The spot price is decided on a demand basis. This model makes sense when there is a good portion of base loaded generation. However when the base loaded generation is insufficient (as it is now) this model causes major issues.

It is an auction based system; where you bid your number of MW at a price, for the upcoming period (6 or 10 minutes from memory). Everybody gets the highest bid price, but the grid can only take what is demanded. So the price is set by the bid that meets the final demand.

So lets say that you are a geothermal generator, you can't easily throttle your plant. So you bid in the auction at a very low number (1c / MW), because you want 100% of your power to be taken.

Lets say you are a hydro plant, you can throttle your capacity semi-quickly, so you bid a realistic number ($80 - $120 / MW), and you want most to all of your power to be taken.

Lets say you are a wind generator, your output is fairly predictable, but not perfectly. You know you will probably be able to output ~80% of your capacity reliably. You can throttle your output by furling your blades, you bid around the same as a hydro.

Finally lets say that you are a peaker plant, you are spinning reserve eating gas at a low rate hoping there is a grid event (trip of a major generator) you cost ~$20/MW to run at idle (generating no power into the grid). But in a grid event where you can supply to meet demand it may be $5,000 - $50,000 / MW for an hour or so while the grid is stabilized.

Now to the shake out:

In normal operation, the base loaded generation all bid crazy low numbers, and this should account for ~80+% of your generation; next the hydros and wind take up the final 20% giving everyone around $120/MW (2023 numbers around $150/MW).

Should a grid event happen, one (or more) of the spinning reserve (peaker plants) will put in a special price and take up the slack (the peakers compete for this); depending on what is available you can get some crazy high numbers.

In our current situation, we don't have enough base loaded plant, and the hydro plants have low lake levels. So we can't supply the demand, with the assets we have, wind is great but leads to a lot of fluctuation in the market which the hydros are not able to dampen like usual. So the spinning reserve is being called on far more than it should.

What we need as a country is to increase the base loaded generation (more hydro, more geothermal) in the past coal was base loaded. Once you get enough wind a big portion of it can be considered base loaded.

The model we have works well if there is incentive to build and maintain base loaded generation, but the power companies make more money when they get to use their spinning reserve.

[–] [email protected] 3 points 2 months ago (5 children)

We're incredibly fortunate to have so much hydro too, because it can be ramped up and down so quickly, so it works very well to fill in the gaps in base load.

Dams that have low water levels still work quite effectively as peak plants, too.

[–] [email protected] 2 points 2 months ago (4 children)

I know, it isa real boon for the country.

I was discussing how we could extend our current generation capacity quickly.

Floating solar on the resivours/lakes would bring new generation close to the grid connection points, the water acts as a battery.

Obviously significant DC-AC converters would be required, but we could get new generation in a few months, rather than years.

[–] [email protected] 1 points 2 months ago (1 children)

Floating solar sounds like a bit of a gimmick to me, I suspect if it was as easy as the people promoting it make out, it would already be everywhere.

It also doesn't help that our hydro is mostly at the other end of the country to where all the sun is.

[–] [email protected] 2 points 2 months ago (1 children)

There is a bunch of hydro along the Waikato. Lakes are huge.

Current most efficient panels are 750W giving an power density of ~350W/m2. With all of the gaps and extras you can probably get a system density of around 250W/m2.

Using this assumption, we are looking at 1MW/acre.

Floating 10 acres of panels (or using the nearby river bank) would supplement 10MW of generation during the day, reducing the draw down on the lake level. Do this at the 9 dams along the Waikato that is another easy 90MW without major infrastructure costs.

The capital outlay is also very small, compared to trying to get another 90MW plant built and commissioned somewhere.

[–] [email protected] 1 points 2 months ago (1 children)

The capital outlay may be small, but the ongoing maintenance on a floating structure like that would be quite high, certainly compared to a fixed installation.

[–] [email protected] 1 points 2 months ago

Maybe, it is not like the ocean. The lakes don't have big waves to deal with etc...

The benefit is that there are not any trees and plant growing above where you want your panels.

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