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Published on July 5th, 2014 | by Giles Parkinson

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Queensland Solar Creates Negative Electricity Prices (In The Middle Of The Day)

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Renew Economy 

The combination of low demand and strong output from the Queensland’s 1.1GW of rooftop solar helped send the state’s electricity prices into negative territory on Wednesday – in the middle of the day.

Daytime electricity prices have historically been the “cream” on the cake for electricity generators because that is when demand is usually the highest, and prices too.

But the emergence of rooftop solar as effectively the fourth largest generator in Queensland has changed the dynamics of the market, particularly on fine, sunny and warm winter days that have been experienced this week. Demand is weak because there are no air conditioners in use, electric heating is not required, and the sunny days means that solar output is strong.

aemo solar price

As this graph above from the Australian Energy Market Operator shows, demand (the green line) in the middle of the day is plunging between the appliance-driven morning and evening peaks. At this time, the output of solar increased to around 60 per cent of its capacity (see below), accounting for more than 10 per cent of demand and sending out more than 600MW of capacity at certain times.

This situation has been exacerbated by restrictions on the interconnector with NSW, which means Queensland coal generators have been unable to send excess electricity to its southern neighbour, adding to the excess capacity in its own market.

As we reported yesterday, this has caused wholesale energy prices to plunge, highlighting the changing dynamics which are afflicting wholesale markets, and why fossil fuel generators want to slow or halt the progress of rooftop solar and other renewables.

On Tuesday this week, the wholesale price of electricity (in red in graph above) skirted around zero for several hours in the afternoon, and on Wednesday they plunged to minus $100/MWh at 2.20. (They were back at zero on Thursday morning between 11am and noon).

apvi solar qld july 2

Negative pricing events are not unknown, but usually occur at night, when an excess of capacity and low demand in the early hours of the morning results in some generators willing to pay others to take their output rather than close down.

This has happened for years due to overbuilding of base load coal generators, but has become more frequent with the addition of more than 3GW of wind energy across the southern states.

A negative pricing event in the middle of the day is extremely rare. One trader in the market said he could not remember such an event. Bidding, however, has been confused and unpredictable because of the proposed repeal of the carbon price, which will be backdated if and when it happens.

As we explain here, some generators appear to be bidding into the market with a carbon price, and others not.

Source: Renew Economy. Reproduced with permission. 






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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • Doug

    Shouldn’t negative prices motivate investment in energy storage? Talk about buy low and sell high!

  • tomandersen

    If the coal generators shut down half their plants, they will make scads more money -at the expense of lost jobs as industry will need to shut down every day that renewables don’t happen to work at capacity.

    The owners of the plants know all of this, and are sacrificing profit to keep the lights on. At some point they won’t bother.

    Its a tough thing to imagine, nice people in charge of coal, but these are also the same people that own all the wind and solar the world over, so they make money no matter what generation system people choose.

  • spec9

    There should be a text message that goes out to all EVs and charging stations that says “Free electricity available”. That will help sell EVs and solve the ‘negative electricity price’ “Problem”.

    • Bob_Wallace

      If utilities were wise they would start huge “Buy an EV” programs. Offer cheap charging power and rebuild grid demand.

      The AU grid, if I’ve got things straight, is suffering from a lot of spending on poles and wires. The higher utilities can drive demand, the more kWh over which they can spread those costs. They could cut their distribution caused demand losses and make it easier to withstand their fossil fuel plant write-offs.

      Quit fighting solar. Become solar brokers and EV enablers. Buy wind and storage for when the Sun isn’t shining.

  • spec9

    There is lots of R&D. But it is difficult work and you don’t know if you’ll get results.

  • spec9

    And yet some people think solar PV doesn’t work.

    • tomandersen

      Well if solar PV was treated as a real producer, there would be no negative prcing events, as there would be no solar.

      Negative pricing is a sign that the market is more soviet like and less real. Waste like this always makes more pollution, as Germany has shown, with its rising pollution levels.

      • CsabaU
      • Ronald Brakels

        Hello Tom. Are you saying that when Queensland has a negative price event at night, which does occur, it is caused by solar? Because if so, that would be quite a neat trick.

        • eveee

          Yes. It’s because of storage. Sarcasm alert. ;)

      • Bob_Wallace

        Solar is a real producer. And it’s kicking traditional fossil fuel producers in the tender areas.

        Negative pricing is an indication that the grid needs to close some fossil generation and get on with modernizing the grid.

        • CaptD

          Bob – And its articles and comments like these that will help inform the masses that they don’t have to remain in Utility Slavery, since Solar now offers ever more a path toward Energy Freedom.

  • CaptD

    I hope other Utilities Globally “suffer” from the same problem ASAP.

    You can be sure that they are doing everything they can to “tweak” their power curves to protect themselves and their shareholders from losses due to increased residential Solar usage.

    • eveee

      Yet some still argue utilities will just increase rates to make up for their mistakes. Hmmmmmm….. And wonder why customers like generating their own power.

