Comment by dublinben
2 years ago
This is known as a Virtual Power Plant.[0] In the case of this cryptocurrency company, they are selling the electricity that they "would" be consuming if it wasn't being bought back from them. If they hadn't "sold" it back to the grid, it wouldn't have been available to be used by other customers.
What an absurd name for basically a big resistor generating heat you are paid to disconnect from the grid when it’s about to go up in flames. They need batteries not sudoku solver bots. Talk about doublespeak in this case, wow.
So let me help you understand how this works.
A grid needs a base load to function properly. Energy producers can't just scale up or down production whenever demand changes. When people talk about "solar and wind can't supply the entire grid we need batteries to store it" this is what they're talking about. Some amount of electricity must constantly be produced to keep the grid functioning. Nobody buys this energy and the cost of it is rolled into the energy people do buy.
So what if someone out there needed a lot of energy all the time? Well, you can sell that constantly produced energy to them, and whatever they pay for it customers don't have to pay for it. You can decrease prices, waste less energy (from a producer perspective; if you think bitcoin mining is a waste of energy it is wasted either way, but to the producer it is sold) and everyone wins.
But, in times of peak load, when that energy is used and needed, you need the newfound customer of it to be able to not need it on short notice. So you need a customer who isn't going to freeze to death without it. This is where bitcoin mining comes in. They negotiate a deal for the base load energy, buy it, then, when the grid needs them to shut down, sell it back. This is all done at pre negotiated rates and the energy is sold as an option, which in this case means on the condition that they have to sell it back if the producer or grid maintainer or state or whoever needs to use it.
I understand how it works. They need a different mix of generation capacity, grid interconnections and storage. Ideally, they'd have adaptive load like EV chargers that slow or stop charging in response to grid asks. This is just an abject planning failure incentivized by crypto waste, and most importantly what it isn't is a "virtual power plant." If the actual power plants turned off, would the virtual power plant be able to supply electricity?
> Energy producers can't just scale up or down production whenever demand changes.
They can with storage, and with power plants that have variable generation capacity - so not nuclear, but gas peaker plants, etc.
If there is no buyer for excess solar/wind electricity, then it must curtail and earn less income.
Less income means it takes longer to pay off initial capital costs and generate return.
Slower investment return from solar and wind deployments means expansion of them will take longer.
If wind and solar takes longer to roll out at full scale for financial reasons, then our goals towards fossil fuel reductions takes longer.
Therefore, if you can find a buyer who will suck up any excess solar and wind and pay them, we eliminate fossil fuels quicker.
> If there is no buyer for excess solar/wind electricity, then it must curtail and earn less income.
Solar and wind have the lowest marginal costs of production, which means they'll win out on the wholesale power markets. Furthermore, Texas is a state with increasing population growth and increasing energy needs (hotter planet means more A/C, after all), and has regularly been setting all-time highs on daily energy consumption. So there'll always be a buyer for the excess electricity.
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It also pushes the market rate below the marginal cost for thermal generation.
remember, everyone: markets are the most efficient way to allocate resources :)