I'm not a fan of most reporting of these negative price events.
First, they rarely explain why the price is negative. As the article explains, solar can switch itself off, so it's nothing physical about solar that can cause negative prices, as all solar can switch itself off before it goes negative it would bottom out at zero for those reasons.
In most cases I've seen so far, contractual agreements with gas, coal or nuclear (who struggle to switch themselves off quickly without hurting themselves) have been the reasons for negative pricing and the grid wasn't actually at 100% renewable at the time of the curtailment. In other words, solar switches itself off, while other, dirtier plants get fined (negative price!) for demanding that they be allowed to still run.
In South Australia they're doing pretty well on renewable, so it's possible they actually are at 100% renewable at these times (would be good for the stories to clarify). If that's the case then the negative price is most likely caused by subsidies to wind that are paid per generation. If the subsidies to two renewable plants are different then one will bid the other off the market at that point since the price can go down to the opposite of the subsidy before they make an actual loss.
All in all, these negative prices are useful market signals. I wish the weren't covered by journalists who seem to think negative numbers are taboo for some reason.
The fact that it's the same plant that gets switched off repeatedly (rather than all solar reducing output) makes me think this is either a contractual thing that only affects its owner or a regional transmission thing that only affects its geographic location. Again, would be nice for stories to find out which.
The thing about a coal, gas or nuclear plant is that they can't switch off as fast as solar. Solar can switch off in the span of a microsecond without much of an issue.
A coal/gas/nuclear plant might actually need the entire day to shut down operation to 0 kW output. And probably needs a day to get back to full operation. So in cases of negative prices, a solar energy producer can do the sensible thing and switch off while a plant operator will probably try to weather it.
I agree. Negative prices make perfect sense in electricity markets, and journalism does a bad job at explaining it.
Supply and demand must always be in equilibrium in real time with electricity (forgetting storage / batteries for a second). If there is more supply than demand or vice versa, then you have instability in the grid and can have blackouts. Those electrons have to go somewhere. This is in contrast to virtually any other good where you can store the good in a warehouse and smooth it supply intertemporaly.
Thus, if there is a big drop in demand or it's simply too sunny / windy of a day, there can be too much supply.
To incentivize reducing supply quickly enough, sometimes prices have to go negative. This is in part because some supply simply cannot reduce quickly (e.g. nuclear) and are still happy to operate in zero price situations bc either they have no marginal cost of generation (solar, wind) or the cost of reducing generation and increasing it back up is high (nuclear, coal).
Thus, there simply might not be enough plants that have the characteristics where they can scale down quickly AND have a marginal cost of generation such that they would turn off when prices go to zero (e.g. combined cycle natural gas plants can turn on and off very quickly and don't want to be on when the price falls below the cost of the gas used to generate electricity, but Australia doesn't have enough of them to absorb a supply decrease as prices fall). Alternatively, the subsidies that you mention shift the break even point into negative prices territory.
Either was, negative is needed to incentivize solar and wind to turn off or else there would be a blackout from oversupply.
Thankfully, this all gets solved with energy storage and all the slow, dirty systems that stay on will be priced out by more nimble renewables and rapid energy storage. Bc then that excess supply is stored and arbitraged to higher price times (when the sun isn't shining and wind isn't blowing). Then prices should always be positive (so long as there is available storage). If the storage is full though, prices could again go negative. Without a place to put those electrons, they quickly go from a good to an externality. It's almost like how we'll pay a musician to perform, but if your neighbor is blasting music at 3am. Without someone willing to consume and pay for those electrons, they literally are just causing trouble for all the other electrons that we do want to consume.
It in part why you can't simply just create significant generation and hook it into the grid anywhere without working with the grid operator. AC power, dude. We don't control where those electrons flow directionally. So you adding too much power somewhere can really destabilize the system.
> "combined cycle natural gas plants can turn on and off very quickly"
Response/ramp times for CCGTs are not particularly quick. Typically they need 15 minutes notice to initial grid synchronisation, a further 60-80 minutes to reach full power output from a "warm" start, and up to several hours from a "cold" start. That's much better than coal-fired plants which need many hours of notice, but still likely to be too slow to respond to unexpected grid imbalances without additional support.
Natural gas "peaker" plants typically use less-efficient but faster responding OCGTs for that reason.
some supply simply cannot reduce quickly (e.g. nuclear)
What is it about nuclear that makes it impossible to reduce as fast as gas or coal? From my layman's point of view, they all use comparable (steam) turbines to power the actual generators, so I would expect them to be equally capable of disengaging the generator from the turbine.
Is this perhaps due to design decisions, or simply a size problem? A foolish question perhaps, but I don't have more knowledge to draw from.
The nuclear part of the reactor is slow to react to control input. Even when completely switched off it produces hundreds of megawatts of thermal energy. This is what doomed the Fukushima reactor. After the earthquake it was technically switched off, but required a lot of cooling as the nuclear reactions continue to go on even with the control rods completely extended. But with the failure of the power supply there was not enough cooling and the reactor eventually melted. Theoretically it should have been possible to passively cool this reactor, but due to operators mistake, one important valve was in the wrong position for that.
Beyond shutting down slowly, nuclear reactors are even slower to start up again. So after a complete shutdown it can take up to two weeks to put a reactor back into full production.
It is conceiveable to build nuclear reactors which are a bit quicker to ramp up and down - I guess more like the reactors of nuclear submarines, but our existing reactors are not suiteable for that, as this was not a requirement when they were designed. They were designed to be combined with quicker providers like gas and water plants.
I don't think you answered the question. The way I read it was "Why can't the nuclear power plant simply vent the steam they create instead of turning turbines with it?" In order to switch off power generation, even if the reactor is still creating thermal energy.
