Counterpoint: electricity markets are terrible for reliability.<p>Markets are great, but there are no pricing signals for reliability. You won't know that your grid will collapse at the first strong breeze, until it happens (see: Texas).<p>Theoretically, it can work because companies might invest in reliable generation, in the hopes of getting $$$$$$$$$ when the spot price goes up through the roof. But in practice, pretty much nobody wants to wait 5-10 years between "income events".<p>And it's even worse in Europe. It's just a story of utter market failure.
I don't think they can be defended. In the UK last winter, generators artificially "shut down" to drive up prices. It's a rigged game that hurts consumers: <a href="https://www.theguardian.com/business/2023/mar/23/uk-power-firms-market-energy-prices" rel="nofollow noreferrer">https://www.theguardian.com/business/2023/mar/23/uk-power-fi...</a><p>The richest people I know (guys in their 30s worth 100 million) all made it through energy trading. Lots of hands in pockets here and is similar to most corrupt privatisation initiatives.
Its a public utility function. The problem is rationing. Both capex and opex.<p>Money only exists in this space to try and control things. It's not actually a good profit centre, unless 100% of the profits are hypothicated to the function it implements. The assumption was the market would equipoise to the "best" outcome. Well guess what: it only sort of works. Now we're in end-times for coal and gas look at what coal and gas electricity suppliers do, maximising their profit.<p>John Quiggin, University of Qld may be one of the last old-school economists who argue its time to walk back from this market madness. Yes, "it works, kinda" but the Kinda here is the massive amounts of market distortion which emerge to make profit, not to further the interests of the public utility function.<p>Remember, its a public utility. And, its a regulated market. This is not a profit centre, its a function we need, which has been put to market because economists believe their own bullshit and Politicians got on board. It worked, kinda.
Below is the fundamental hypothesis behind electricity markets:<p>> Efficient plants with low fuel/opportunity costs usually set the price, and prices rise slightly to bring on less efficient plants during peak hours.<p>You'll see it everywhere someone discusses electricity markets. The only problem is that this hypothesis is wrong in practice …<p>It's not so much the <i>marginal price</i> that sets which energy source start and stop, but mostly the technical flexibility of the produce mean. First of all, marginal price doesn't really exist in the first place[1], and different means of electricity production have very different ramp-up delay and costs, which is totally unaccounted by the marginal price hypothesis.<p>[1] and this isn't just the case in the electricity market, but pretty much everywhere: marginal price is a economic concept that just doesn't refer to anything existing in the real world, as illustrated by the work of Nobel Prize winner Maurice Allais.
I like the idea but not sure about the implementation.<p>Here in deep south Texas they have electricity retailers. What they do is advertise a very low fixed rate, but make it only last for 6 months.<p>Then if you don't switch to a new provider, you may end up being stuck with a rate that is effectively double what you originally signed up for. Not in the rate that they say they are giving you, but there is some fee that they are allowed to add supposedly related to the real electricity costs from the actual power company, and they make it as high as they can get away with, in order to max out the effective rate.
I, for one, want Gen IV small-modular nuclear reactors built.<p>They solve all our climate change-related challenges AND they eat the waste of older generation reactors.<p>I fail to see why we're not investing in more nuclear over solar and wind (whose components are not usually recycled)
I am still a fan of the way Texas handles its energy markets. The failures that happened a couple years ago was terrible and Texas screwed up big time but I still think its markets are better.<p>This is of course anecdotal but it always seems like most other markets in the US are not as efficient in terms of infrastructure and pricing. In Texas you have what I consider the more public utility piece, the transmission that is split between two companies. I am sure there are areas in Texas that struggle but I found Texas transmission builds and maintenance to be a lot further ahead then the other states I have lived in.<p>I always really appreciated picking my retail energy provider. There are some shenanigans here so customers need to pay attention to the pricing BUT I appreciated how this allowed more transparent pricing on a whole for everyone. I am paying a separate company for the transmission piece and then paying the generation through a retail provider who is setting a price for me and then essentially buying that capacity on the market. In other states it always feels like a struggle for the single "public utility" company to argue their way to increase or decrease rates. So instead of having many different energy generation plants which can include solar, wind, battery storage etc, I am stuck with a single company that is publicly traded. Maybe they do need to bump up rates to serve demand or maybe they are trying to also get some more profit out of it.<p>I also always appreciate the amount of data you could get in Texas.<p><a href="https://www.ercot.com/gridmktinfo/dashboards" rel="nofollow noreferrer">https://www.ercot.com/gridmktinfo/dashboards</a> - Live statewide dashboard of the grid<p><a href="https://www.smartmetertexas.com/home" rel="nofollow noreferrer">https://www.smartmetertexas.com/home</a> - You can signup can get data from your meter I think delayed 15mins.
We develop software for the german energy market (just the economic parts of it). If you are interested, look the following (we germans loooove rules and specifications :D) <a href="https://www.edi-energy.de/index.php?id=38" rel="nofollow noreferrer">https://www.edi-energy.de/index.php?id=38</a> This are just the specifications for exchanging data between participants.
A sprawling read that is difficult to follow. In particular the critical design elements of an "electricity market" are never defined, let alone convincingly defended.<p>Market dynamics is a complex interplay of market design (which influences participant behavior), market maker incentives and regulation etc.<p>There is no single alternative to a monopoly market. Turning every nano-Watt of electricity consumption into in incessant trade and emulating money markets is the market intermediary dream but it is not necessarily optimal.
Here in South Africa, energy production is starting to move more and more to individual households and businesses, because our government power utility is failing. We don't have electricity markets, but that seems to be changing.<p>Hopefully we will get robust electricity markets here. Not because I think they are intrinsically a great thing, but because they are less terrible in the SA context.
Electric water heaters have long been in demand response programs, but new upgrades improve their ability to shift energy based on real-time conditions without leaving customers with cold water. Roughly 18% of household energy goes towards water heating, though many buildings still use fuels like natural gas.<p>Would love to hear more on this point. Which companies are doing the integration?