage of what you propose.

We know this because until recently, this ‘ideal situation’ that you propose was available by a company called Griddy, that went balls up when their consumers got absolutely slammed during the Texas snowstorms, and the idea of having the wholesale price if you’re a retail consumer became a very very silly idea

Oh, I know about the Texas example. It wasn't the concept that was bad, it was the implementation. The implementation needs to be coupled with meters where you can set a max price you'll accept.

Any system where you sign a contract that says you'll pay any price to turn on a lamp is idiotic, and so are the people who sign such contracts.

(The wholesale prices fluctuation does little to affect demand, because the demand is on the retail price, which is fixed.)

When it’s dark people turn on the lights. When it’s cold they turn on the heating. Those are the drivers of demand.

Industrial demand (aluminium smelters etc) are more price sensitive, but they tend to be billed by the minute anyway. some “residential” people will be happy to turn off their Bitcoin or weed growing equipment when the price rises but that shouldnt be residential.

The wealthy will have their own storage systems to smooth out the bumps and thus spend less than those who are poorer. You may like that idea, but for most people this would be devestating and less to more deaths.

Every house has many energy-hungry devices that can time shift their use.

1. electric car battery recharging

2. hot water heater - heat it to the max of the range when electricity is cheap

3. A/C - cool it to the coldest end of the range when electricity is cheap

and so on. 1,2,3 are just the start of what can be done, cheaply, to shape demand to the price.

> devestating

People adjust their use of gasoline based on the constantly shifting prices. This is how demand is shaped to match supply.

> People adjust their use of gasoline based on the constantly shifting prices. This is how demand is shaped to match supply.

Yeah, but unlike electricity gas can be stored efficiently and long term - your typical 5-series BMW has ~60l of tank volume, a Ford F150 has ~90-100l, not to mention jerry cans. That means when gas is expensive, a consumer usually can choose to simply fill up the tank at another date.

People don't actually do that.

Electricity can be "stored" in hot water in the hot water tank, the thermal mass of the house, and in the battery in the electric car. This can greatly mitigate the demand for electricity at night, for example.

> The implementation needs to be coupled with meters where you can set a max price you'll accept.

Systems where your house goes dark and cold in the middle of a blizzard are never going to be popular no matter how "rational" they are.

If electricity is scarce during a blizzard, many people's houses are going to be dark and cold anyway. Variable pricing means people can decide how valuable not being dark and cold is to them.

The alternative is the lights go out anyway because of rolling blackouts.

> If electricity is cheaper to generate when the sun is shining, the retail price of electricity should reflect that.

This would be amazing. It would quickly turn the population off further investment in solar and other unreliable, unpredictable sources of energy and prove that nuclear is the only viable green power.

We pay variable prices for gasoline every day, mainly due to unpredictable supply. Society hasn't collapsed.

The French "gilets jaune" riots demanded, among other things, reductions in the prices of diesel. Plenty of countries subsidise fuel or electricity in order to maintain society. While the US tolerates small price fluctuations, I guarantee you that if people in the US woke up to $10/USgal gasoline there would be armed mobs heading to the statehouse.

https://edition.cnn.com/2022/04/09/business/food-fuel-prices...

Isn't the price of diesel in France higher now than at the time of the protests in late 2018? At one point this year it even passed 2 euros per liter. How come they aren't rioting now?

Rioting is tiring and there's an election happening right now through which they can express their preferences? Also these things tend to be "edge triggered rather than level triggered" - by a rise, rather than any absolute level.

There's a good chance France will reelect the president that was vilified during the riots.

I guess four years ago the cause of the price hike was different. But overall the situation seems worse to me now. I don't think the yellow vests accomplished much in the long term.

And we would happily change to another system if it provided long-term price stability.

You'd be happy, but that happiness would fade after not too long. It was tried in the US in the 1970s, and produced long gas lines, shortages, and gluts.

It's what always happens when the government engages in price fixing and supply fixing.

You mean like OPEC?

Also, I did not even mention price or supply fixing: prices can be stable for reasons outside governmental and/or monopolistic-evildoer's direct control.

I meant Nixon's price and allocation controls he imposed on gas. The proof that the lines were not OPEC's doing is the moment Reagan repealed those controls, the gas lines disappeared and never came back.

And I mean the moment. Gas lines one day, gone the next.

We can predict the weather reasonably well. As the penetration of renewables increases, eventually storage will start to make more economic sense. It is likely that renewables with storage will be cheaper than nuclear. It is virtually certain that we can build renewables and storage much faster than nuclear.

That comment is so funny, because my home runs on solar/pv plus battery storage and my car too, saving me a ton of money :)

Except in the UK where it's called octopus and electric car drivers love it.

Here's the price for my residential electricity in Denmark for the next 24 hours: https://i.imgur.com/EER7bMP.png

The light part of the graph is transport costs and taxes.

I think the price moves within a range -- I'm protected from enormous spikes, but I also won't see the price go negative.

This is a standard tariff, there are other options for people owning electric cars. There's also an app to show this information, and (I assume) a way to tell the car to charge at the cheapest time in next few hours.

It's a good start, but still an approximation. I bet it makes a significant difference, and that difference will increase over time as people adapt to it, and buy electrical appliances that automatically adapt to it.

This would definitely work, but would require a big infra adjustment.

I don’t know but I wonder if (and it seems likely that) the time arbitrage of electrons is better/simpler (and cheaper?) solved by batteries now or in a few years time.

What batteries ain't is cheap. Grid scale batteries so you can have a fixed price 24/7 will more than double your electricity bills. If they can be built at all, with their massive need for rare metals.

Sorry, I don't mean at home batteries.

