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Comment by pclmulqdq | Hacker News Reader

Power demand is often inelastic. There are many places in summer where people would pay $200/kWh to run a small air conditioning unit, for example, when their normal price of power is $0.10/kWh. There is no reason to shift toward generation sources that have price uncertainty when demand is inelastic like this. See the exact same thing in healthcare. The proper solution to this economic problem at a societal level is to have a predictable low price of available power.

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There are "many" places where people would pay US$200 to run an air conditioner for one hour?

Hospitals, specialty warehouses, datacenters, the list goes on. Some private citizens in Arizona or Texas, too.

> There are many places in summer where people would pay $200/kWh to run a small air conditioning unit, for example, when their normal price of power is $0.10/kWh.

I don’t know anyone that would pay $200/hr to run a 1kW air conditioner. I’d just go in my air conditioned car and pay for gasoline..

Parent may be referring to specialty units that for example chill expensive perishable medication.

That sort of facility will have diesel generators for backup power, they will be maintained and tested monthly, load banked yearly.

Even if the generators failed, renting a trailer mounted diesel generator costs much less than $200/kWh.

If you really want to turn everyone who runs a facility that needs power for under $10/kWh into an energy trader who has to build a facility with a larger generator than needed and a battery bank and everything else, there is a huge amount of economic loss involved in that. Energy is cheap. Energy should be cheap. That infrastructure should remain for disasters.

Running those generators is not free, and puts wear on them. Also, starting up those generators takes time and puts a certain amount of wear on them, so you are now talking about also having batteries and other equipment to cover short periods and the gap during generator startup. And now when do you spin up the generator? Do you spin it up when the instantaneous price of a kWh goes over a certain threshold or do you wait? All of these are now things that every single industrial facility has to think about.

In my post I was explicitly referring to backup generators being basically mandatory at a refrigerated pharmaceutical storage warehouse, not making a general argument that every industrial building should have backup generators. Generators are common at data centers, hospitals, emergency dispatch call centers, and refrigerated storage facilities.

There was no need to take a specific point I was making about refrigerated storage facilities and pretend I was talking about commercial and industrial sites in general. Please read more closely next time and respond to my actual argument instead of the argument you imagined that I made.

My point is that running those things is not free or cheap, and that with floating energy prices, you now have to make them significantly beefier and make economic decisions about when to run them. You will also have many more of these generators show up. People adapt their behavior to the incentives you give them, and the design of generators is also very much more subtle than you are giving credit for.

So yes, while it seems like people already have infrastructure for floating energy rates, in reality they do not.

Again, I am not saying that facilities should use backup generators to make power if it spot price goes slightly above what it costs to run the generators. Read the original post I was responding to, all of my posts in this discussion are operating under the assumption that electricity is $200/kWh.

Let’s say you’re running a 250 HP compressor to keep your cold storage warehouse cold, that would draw around 200kW. One hour of operating that would be $40,000 if electricity was $200/kWh. It costs much much less than $40,000/hr to operate a 250kW generator, you can buy a 250kW diesel one with an automatic transfer switch for around $100k from Cat or Cummins.

I’m not replying if you respond again, you’re responding to straw men instead of my actual arguments. I sell and run commercial electrical work, including generator installs and replacements, I know everything you’re telling me already.

I once had to pay about $1500 USD per kWh. That’s $90 USD to boil 1 litre of water.

Consequently I chose to freeze rather than turn on any heating. At that price even LED lighting is too expensive. I probably should have unplugged my fridge too.

But many people chose to keep themselves (and families) warm.

Lesson learnt: never pay the spot price for power. In minutes I probably lost all the saving I had accumulated by micro managing power until that point.

I have seen my fair share of data centers and office complexes switching to their diesel generators due to very high energy spot prices.

If you have an alternative source of power (even if it is a gas generator) I think a spot price contract is fine. Otherwise it is too risky for residential consumers.

Good point. If there is an alternate power source, it makes perfect sense to go to spot pricing. If you don't and you have room mates who may not like freezing in the middle of winter, don't.

I would only be on a pricing plan like that if I had a way to automatically cut off my service if price exceeded some limit. If this made power outages common enough I'd install batteries to tide me over most of them. Functionally this would be equivalent to an unreliable power system.

Ultimately, "shutting down the house, draining the water pipes, and going elsewhere" is a solution for extreme winter events.

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