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How Wind and Politics Pushed the Price of Texas Electricity Below Zero
Slate dissects the strange circumstances that led the price of electricity in Texas to briefly dip not just to zero, but into negative territory, reaching at one point negative $8.52 per megawatt hour. Why? A combination of being an "electricity island" with only weak ties to the surrounding state's grids; strong wind in a state that's sprouted thousands of windmills; and infrastructure design that means the only real buyer for most electricity producers' output is ERCOT, the Electric Reliability Council of Texas. (One of the comments attached to the story notes that Texas is not completely isolated from the national grid, but it's still markedly isolated.) A slice: Demand fell—at 4 a.m., the amount of electricity needed in the state was about 45 percent lower than the evening peak. The wind was blowing consistently—much later in the day Texas would establish a new instantaneous wind generation record. At 3 a.m., wind was supplying about 30 percent of the state’s electricity, as this daily wind integration report shows. And because the state is an electricity island, all the power produced by the state’s wind farms could only be sold to ERCOT, not grids elsewhere in the country.
Wind farm owners get lots of taxpayer help paying for the construction of the wind farm, then forced production credits means they get paid if power is needed or not. Apply this to any generation technology and the result would be pretty much the same.
The model is even worse in place where the grid is forced to purchase power a even higher rates.
In this model, who pays for the reliable backup?
Based on the summary, it sounds to me like we aren't dealing with a free market here. Trade is limited, the number of participants is very small, and regulation is no doubt involved. So why the fuck would anyone be surprised when such a non-free market acts erratically? In cases exhibiting economic autism, we shouldn't expect typical economic behavior!
... if you listen to what politicians have to say about this.
There are many storage methods available for this excess energy.
Seemingly concerned with the "Texas" angle, TFA fails to mention if this is a rare anomaly or worthy of storage development.
Happiness in intelligent people is the rarest thing I know.
Ernest Hemingway
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And that market is also heavily impacted by build incentives and production credits. So in that sense it isn't truly free. I'm not suggesting it should be, BTW.
By buying land up, guys like T. Boone Pickens acquire the water rights underneath it. And what goes right alongside the powerlines? Water pipes. Wind in TX is an excuse to monopolize access to the aquifer.
That is what they claim, but if you live in an electrical cooperative area (like I do), you have exactly one supplier.
There are over 80 different electrical corporatives in Texas, covering the majority of the population and land area, and each is a monopoly.
So electrical deregulation in Texas? Not so much.
The author must have very little experience with electric utilities to think this could only happen in Texas. I've personally seen negative spot prices on MISO's (Midwest ISO) web site, and for the same reason -- lots of wind during low-demand periods in the middle of the night. In this case it was Iowa that had all the wind and very little demand. But the price is based on location due to the costs of transmission, so while it may be negative in Iowa, it would probably be fairly low positive amounts closer to Chicago.
dom
There is a plan to connect Texas to other grids. In fact a global grid would be a good idea. We could use microwave and large rec-antenna satellites to transmit power globally.
Racist?
State give 23$ per mwh of tax break. So producers were selling a -8.35 to get that tax break.
Such a non-story...
Negative prices have persisted in Texas and elsewhere for the past decade; this is not news. It is a function of the tax credit, but also a lack of transmission. When transmission is not available from wind resource areas, the prices will be negative there (and higher on the other end), reflecting the fact that wind has to back down because it can't go anywhere. There are also instances where there is simply more power than there is demand over an entire area, but this not as common; that scenario is actually a bigger problem in California due to the buildout of solar (for which there is no production tax credit, notably). Negative pricing was much worse in Texas a few years ago before they built a backbone transmission system to get wind from West Texas to load in the east. There is no doubt that the spot price of energy on average is lowered by wind; utilities nationwide are signing contracts at $20/MWh or less, well below today's average spot price, fixed for 20+ years. Interesting aside - even before there was much wind, prices in the Pacific Northwest would typically go negative for a few hours in the spring when coal needed to be paid to back down to accommodate spring runoff through the hydro system.
