Comment by ZeroGravitas
2 days ago
Not sure if it's discussed in the paper but apparently in Australia there have already been recorded instances of batteries charging with negative price electricity and then selling back that electricity at a still negative but closer to zero price and so profiting.
When I first heard it, it seemed wild that they couldn't hold on for the price to go back above zero, but I guess if we're talking high frequency trading it makes more sense. They might have bought and sold many times while the price is different levels of negative before switching to charging up in preparation for the later price rises.
And the round trip inefficiency helps too.
That's not as ridiculous as it sounds!
As you know, negative electricity prices mean that someone is willing to pay you to dispose of electricity they need to generate for some reason. For example, a conventional steam-turbine-based electricity plant might prefer to just keep running for a brief period of time when demand is low, rather than subject their equipment to a power cycle, which increases their maintenance costs. There's other, dumber, examples based on stupid contracts and badly designed solar... but this example is a reasonable one that exists for good engineering reasons.
The battery provider in this circumstance is profiting from their ability to accept power when demand to dispose of electricity is particularly high. When that need goes down, they can reasonably profit by dumping that energy on someone else who is also able to dispose of the electricity. But at a lower cost. E.g. imagine an big industrial refrigerated storage facility that can consume some excess energy by supercooling their refrigerators. But they can't consume unlimited excess energy, because at some point their warehouse just gets too cold, and they don't have unlimited refrigeration capacity anyway.
So in this simplified example, the battery storage service is getting paid a lot of money to quickly absorb a lot of energy, which they then dump more slowly to the refrigerated warehouse (and similar providers) as the surplus diminishes, in anticipation of another surplus in the near future.
> That's not as ridiculous as it sounds!
I'm not sure: why doesn't someone 'just' put up a few resistive heaters and fans to benefit from negative prices?
If one is incentivized (eg, paid) to burn power, then sure: One can burn power and reap the incentive. It can happen in any market. The producer has so much abundance of a thing, for whatever reason they do, that they're willing to pay others to get rid of it for them.
It can even happen productively: "Hey, they're paying us to run the heat! Turn the glass kiln on so we can get a head start on tomorrow."
Or "Hey, they're paying us to charge our batteries! Let's charge them!"
It can also be "Hey, they're paying us to run resistive heaters! Turn on the artificial sun!"
Whatever it is: If the demand satisfies the supply, then the supplier is satiated. And then the price can go back to something more-profitable for that supplier.
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Freight trains have very powerful versions of those onboard. You'd just have to repurpose them. It's called "dynamic braking".
https://en.m.wikipedia.org/wiki/Dynamic_braking
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Because it doesn't happen often enough to be worthwhile, you're better off just building a battery and being able to make profit every day.
People do - but the actual answer to your question is as you’re implying: it’s not as simple as “you get paid to consume”.
There are negative spot prices in Europe all the time - but they are not usually negative enough to make up for the grid fees and taxes. Or they are in countries like Germany that hasn’t rolled out smart meters, so consumers have no way to access spot prices
Oxygen capture and liquid nitrogen seems like a great use of negative prices.
If it was so profitable, why wouldn't the electricity utility do it themselves? Certainly, they have the scale, infrastructure, and pricing power to do it.
Oh, that's right. This is supposed to be wealth transfer.
If you find a hundred dollars on the ground you don't pick it up because in an efficient market somebody else would have already picked it up, hence it can't be real?
Even if the arbitrage exists, it does not mean you are equipped to profit from it. Furthermore, the rapid installation of battery capacity means that the profit margin for this activity is likely to dwindle as more entrants try and do the same thing.
What do you mean by electricity utility? Which organisation specifically? The electrical supply is usually formed of multiple organisations with different responsibilities, which usually works pretty well, but it generally means that e.g. storage, transmission, and generation are not one single organisation.
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I’m just guessing but it probably isn’t so profitable. More like a “you already have the batteries, so why not?” type thing.
Someone at the generation facility ran the numbers and found that the grid was able to dispose of excess energy for peanuts but installing and maintaining a dedicated electronic load cost more than peanuts.
I'd recommend digging elsewhere for conspiracy bait. This is a mild curiosity at best.
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Your electric utility could be doing this if they were more forward thinking and installed grid scale batteries, but that's not their business model so they don't do it.
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One reason, that I understand has applied in Germany, is when taxes are applied both to the electricity the storage firm buys and to that which it sells. This puts a damper on the whole thing unrelated to any actual technical or economic realities.
> and then selling back that electricity at a still negative but closer to zero price and so profiting.
How is it not better to discharge the batteries instead? I guess if you don't have that hardware option integrated into the platform maybe, but otherwise...