7 ms·

Seems like a lot of complexity that can be solved by simple spot pricing for electricity. With spot pricing you can decouple solar and battery storage, as batte

Seems like a lot of complexity that can be solved by simple spot pricing for electricity. With spot pricing you can decouple solar and battery storage, as battery owners can make a profit by storing electricity when it's cheap and selling it when it's expensive. Solar power owners can just sell to the grid at market rate.

ThatPlayer 3y ago
The majority of consumers at home would against spot pricing like that. California already has time-of-use pricing. Peak hours are 4-9pm when there's no solar. Peak usage is people coming home from work, turning on their lights, stoves, hot water, ovens, air conditioning, etc. Are they supposed to not do that? Raising those rates too much would just be raising rates for everyone, just so those who are rich enough to afford solar panels and batteries make more profit.
- nawitus 3y ago
  In a spot price system you can use electricity when the price is higher than average.
  - ThatPlayer 3y ago
    Yes, but when the majority of people cannot change their habits to match prices, you're just raising electricity rates.
    - nawitus 3y ago
      I'm not expert in the system in California, but usually consumers are already paying the average spot price (plus some significant margin, which takes into consideration the demand profile of the consumer). Switching to spot pricing would not raise rates, and if consumer would adapt slightly to spot prices the average rate would actually decrease.
    - wcoenen 3y ago
      I keep an eye on the day-ahead market prices (which determine the hourly prices for time of day contracts) here in Belgium. It turns out that the energy price charged by a traditional contract matches the peak price of a typical day, plus a healthy profit margin. This makes sense because most electricity is consumed when prices peak. So switching to a time of day contract does not actually raise your effective price per kWh, at least here in Belgium. Instead, it more or less keeps the same price for peak time, while giving you access to much cheaper energy off-peak.
      - senkora 3y ago
        I don’t know the specifics of your contract, but I wanted to note that something similar bit a lot of Texas residents a few years ago: https://theconversation.com/whats-behind-15-000-electricity-bills-in-texas-155822 https://theconversation.com/whats-behind-15-000-electricity-... They were exposed to electricity spot prices and got bit hard when they spiked during a winter event that overloaded the grid.
        deleted 3y ago
        [deleted]
        nawitus 3y ago
        Europe has a max price and prices are determined on the previous day.
Ekaros 3y ago
At least on all supply side. Including residential. On demand side, I think fixed price contracts could be allowed. It is then up to those contract providers to buy enough future contracts at lower price to generate profit. Or just ride it out and hope their math was correct.
spywaregorilla 3y ago
Works great until one day your energy goes up in price by a factor of 10,000.
- lotsofpulp 3y ago
  Is it possible to set your power to shut off if it breaches a certain price?
  - Ajedi32 3y ago
    Yeah this would be the way to go. Intelligent, automatic, prioritized, voluntary, per-household (or even per-device) load shedding with no central planning required.
  - ars 3y ago
    It's not just possible, it's actually done in practice. You pay a lower rate and allow the utilities to shut off your power during peak demand. Usually people will have two meters - a regular one at full price, and a lower priced one that's connected only to heat pumps. It's marketed as "let us control your thermostat for lower electric rates".
  - post_break 3y ago
    This was done in Texas. You could get power at pass thru rate. The freeze came and griddy, a pass thru supplier begged everyone to switch because the rates would explode due to market demand pricing. Those who didnt switch got charged thousands because it's straight pass thru pricing. Some who knew how this worked just turned off their breakers or switched to generators. Those who refused complained to the state, and then of course the rest is history. https://en.wikipedia.org/wiki/Griddy https://en.wikipedia.org/wiki/Griddy
    - mlyle 3y ago
      This is an issue where there just weren't sane defaults. Some people will want power to be turned off at the slightest increase in price. Most people will tolerate a small increase in spot pricing over the normal state of affairs, but would like to be disconnected if, say, electricity more than doubles over what would be normal for that time of day. Other people will tolerate huge increases in price-- and should be able to opt into this behavior after careful acceptance of disclosures. Indeed, having different thresholds where demand goes away is essential for spot markets to work. Otherwise, the only change in demand is from those actively watching the spot rates (either through automation or manually). It makes sense to provide a minimal level of that automation "built into" the product.
Animats 3y ago
Tried that in 2001. See https://en.wikipedia.org/wiki/2000%E2%80%9301_California_electricity_crisis https://en.wikipedia.org/wiki/2000%E2%80%9301_California_ele...
amalcon 3y ago
The problem with unrestricted spot pricing is that it's easy to end up with a surprise bill due to circumstances beyond your knowledge or control. E.g. the heating system fails in the apartment complex next door, so everyone plugs in space heaters. Your bill goes up also due to the increased demand. They can get insurance to cover this sort of eventuality -- can you? I know two ways to fix this. First, obviously, you didn't say "unrestricted". There are various ways to restrict spot pricing to alleviate these issues, e.g. guarantee each home a particular amount at a fixed rate, and overages are at spot rates. Second, the "knowledge" angle can be attacked -- if you know that's happened, you can turn down your thermostat.
- nawitus 3y ago
  In Nordpool the prices are set the day behind so there's no surprise bill. If the spot price goes up one actually should pay more, which incentives reducing electricity consumption. I think your apartment complex example is not that realistic as it won't affect the spot price. Something more like a war will..
oivey 3y ago
Yeah, and then I can buy some insurance / hedges against the spot prices of electricity, day trade my air conditioner, and complete the financialization of my life.
toast0 3y ago
I don't think spot pricing for electricity is all that simple. I don't think it's really reasonable for households to pay the raw spot pricing. Someone else (utility company? government?) should be backstopping the prices for them. Time of use pricing based on typical prices seems reasonable enough. For large industrial consumers, sure; let them pay based on actual costs, and they'll adjust their peaks to save money, which helps even out the supply/demand, which is great. For electricity producers, spot pricing isn't really enough either, though. There needs to be some compensation for available capacity as well as generation. I agree that it makes sense to try to decouple solar and storage though. Storage's ability to move capacity from peak generation to other times is valuable and should be compensated, and there's no reason to tie it to generation.
- nawitus 3y ago
  96% of Norwegians use a spot price contract. Seems to work just fine.

