Hacker News Reader

Comment by pjc50 | Hacker News Reader

The price of gas is −£9.26/MWh? (from that link!)

Exactly. That's clearly not a price dictated by gas. That's an example where CCGT generators were willing to pay you to take away their electricity. Obviously the gas they bought to do this cost money and so they're making a small loss when this happens and it would be good to understand why and how this makes sense for them in order to develop policies which get us the outcomes we want.

I'm far from an expert here but isn't that spot price rather than future deliveries? Few people pay for actual spot pricing because it can go the other way, and you want known pricing. You would have a forward contract to delivery gas at say 20p. This is a known price for operation and likely has profit baked in anyway. The excess is what we see now. They can't just switch off as they have a contract to fulfill, but the grid doesn't need the excess, therefore priced at a negative.

In https://commonslibrary.parliament.uk/research-briefings/cbp-... under "Why does the price of gas drive electricity prices?" it suggests that, at the time the CMA report linked was written (now over 10 years ago) the CMA thought as much as 40% of electricity is traded at spot prices.

Now, the CMA report that's linking is talking about a world we no longer live in, in that world the UK burns coal, Russia hasn't invaded Ukraine and so on, and thus the numbers might be entirely different now, but that's the best I could find.

The how and why is that gas takes up space, cutting usage to zero when your site storage is full can cause issues (you can do this short term and get a bit of line pack going but it all eventually has to go somewhere).

I think gas turbines can turn off completely without issue (unlike coal) but there may also be situations where it costs more money to restart the generation process completely than to idle it at low capacity for a few hours when there is no demand for gas generation.

Reply on news.ycombinator.com