That could possibly done, but then, no one had created such a design yet. It is also not trivial to cool in the gigawatt range. Actually, many power plants even run into cooling issues in some time of the year, as they often rely on local rives to provide the cooling and the water supply as well as maximum water temperatures (animal and plant live) limit their cooling capacity in normal operations.
In Belgium there were even streetlights being installed along all highways to use up nuclear energy when the grid was not consuming it.
So extrapolating from what you said, these negative price events should incentivise energy storage solutions. Which arguably seems to be a good thing for the network. I suppose it should not be a surprise that the use of a thing incetivises the infrastructure necessary to make it more efficient, but it still does surprise me ;-)
So as awesome as the wind production tax credits are in creating many GW of wind power (in the US at least), it did result in many wind farms being able to submit offers that are artificially low. That lowers price signals for everyone else too and causes market distortion.
That market distortion is the whole idea. Similar to a carbon tax, it's intended to correct for the market distortion of externalities from pollution and carbon.
If we just left the market alone it would make inefficient decisions. It's not perfect but it's moving things in the right direction.
I think your point misses part of the market's intent. If you want the market to act correctly, you have to model the carbon or greenhouse constraint in the opmization.
That way you'll send the proper price signals and incentivize new generation or other assets (badly needed in much of the US). What we're currently doing fixes one problem and causes another. This is why ERCOT is having to do things like add in a $9000/MWh ORDC (among other reasons). The prices are just too low.
Towards the end of the article there is discussion of coming factors that may eliminate the negative price shutdowns: a) construction of grid interconnects to New South Wales, and b) new pumped hydro storage to enable time shifting (i.e. using daytime power to enable nighttime generation).
> In most cases I've seen so far, contractual agreements with gas, coal or nuclear (who struggle to switch themselves off quickly without hurting themselves) have been the reasons for negative pricing and the grid wasn't actually at 100% renewable at the time of the curtailment. In other words, solar switches itself off, while other, dirtier plants get fined (negative price!) for demanding that they be allowed to still run.
No contracts or fines are necessary. The plant is making the power and dangerous or expensive things will happen if nobody takes it. So they pay for it to be disposed of.
> "No contracts or fines are necessary. The plant is making the power ... So they pay for it to be disposed of."
They only pay if they are selling into the market at the market rate. Often, large operators will have some or all of their output contracted to buyers at a fixed contractual rate, so they are not affected by negative prices.
South Australia gets additional energy from grid interconnections from other states, and it's gas turbine power plant at Torrens Island.
Additional power from other sources like diesel generators when required
In South Australia (SA) there's a few market-specific reasons why floor prices (here -$1000/MWh) occur:
1. Older wind farms have PPAs (essentially a swap) that have no floor. They make the strike price regardless of the market price, so they bid at floor to ensure dispatch.
2. System strength constraints [0] usually limit the amount of wind and solar in SA when there is a lot of intermittent generation (SA is never 100% wind and solar because of this). Because of the way constraints are implemented, these generators are incentivised to bid at floor to ensure maximum dispatch. If everyone bids their capacity to floor, everyone gets turned down 'equally'. If you bid above floor (say at your marginal running cost), you get turned down more (and probably off completely).
3. The market operator (AEMO) also routinely intervenes in the market, directing gas generation to remain on for system strength. AEMO strangely implements this with two separate prices [1]. One for dispatch (accounting for the intervention) and one for payment (an estimated price without intervention). It's often the case that the dispatch price is at floor, again incentivising everyone to bid at floor to ensure dispatch, while the payment price is at or above $0/MWh.
This usually results in a very delicate market where a large amount of capacity is bid at floor (-$1000/MWh) and the next bid is usually at or above $0/MWh. A reduction in demand (hello rooftop PV) causes the price to fall off a cliff. The other thing to remember here is the settlement price (the actual price that is paid to generators) is an average of the six 5-minute dispatch prices over a half hour which can distort 5-minute price signals (there is a rule change fixing this coming into effect in 2021).
Negative prices are definitely useful, but in this case I think these issues distort the signals. I'm not sure what the solution is, there is some talk of a market redesign [2] (but I'm not sure that's a great solution either).
If I'm reading your comment right then the negative price is mostly a an accounting fiction.
If solar farms are bidding -1000, but not getting paid that (i.e. not paying that) when they deliver power, just using it as a placeholder like null, then the price isn't actually -1000.
First, they rarely explain why the price is negative. As the article explains, solar can switch itself off, so it's nothing physical about solar that can cause negative prices, as all solar can switch itself off before it goes negative it would bottom out at zero for those reasons.
In most cases I've seen so far, contractual agreements with gas, coal or nuclear (who struggle to switch themselves off quickly without hurting themselves) have been the reasons for negative pricing and the grid wasn't actually at 100% renewable at the time of the curtailment. In other words, solar switches itself off, while other, dirtier plants get fined (negative price!) for demanding that they be allowed to still run.
In South Australia they're doing pretty well on renewable, so it's possible they actually are at 100% renewable at these times (would be good for the stories to clarify). If that's the case then the negative price is most likely caused by subsidies to wind that are paid per generation. If the subsidies to two renewable plants are different then one will bid the other off the market at that point since the price can go down to the opposite of the subsidy before they make an actual loss.
All in all, these negative prices are useful market signals. I wish the weren't covered by journalists who seem to think negative numbers are taboo for some reason.
The fact that it's the same plant that gets switched off repeatedly (rather than all solar reducing output) makes me think this is either a contractual thing that only affects its owner or a regional transmission thing that only affects its geographic location. Again, would be nice for stories to find out which.