  • Ronald Brakels

    We don’t need energy storage yet. Well, it would be nice to have, but it’s not necessary at this point. Queensland already has a pumped storage facility, but the electricity price only went negative for about 15 minutes. Obviously it’s not possible to pump a whole lot of water in that time. (Although upgrading the facility with larger pumps is an option if it looks like it would pay for itslef.) Solar power would have to triple in Queensland before it could exceed demand on high sunshine low demand days such as sunny weekends or holidays. And before that happens the price of daytime electricity will be much lower shifting demand and putting that day off even further. And then, once solar power does start regularly exceeding demand we’d have to decide is it more cost effective to build storage or just live with the fact that at times we’ll have excess clean electricity. (There are worse things to have.) The cost of energy storage at that point will determine where the sweet spot between storage and shugging our shoulders is.

    Currently it looks very likely that energy storage will be located in homes and businesses in Australia. The costs of storage are coming down fast and I imagine it will be pretty standard in a few years for people to have at least a couple of kilowatt-hours battery storage put in when they either install rooftop solar or replace an old inverter. (Unless of course the smuggled budgies that control our dear leader’s mind succeed in making protecting the environment a federal crime.)

    • Bob_Wallace

      Your other option is to get a lot of EVs and PHEVs on your roads. Plugged in, with a smart charger, they could suck up the cheap power and push the need for grid storage further into the future.

      • eveee

        Yes. The whole storage thing is interesting. The first effect of solar is to quash the daytime peak and reduce the need for storage. That is not exactly what critics had in mind. The next effects are only starting. The markets have not yet adapted. As daytime prices fall possibly negative, it spurs action to store or use that surplus. As EVs come online in the next decade, what happens next? Sounds like daytime charging, and even possibly mid evening V2G power from the EVs. Makes one wonder where and how soon storage will really be needed. Why are markets not figuring out what to do with cheap long term storage? Thats what I want to know. Seems like there is no seasonal TOU market to drive them. You think?

        • Bob_Wallace

          More likely daytime EV charging with V2home during evening peak hours.
          Storage (like PV) is more affordable at the end-user level because grid prices are retail, not wholesale. The big question is whether it will cost less to purchase dedicated batteries or replace EV batteries sooner than otherwise would be required.

      • Ronald Brakels

        Yep. A Nissan Leaf battery pack now has a storage cost of about 5 cents or less a kilowatt-hour. The difference between the feed in tariff for new rooftop solar and the cost of grid electricity is now about 25 cents or more for most Australians. (You can see why I’m certain home and electricity storage will become standard.) And half or more of our household vehicles are parked at home for most of the daytime. Even just used passively to soak up cheap electricity they can be a very useful storage mechanism.

        • Ronald Brakels

          Sorry, sorry, about 17 cents a kilowatt-hour. But the point still stands.

          • CaptD

            Ron No Worries Mate…

            DC rules thanks to Solar (of all flavors) and I’m happy to say that Solar’s cost, (initial setup, generation efficiency and its storage) will only keep getting less thanks to both R&D and ever more people shifting away from traditional generation ASAP.

            Mankind’s future is bright, especially where the Sun shines…

          • eveee

            I might quibble with 17c and agree with something lower. If we start with balqons complete solution, 34kwhr for 12k US, and posit that a LiFe battery gets much higher number of cycles at small reductions in depth of discharge (3 to 6x) it’s possible and even likely to have 7,000 daily cycles. Given that the average residence is less than 20 kwhr/ day and that load balancing is a fraction of that, the chances are good.
            You can find all the numbers at Winston battery and Balqon. I have run them. They need a cost of money calculation based on a series of energy outputs. A first calculation without interest gets you to below 10c. A more refined calculation with interest is more difficult. Suffice to say that 17c is conservative.

          • Ronald Brakels

            Well, at a 5% discount rate, 7,000 daily cycles, and $353 dollars a kilowatt-hour of storage, and no maintenance costs, that would come to about 8 cents a kilowatt-hour. If limits on battery discharge limit useable capacity to 80% that puts the price up to about 10 cents a kilowatt-hour. Unfortunately an installed system with the necessary electronics is not currently available at that price here.

          • eveee

            An inverter seems to be included. Maybe need to check further to make sure that is not an extra cost option, but the literature says its there. Installation might be extra though. The Balqon unit is a complete solar to 120VAC solution. Battery pack, BMS, DCtoDC for the solar to battery, and finally inverter to give you 120VAC. Thats everything. They guarantee 3000 cycles at 80% DoD. If you back off to 70% DoD, it just about doubles. I think the c/kwhr actually improves going to 70% DoD because the cost is divided by a larger number of cycles. Not available? Bummer. Here are some rough calculations. See what you think. 12650 paid back over 20 years in annual payments at 5%, is about 1000 dollars. I am a little rusty, but capital recovery factor i=5%, n=20, is 0.08024 . Its not perfect, but you can just sum up the expected cycled (stored) energy for 1 year and put it in the denominator. Check to see if this is correct. 365 cycles at 70% of 36kwhr is 9.198e3 kwhr. The cost is about $1e3/9.198e3 kwhr or about 11c/kwhr.