I'm far more interested in the percentage during the day, when it's 95-99 outside (and with 90% humidity in Houston). Heck, here in Houston in the summer, it's still 82 at 2am in August (no exaggeration--I didn't understand why my AC ran so much at night until I discovered this).
If storage has even an 50% loss rate, then daily price variation should be limited to 50% because otherwise storage batteries would make a profit.
The trick is to create a battery efficient and cheap enough to reliably make money on daily price variations.
excitingthingstodo.blogspot.com
From TFA "But wind operators have another advantage over generators that use coal or natural gas: a federal production tax credit of 2.3 cents per kilowatt-hour that applies to every kilowatt of power produced. And that means that even if wind operators give the power away or offer the system money to take it, they still receive a tax credit equal to $23 per megawatt-hour. Those tax credits have a monetary value—either to the wind-farm owner or to a third party that might want to buy them."
That is how the free market is supposed to work.
"supposed" is the operative word here because "free market" is a fiction
...not wind mills. Learn the fucking difference.
Exactly! As long as the federal government keeps their thumb on the scale for wind power, these situations will continue. This isn't the only case of negative pricing for unneeded electricity, it happens in any grid where the law is that the ISO is required to buy wind power, whether it is needed or not.
"Well, good luck finding a judge that doesn't run a bestiality site."
But rather a $23/MWh taxpayer subsidy that allowed them to pay people to take their electricity and still make money, all on the backs of the taxpayers, which is doubly insulting because Texas won't even allow that electricity to be sold back to the taxpayers that subsidize it.
If you have a better source I'll read it, but Slate is propaganda.
Generators contract much of the power to be supplied well in advance. Some is a year, some is a month, some is a day in advance. They get paid the agreed on price regardless of what the current immediate demand price is or the hour ahead market, which varies considerably. So at times of low demand, especially those not readily forecast a month or so in advance (like a moderately cool day in August so air conditioner load is low), the need for additional power might be very low. At this point, if wind generation is available, and is subsidized, the generator can pay a small amount to get their power online to get their subsidy.
Even without subsidies, the price of power on the hour ahead market can go to essentially zero. If the system operator has contracted more power than is being consumed, they aren't buying any at all. They have to pay someone for generation they bought but can't use.
> That is how the free market is supposed to work
Free market is supposed to subside production at 23$ per kwh, so people can sell at a loss?
You didn't even read the article before writing this answer.
No, that in itself isn't enough for storage batteries to be profitable. Take lead-acid batteries for example. They're a century-old technology whose primary drawback (weight) isn't a factor for storage applications. A deep-cycle lead-acid battery will cost you about $1 per Ah. At 12 V, that's $1 per 12 Watt-hours of capacity, or $83.33 per kWh of capacity.
The average residential price (the more expensive) of electricity in the U.S. is $0.12/kWh. If the price swing between day and night is $0.12/kWh ($0.18 at peak, $0.06 at night), then it will take you $83.33/$0.12 = 694 cycles to recoup the cost of the batteries and actually start to make money.
"Great! So you'll start making money after 2 years!" No, these batteries typically only last 150-300 cycles. Deep cycling is very stressful to the chemistry, and the cells rapidly begin to lose capacity beyond that many cycles. So it'll die long before you reach your break-even point. If you figure it lasts 300 cycles, the daily price differential in electricity price between day and night needs to be $0.278 per kWh before the battery becomes economical. If it only lasts 150 cycles, the price differential needs to be $0.556 per kWh. And I haven't even factored in charge/discharge efficiency.
This is why batteries are used almost exclusively for mobile applications - where it's impractical to draw power straight from the grid. Essentially you're paying dozens of dollars to carry around a few cents worth of electricity. Trying to turn that around and use batteries to release electricity back to the grid is adding a huge expense for very little benefit. It's almost always more practical to just scale electricity production up or down to meet demand, than try to time-shift it with batteries.
Actually, this isn't true at all. Wind farm owners are participants in ERCOT like any other generation facility; if there's too much power on the grid, they are given directives to throttle down, even to zero if necessary.
What we need is a way to use the excess electricity, or store it.
