Here in the Netherlands we have some energy companies offering dynamic tariffs. Basically it means that the price is high when the demand is high, and on contrary, the price is low when the demand is low. When the energy supply is greater than the demand the prices can become negative, I.e. -0.05 ct per Kwm
And the negative price is what amazes me. It means you earn money by using electricity. So in theory I can built a giant hamster wheel which will be powered by electricity only when the price is negative, and it will make profit. Free money for doing nothing
Does anybody knows how negative energy prices work?
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if you see negative prices and you start using a lot the demand increases and its no longer negative I guess 😅
If you’ve got more of something than you know what to do with, you may pay someone else to take it away.
Say you’re the power provider and demand has dropped, for reasons. You’d like to shut down one of your generators but you know you’re going to need it in a few hours when demand picks back up, and restarting it isn’t as simple as flipping a switch.
That is practice to shift consumption (rapidly) to different timeslots. Power production is most profitable with least operational cost when cobsumption is as even as possible
You could, but you’re already behind the curve as there are plenty of places already hooked up to do this automatically
The grid is powered by a bunch of spinning generators, in Europe your generators will be spinning at 3000 or 1500 RPM (50 Hz). If you put more demand on the grid the generators will slow down a bit until the plant can start burning more fuel and generating more steam to get them back to 3000 RPM. Similarly if demand drops the generators will speed up until the plant can cool down a bit. For big changes it could be a matter of completely starting up another plant or completely shutting down a plant which both take a while..
This is annoying for the plants and if the frequency gets too far off normal (>1% or so) it can start damaging the hardware so power companies incentivize customers to help them balance supply/demand
Industrial and commercial buildings will have communications with the power company already set up. This is generally used in the summer for load shedding where the power company sends a signal that causes all the office building ACs to slow down a bit to reduce load, but it can also work the other way
Its basically “hey, precool your buildings to keep the grid happy while this unit uses up the last of its steam”
maybe its for encouraging crypto miners to mine only at night
they will mine anyway but this way, they wont overload the grid during the day
Not every power plant can easily adjust their power production to match demand. Especially nuclear and coal power plants take quite some time to adjust to demands. If they shut off the steam supply to their turbines they still have a lot of high temperature high pressure steam in their boilers and very hot reactor/fire to deal with. So when they have too much steam they will sell power with a loss in order to get rid of the steam. This tends to happen whenever there is a lot of wind. It is very hard to predict the output from wind power plants so generally the coal and nuclear power plants will build up a bit of steam even though the forecast say it is going to be windy just in case it is less wind then expected. This leaves them with a bit too much steam. It costs money to transfer power so the wind turbines will be running full production in order to meet local demand but the coal and nuclear plants in other areas are not able to pay the transmission fees and compete with the wind turbines. So they sell the power with a loss locally instead.
It should be mentioned though that you are not getting money for using power. In addition to the power you also have to pay for the power transfer from the power station to your house. So the net cost of the power will still be positive. But if you need to use power anyway then using it at these times will be preferential.
To keep the grid stable, energy production and demand have to be matched. Some forms of energy production can be switched on and off at will, while others are very inflexible and have to be gradually spun up and down, or there might not be the necessary infrastructure to switch them off because it’s needed so rarely. And then on top of that you have all the business stuff – in most countries, there isn’t a single monolith in charge of all this: instead there are a whole host of different private companies involved in producing, consuming and distributing energy, which have all kinds of contracts and regulations they have to follow, and all kinds of financial incentives and penalties.
When demand is very low, the producers that can switch off their production do so, but for some it can be worth paying other companies to take their electricity off them. If this happened a lot, then obviously it would be possible to profit from it. For example, you could set up some kind of energy-hungry business, like an aluminium smelter, that only runs when electricity is free or negative. In fact, there are already plenty of businesses like that which only operate when electricity is cheap. In most countries, negative prices are a pretty rare event, which only happen when those businesses are failing to soak up all the production.
Some machines and systems, you have to keep running: the startup and cooldown cycles are too rough to do more than once or twice in the system’s lifetime. We saw this with oil production in April 2020, when demand crashed due to lockdowns, but the oil wells and pipelines had to keep pumping, or they’d be too hard to restart.
When an power plant is like that, you *have* to keep producing electricity, or you’ll brick the plant. You’re not just indifferent to customers using your electricity, you *need* them to.
These dynamic prices aren’t only dependent on demand, but on supply as well. Not only is demand lower during the day, but supply is high. This is a result of the fact that nuclear and coal can’t be shut off quickly and the abundance of sunlight and wind during the day.
To keep the power grid intact, it is essential to match demand and supply. More supply than demand can really damage the power grid. Energy companies can avoid this by offering energy at a cheap price (or even give money for using energy).
And yes, you could make money out of it by only using power during that time frame.
Generators spin at a set frequency that matches the grids electrical frequency (50hz in Europe, that’s 3000rpm).
Due to their massive weight and other echnical reasons power provider usually want their generator to ALWAYS spin at that frequency, never more, never less as this puts strain on their components.
Keep that in mind.
If the grid wants more power than the generators provide it causes the frequency to drop and generators to slow down (bad).
The energy providers compensate that by reducing the load on the grid to get back to that wanted 50hz. Usually done by restricting large power consumers.
This works the other way around aswell.
Low demand on the grid, generators spin faster (really bad). So the providers want to increase the power consumption until the generators adjuster their output.
So they actually pay companies to consume power, in other words the cost of energy becomes negative.
Fun fact:
These adjustments are done in 3 steps.
Best case is storing the excess energy in various ways.
If that’s not enough you “waste” the energy to prevent the grid from becoming unstable
At worst case you disconnect power producers, this in most cases causes heavy damage on the spinning turbines
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