            Actually, from Winston 80% DoD is 5000 cycles, but they derate to 3000 cycles on this pack. At 70% DoD the cells go to 8000 cycles.

            http://www.balqon.com/wp-content/uploads/2013/07/39_39ES30HD_HIQAPa.pdf

            http://www.balqon.com/store-2/#!/~/category/id=2860254&offset=0&sort=priceAsc

          • Ronald Brakels

            I’ll probably read through those links in detail later, but what is clear is that whether people go for just a few kilowatt-hours of storage from high performance batteries, or for lower cost per kilowatt-hour but larger storage that allows them to go off grid with perhaps a small generator backup, home and energy storage is going to have a major effect on electricity use in Australia. We have plenty of sunshine, low solar installation costs, and terribly high retail electricity prices.

          • eveee

            Yup. Australia and Hawaii seem to be places where there is motivation to have power options to reduce costs. When one considers that an EV has about the same amount of storage and a V2H or V2G is only a few K, … well there are many options besides standalone storage.

    • Doug

      Isn’t the negative spike largely a symptom of a poor electricity distribution network? A fatter pipe would allow that electricity to reach to areas a few miles away where prices aren’t negative?

      Also, adding battery storage could help smooth out those spikes, right?

      • Ronald Brakels

        Well, the short answer to that is no. Negative prices generally occur when demand is far from its peak and so the transmission lines aren’t overloaded and there is no problem sending electricity long distances. What is the problem is that coal plants don’t like to shut down. They hate it. Every start/stop cycle causes wear and tear, costs money, and has a real chance that some kind of damage or malfunction will occur. Some coal plants are more flexible than others and generally speaking the newer the coal plant is the less risky it is to shut down. So coal plants will play chicken with each other and hope someone else will go offline first, or perhaps demand will pick up. It can be a lot cheaper to lose money for 15 minutes than to shut down.

      • Ronald Brakels

        Enough battery storage, or other energy storage could help reduce or eliminate negative price events. This storage could be on grid or in homes and businesses. But to get rid of negative price events alltogether it would have to be quite substantial.

  • Ronald Brakels

    The important point of the article are the low wholesale electricity prices in the daytime. Temporary negative energy prices could and would exist in Queensland even if they had no solar power. (They have next to no wind power.)

    Meanwhile, in South Australia we had a negative price event at about 6:20 yesterday (Saturday) morning. Thanks to higher gas prices and the distinct possibility that our carbon price was removed on Tuesday we now have a unit running at the Northern Power Station coal plant instead of shutting it down for the winter as we did last year. Rather than shut down the coal unit once wind was sufficent to meet all demand they just paid a couple of cents a kilowatt-hour to use the grid as a big resistor for about 20 minutes or so.

    • Ronald Brakels

      And wholesale electricity prices went negative again this morning. This time for a couple of hours and at considerably more cost. And it’s expected to happen again tomorrow morning. At this rate maybe the coal plant should consider installing some thermal storage.

      • CaptD

        Great comments and yet another reason the SA will become ever more attractive to those seeking a clean Green place to live.

        ===> DC rules thanks to Solar (of all flavors)

  • JamesWimberley

    The seasonal inversion is interesting. germny gets negative eprices on windy winter days, and sunny summer ones. This is happening from solar in the (very mild) Australlan winter.
    Netflix should commission a TV soap opera called “Desperate Generators”, with skulduggery against the renewable enemy, crooked politicians, mental breakdowns, and sex on the boardroom table.

    • Bob_Wallace

      I imagine the fossil fuel folks are so worried that they can’t get it up….

      • Offgridmanpolktn

        But then in the season finale when their resistance to change results in bankruptcy the deathbed affect will kick in and these bereft corporate leaders will turn to each other for a consoling lovemaking session on the boardroom tables as the offices close down around them for the final time.
        And if the mind picture of that hasn’t caused you to change the channel then the credits can roll over the final scene of the green producers laughing as they carry their bags of money to the bank.
        And apologies for turning anyone else’s stomach with this vision, couldn’t help but to extrapolate out a proper soap opera end to our pretend drama.

      • CaptD

        Bob – Your comment brings to mind an early TV actor in the Life of Riley, who use to say, “What a revolting development this is” all the time…

        • Bob_Wallace

          Man, Capt, you’re a lot older than I realized. (Or watch a lot of reruns.)

          I had totally forgotten about Life of Riley.

          • CaptD

            I don’t think I’m old enough to call you a Whipersnapper… ;^)

          • Bob_Wallace

            I’m only middle-aged. 70 is the new 40 (except for my knees which are more like 90).

  • Bob_Wallace

    There’s a tremendous amount of research being done on large scale energy storage.

    There are many different battery technologies being developed, including flow batteries and molten metal batteries. Some of these are already being installed/used.

    In addition there are systems which store energy in hot rocks and compressed air as well as some unusual ideas.

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