Storage may be coming within the next 5 years or so. I know, I know, all battery technology is "five to ten years out", but I've been following Donald Sadoway's liquid metal batteries for awhile now. They're slowly building bigger and better versions, figuring out the full-scale details before releasing it on the market. They're now very close, with no appreciable problems.
Usage is another possibility. Nitrogen fixation (via the Haber process) makes Ammonia for fertilizer. It's energy expensive, and uses about 1% of all the world's energy.
Within limits, an ammonia plant can be started and stopped. I won't say "easily", or "instantaneously", but it's entirely possible to build a plant that can run in bursts of a couple of hours.
We could put an ammonia plant in the middle of wind territory and shunt all unused power to making fertilizer.
Or, perhaps a different manufacturing process would suffice - something that can be started and stopped quickly, and without ruining the equipment.
Or, perhaps we could shunt unused power towards liquefying CO2 from the atmosphere and pumping it back into unused oil wells.
Once we have excess power to dispose of, there's a world of possibilities that we couldn't do before, because it would be "too expensive".
Just generate hydrogen and sell it to the chemical industry. (And pure oxygen, while you're at it. It's also worth something.)
Ezekiel 23:20
There's nothing "free market" about it. Negative wind prices only happen because of federal subsidies of $24/MWH. That why producers are willing to pay $8/MWH for someone to take it. A free-market price of about $16/MWH is the best you could hope for.
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
The problem here is the state being an island site. Better interconnects to other parts of the US would make this a complete non-issue (and improve reliability within Texas too...)
Lead-acid batteries work reasonably well for homes, but aren't a good option for grid-scale installations. Try the numbers with a Redox Flow Battery. The operating costs (after up-front installation costs) are more favorable:
http://cleantechnica.com/2014/...
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
The US uses million and millions of barrels of oil every day. If we replaced that with electricity, and wanted to store even a few minutes worth of a small section of a states energy supply either we have two options: Store it in a medium with about the same energy density of gasoline or crude oil. - We are talking about taking up the area of hundreds of thousands of cubic meters for even just a small section of a state. Store it in some yet undiscovered way that is orders of magnitude smaller. - You just created an incredibly volatile and powerful bomb.
Troll is not a replacement for I disagree.
In principle true, but storage alone is not enough, you need the grid, too.
E.g. if own a nice spot for a pumped storage plant, but there is only a low voltage connection to the grid, we need a better grid connection and of course that includes information technology when to draw power from the grid and how much and when to idle and when to generate power.
Also the grid operators need to know my capacity, both ways, all the time.
Pumped storage by the way has no 50% loss rate, it is about 81% effective, in some cases up to 85%.
The trick is to create a battery efficient and cheap enough to reliably make money on daily price variations.
There are plenty of more tricks which not even require smart grids, like the Ammonium Factory example, cooling houses or domestic hot water storages, electric cars etc.
Cost free eBook I read (by iBook/Kobo/Amazon/ObookO/Gutenberg etc.): "The Green Odyssey" by Philip Jose Farmer.
They can whine about how Texas should do this, should do that, should share, should tax, should do everything.
Meanwhile, Texas IS doing something, and they're self-sufficient. They're successful, and they've worked hard for it.
So get over it, get off slashdot and do something for yourself. WTF.
If storage has even an 50% loss rate, then daily price variation should be limited to 50% because otherwise storage batteries would make a profit.
50% loss rate energy storage is easy and it exists. It is simply a hydro electric dam with pumps to pump water upstream behind the dam. I have read about using such a scheme to even out the difference between peak and base load in a grid. I read about one such project back in 1980s
. The Chief Minister who inaugurated the project was a ex-movie actor, who completely misunderstood the project. He said it would generate power when the water flowed down, then they will pump the water back up and make energy again and again, effectively a perpetual motion machine!
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Texas could solve their problem by connecting their grid to the rest of the country that they supposedly belong to.
I don't know where you got the idea that CO2 doesn't have a liquid phase, but it actually has a pretty standard looking phase diagram. It's triple point is within easy reach of a home experiment if you want to see for yourself.