ThatPlayer 3y ago

The majority of consumers at home would against spot pricing like that. California already has time-of-use pricing. Peak hours are 4-9pm when there's no solar. Peak usage is people coming home from work, turning on their lights, stoves, hot water, ovens, air conditioning, etc. Are they supposed to not do that? Raising those rates too much would just be raising rates for everyone, just so those who are rich enough to afford solar panels and batteries make more profit.

nawitus 3y ago
In a spot price system you can use electricity when the price is higher than average.
- ThatPlayer 3y ago
  Yes, but when the majority of people cannot change their habits to match prices, you're just raising electricity rates.
  - nawitus 3y ago
    I'm not expert in the system in California, but usually consumers are already paying the average spot price (plus some significant margin, which takes into consideration the demand profile of the consumer). Switching to spot pricing would not raise rates, and if consumer would adapt slightly to spot prices the average rate would actually decrease.
  - wcoenen 3y ago
    I keep an eye on the day-ahead market prices (which determine the hourly prices for time of day contracts) here in Belgium. It turns out that the energy price charged by a traditional contract matches the peak price of a typical day, plus a healthy profit margin. This makes sense because most electricity is consumed when prices peak. So switching to a time of day contract does not actually raise your effective price per kWh, at least here in Belgium. Instead, it more or less keeps the same price for peak time, while giving you access to much cheaper energy off-peak.
    - senkora 3y ago
      I don’t know the specifics of your contract, but I wanted to note that something similar bit a lot of Texas residents a few years ago: https://theconversation.com/whats-behind-15-000-electricity-bills-in-texas-155822 https://theconversation.com/whats-behind-15-000-electricity-... They were exposed to electricity spot prices and got bit hard when they spiked during a winter event that overloaded the grid.
      - deleted 3y ago
        [deleted]
      - nawitus 3y ago
        Europe has a max price and prices are determined on the previous day.