I mean gird scale batteries at production sites to smooth fluctuations in supply, and virtual producers like Tesla in Texas that store power when its cheap and sell when it's expensive to smooth out fluctuations in demand.

I specifically talked about grid scale batteries.

This makes prices unpredictable, and I think it's a bad thing. You cannot plan when you can charge your car. Why not have just two prices which are predictable (one day and one night for example) ?

The price of pump gas changes every day. Is that a bad thing?

I'm old enough to remember when pump gas was regulated. Two things happened - gluts and shortages, at the same time! This all ended abruptly when Reagan signed his first Executive Order to repeal all that nonsense.

Every day, not every minute. And the office does not change while you are buying it.

That's close to the way things work in Europe

Pricing for the next day is decided on the spot market, around 2-3 PM. All large consumers and producers place bids on one-hour slots until the market clears. Prices do not fluctuate minute-to-minute, but hour-to-hour. Consumers might opt in to electricity resellers selling spot prices, or get a fixed but usually higher guaranteed price per kWh. All that changes for the end consumer is that your electricity meter readings will be forwarded to a different company

As an European with a fixed-Euros-per-kWh-contract (with two prices, one for daytime, one for nighttime, the latter being a bit cheaper), I'm curious - which countries allow you to get a contract in which your electricity costs get updated daily?

Nord Pool covers a large part of Europe: https://www.nordpoolgroup.com/en/maps/#/nordic

Your actual contract would be with some local electric company that uses Nord Pool (or some other provider).

Apparently, Nord Pool just is an electricity exchange market - I was aware those existed. I was more asking for a local electric company which changes prices daily (and allows me to know that before so I can adapt). At least in Germany, I am not aware of anyone offering that kind of contract, and I would love to see how that is implemented elsewhere.

At least in Finland pretty much every electric company offers "pörssisähkö" contracts using either hourly or daily prices. Afaik they all provide an app to see the prices, or you can get them directly from Nord Pool.

Since German prices are on that map, I assume there are at least some companies doing that in Germany too.

Renewables do make electricity cheaper. Here is a highly simplified version of how rates are set:

Fixed price = (unit cost + a profit margin) * number of units

The fixed price is set for a period of time based on historical and forecasted costs. Which costs are allowed and the profit margin for regulated utilities serving fixed price load is determined by the public service commissions.

When their costs go down the regulators will say you can’t charge as much during the next period.

Utilities are a natural monopoly and their prices are controlled.

That formula denies how markets work, and gets us high priced electricity and rolling blackouts.

Like it or not, supply of electricity with renewables is highly variable. Fixed price electric rates are simply incompatible with that.

P.S. Back in the 70's when the DOE allocated gas and set prices, it was simply unable to react to varying gas supplies and demand. The result was gas lines for years until Reagan repealed all that nonsense.

This is in fact how regulated utilities work for fixed rate customers (simplified). The utility charges a customer a rate of x for some period. If the cost during that period is below x the utility may have to lower the price in the next period. If the cost is greater than x they may be able to raise the price in the next period. The exact mechanism for cost-recovery is state-specific and subject to a lot of considerations [0]. Utilities act as wholesale price buffers for retail customers (not commercial users) but the costs are eventually paid.

None of this denies how economics works or that solar and wind are variable.

[0] https://emp.lbl.gov/sites/all/files/lbnl-1005742_1.pdf

It denies economics because it does not shape demand during the day due to price signalling.

Most goods and services don’t fluctuate minute to minute despite input prices varying minute to minute. If I go to a car dealer the price of the car doesn’t change while I am there even when the real time price of commodity inputs are moving that quickly. Is that denying economics?

These are called "time of use tariffs".

Here in Belgium this type of tariff is marketed under the name "dynamic tariff". (It's only offered by the biggest player Engie, but other companies are working on it.) The price varies hourly, but it is determined by the day-ahead electricity market so the price schedule for the day is known the evening before.

It's a good approximation. But renewable power generation is affected by the weather, and the weather is not predictable.

The price should change minute by minute. Of course, this implies people having internet-connected hot water heaters, car chargers, etc., which are hardly expensive.

The weather across all of Europe (which is relevant for the pricing) is reasonably predictable.

Can it predict a day in advance every time the sun goes behind a cloud?

I didn't think of that (not much solar power in Denmark...) but my feeling is that it isn't really relevant on the scale of a country -- clouds move across many PV sites, covering one panel as they uncover the adjacent one.

The graphs at the start of this paper show fluctuations on 9 PV power plans in a 50km square, 49 plants in a 250km square, and 225 plants in a 500km square.

https://solargis2-web-assets.s3.eu-west-1.amazonaws.com/publ...

I don't want to live in a place that does that, my power consumption over the course of the day is pretty consistent.

We already do that for industrial power consumers how are most capable of changing the time they put load on the grid.

> I don't want to live in a place that does that

Would you prefer rolling blackouts like California has? Would you prefer paying much higher electricity rates for all those peaker plants and grid storage batteries?

I'd prefer the cheap LNG and nuclear power where I live now. Power cost fluctuating over the course of the day would mean cutting back on critical stuff since I already optimize my power consumption pretty well. Maybe I could cut power to my refrigerator/freezer at night but I prefer having it cold on the small chance that there is a blackout the next day.

It'd mean you could take advantage of cheaper rates to spend overall less money. Fluctuating rates means you'll spend overall less money.

Are there any residential water heaters or ACs with "storage" that works till 4 pm and releases at 10pm?

I have a conventional water heater, and when a tree falls on the power lines I discovered that the water will remain hot enough for a shower for 3 days.

I don't see any problem with heating the water to the max during the day, and you'll be able to enjoy the hot water at night.

With your existing heater.

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