No free market has ever existed. Not even the most primitive tribes have markets that are free of taboos, rules, some form of taxation or regulations. The concept of a free market exists to fool people who really don't think things out. Tell me that some markets are freer than others and I will tell you my sister is a little bit pregnant. It makes no sense at all. She either is pregnant or she is not just as you are free or not.
Anyone that can come up with an effective electrical storage company can make a ton of money with spot negative prices
According to the article this is the first time it actually happened, and the circumstances were very unusual. So don't spend too much of your own money on electricity storage just yet.
We've been told for years that we need to subsidize wind power so that there will be investment in wind power development so that it can compete on the open market with coal. It looks like we've reached that goal. Wind power can produce up to 40% of the power in Texas and that sounds like a success to me. I believe that wind can now compete on its own merits now.
For those that will inevitably point out that coal gets subsidies too, I say those need to go away too. No more energy subsidies.
I am armed because I am free. I am free because I am armed.
"Just"? Hydrogen is very inefficient to compress and not very useful uncompressed. If you react it to store it, then you have thermal losses going both directions and because hydrogen has an atomic weight of 1, anything you mix it with for storage purposes will have a relatively low energy density. Over time it turns even the hardest steels brittle and is a pain to handle. And then there is the fact that it is an explosion hazard. There is no "Just" when it comes to hydrogen.
A bigger army, southern wall on the border, and strong leadership are all that is in our way to succession.
Hahahaha. That's a good one. I've lived in Texas for over thirty years.
Texas is the most protective of markets. They'll deregulate, as long as it is deregulated within Texas. As soon as someone wants to invade Texas, watch how quickly they throw up the barriers.
Tesla Motors?
Maybe they can pay for the $1000 per kilowatt hour that Enron charged California. And that I'm still paying for.
Is the massive lay off of oil fraking since the price has been so low. The energy prices have gone way down because when the oil and gas came in they propped up solar and wind farms all down wind of san antonio. Now that alot of the oil is drying up (due to low oil prices), the work has left and now there is a surplus of energy.
Texas / ERCOT is in the process of connecting to other grids. Look up Tres Amigas SuperStation https://en.wikipedia.org/wiki/Tres_Amigas_SuperStation.
Repeat after me...wind turbine.
Calling a wind turbine a wind mill is like calling a car a horseless carriage. It's an archaic and incorrect description. When people say "wind mill", they are announcing their technical illiteracy.
Wind turbines are modern devices that convert the kinetic energy of the wind into electricity.
Wind mills were used in the past to mill salt and grain. Spanish gentlemen were said to tilt at them occasionally.
Go forth informed, my friends.
Left MS Windows for Linux Mint and never looked back!
Vote for Bernie in 2016!
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Nice observation, but you should have read the parent's post in full.
"The trick is to create a battery efficient and cheap enough to reliably make money on daily price variations."
It is obvious to most that lead-acid hasn't and doesn't make economic sense. Other chemistries such as vanadium redox and improvements to existing batteries such as lithium based cells are where the optimism lies. The vanadium redox battery has no cycle limit and seems ideal for large installations at power stations. Lithium ion is better suited for substations, where it can deal with local demand and supply (home solar) spikes. The latter can prevent the need for natural gas peaker plants. While the $0.18 peak rate you mentioned is the average, which includes base load elements, the peaker plants themselves are much more costly. A battery can be economical if it costs less than both the construction and operational costs of these peaker plants.
That will be one of the major policy responses to this situation. Whatever barriers exist to grid connectivity will gradually (or maybe not so gradually) get worn away.
The price may have gone below zero, but the cost did not. So, somebody got stuck with the difference.
There's no time like the present. Well, the past used to be.
On the other hand, something like liquid batteries (useless for transportation, obviously, but great for fixed installations) have a pretty much unlimited lifespan, as the interfaces are all just immiscible liquids and most everything that kills regular batteries (dentrite formation, crystalization, membrane degradation) are not present. Likewise manufacture should be fairly cheap:
http://www.ambri.com/technolog...
(not promoting this particular company, but they seem to actually be working on it).
Sam