Ekaros 3y ago

At least on all supply side. Including residential. On demand side, I think fixed price contracts could be allowed. It is then up to those contract providers to buy enough future contracts at lower price to generate profit. Or just ride it out and hope their math was correct.

spywaregorilla 3y ago

Works great until one day your energy goes up in price by a factor of 10,000.

lotsofpulp 3y ago
Is it possible to set your power to shut off if it breaches a certain price?
- Ajedi32 3y ago
  Yeah this would be the way to go. Intelligent, automatic, prioritized, voluntary, per-household (or even per-device) load shedding with no central planning required.
- ars 3y ago
  It's not just possible, it's actually done in practice. You pay a lower rate and allow the utilities to shut off your power during peak demand. Usually people will have two meters - a regular one at full price, and a lower priced one that's connected only to heat pumps. It's marketed as "let us control your thermostat for lower electric rates".
- post_break 3y ago
  This was done in Texas. You could get power at pass thru rate. The freeze came and griddy, a pass thru supplier begged everyone to switch because the rates would explode due to market demand pricing. Those who didnt switch got charged thousands because it's straight pass thru pricing. Some who knew how this worked just turned off their breakers or switched to generators. Those who refused complained to the state, and then of course the rest is history. https://en.wikipedia.org/wiki/Griddy https://en.wikipedia.org/wiki/Griddy
  - mlyle 3y ago
    This is an issue where there just weren't sane defaults. Some people will want power to be turned off at the slightest increase in price. Most people will tolerate a small increase in spot pricing over the normal state of affairs, but would like to be disconnected if, say, electricity more than doubles over what would be normal for that time of day. Other people will tolerate huge increases in price-- and should be able to opt into this behavior after careful acceptance of disclosures. Indeed, having different thresholds where demand goes away is essential for spot markets to work. Otherwise, the only change in demand is from those actively watching the spot rates (either through automation or manually). It makes sense to provide a minimal level of that automation "built into" the product.

Animats 3y ago

Tried that in 2001. See https://en.wikipedia.org/wiki/2000%E2%80%9301_California_electricity_crisis https://en.wikipedia.org/wiki/2000%E2%80%9301_California_ele...

amalcon 3y ago

The problem with unrestricted spot pricing is that it's easy to end up with a surprise bill due to circumstances beyond your knowledge or control. E.g. the heating system fails in the apartment complex next door, so everyone plugs in space heaters. Your bill goes up also due to the increased demand. They can get insurance to cover this sort of eventuality -- can you? I know two ways to fix this. First, obviously, you didn't say "unrestricted". There are various ways to restrict spot pricing to alleviate these issues, e.g. guarantee each home a particular amount at a fixed rate, and overages are at spot rates. Second, the "knowledge" angle can be attacked -- if you know that's happened, you can turn down your thermostat.

nawitus 3y ago
In Nordpool the prices are set the day behind so there's no surprise bill. If the spot price goes up one actually should pay more, which incentives reducing electricity consumption. I think your apartment complex example is not that realistic as it won't affect the spot price. Something more like a war will..

oivey 3y ago

Yeah, and then I can buy some insurance / hedges against the spot prices of electricity, day trade my air conditioner, and complete the financialization of my life.

toast0 3y ago

I don't think spot pricing for electricity is all that simple. I don't think it's really reasonable for households to pay the raw spot pricing. Someone else (utility company? government?) should be backstopping the prices for them. Time of use pricing based on typical prices seems reasonable enough. For large industrial consumers, sure; let them pay based on actual costs, and they'll adjust their peaks to save money, which helps even out the supply/demand, which is great. For electricity producers, spot pricing isn't really enough either, though. There needs to be some compensation for available capacity as well as generation. I agree that it makes sense to try to decouple solar and storage though. Storage's ability to move capacity from peak generation to other times is valuable and should be compensated, and there's no reason to tie it to generation.

nawitus 3y ago
96% of Norwegians use a spot price contract. Seems to work just fine.