Came across an anti-China AI video about negative electricity prices in certain provinces, and it got me thinking. I know brief negative prices can happen, but if every day in summer has negative prices, what are the implications of that? Electricity revenue is supposed to go to grid maintenance and stuff, but could they start losing money if the prices are negative for too long?
Look forward to the discussion and thank you for time!
P.s.: I really don’t recommend the video (I mainly just saw the title) but included for completeness: China’s Manufacturing Collapses, Power Overload Causes Negative Electricity Prices!
Source: afro-tastic
3 Comments
It depends on rate structures on both sides of the meter. If power is accurately priced at time-of-use, then consumers and producers will be heavily incentivized to shift demand or production to the best price, and will finance increased use of batteries and timing tricks. The invisible hand will fix your grid for you over the long run.
Bad forced-take or flat-rate contracts on either side of the meter will bite the utility.
Right now my fixed solar panels maximize summer noon sun production, because why would I chase evening winter sun for free? My electric car can charge on a schedule, but why bother to charge off-peak for free?
If prices are negative because of excess solar or wind then consumers who buy electricity should get a discount encouraging them to buy batteries to suck up all that cheap power.
Texas used to have a program called griddy. With griddy you would pay a monthly fee to access the wholesale market. Most of the time the prices were cheaper than retail prices but some of the time the prices were 10-100x retail prices. Your savings during the cheap window were negated by the huge expenses during the expensive periods. Likewise sometimes the periods with the cheapest energy would be when you were sleeping and thus not running all your appliances to make use of the savings.
Griddy was premature. It’s a completely different animal if home owners have a 100+ kWh battery. Then you can completely shift all your purchases to the absolute cheapest times and completely avoid buying energy when it is expensive.
It would not take many people with reasonably large batteries to get rid of negative pricing.
You mix different expenses here.
Production Price is different from Grid Fee.
**Production Price can go negative.**
**Grid Fee cannot go negative.**
You pay for the production of electricity, and if there is an excess production compared to consumption, you may experience a negative price on the part of the price that is related to production.
The electricity needs to be delivered from the production sources to where you consume it. You *also* pay for this. This is a seperate fee, that will not go negative. This fee is often not just one fee, but fees for higher voltage grids and mid-voltage grids, which you are both ‘using’. The fee is used to keep the grid in order, and to advance it into the future.
Many places this grid fee may vary over 24h, due to variation in consumption. Most places see a surge in the afternoon, when families get home from work and start cooking dinner. This is usually the most expensive time to get electricity delivered through the grid. It can be cheaper during night, but it will never be negative.
The Price of Production of electricity varies due to many factors, where I think the most dominant are: weather (does the sun shine, wind blow, is it cold, is it hot) and fuel prices (gas, oil, wood, etc).
The Grid Fee varies, but usually at a fixed contractual variation. Winter may be more expensive than summer and day more expensive than night.