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If you have access to the wholesale market, yes...
In practice, some industrial companies will be able to stop their normal production and make money instead by not consuming the power they would normally use (or by using their backup- typically diesel - generators instead...

Wind power
by Jerome a Paris (etg@eurotrib.com) on Wed Dec 26th, 2012 at 10:33:58 AM EST
[ Parent ]
In practice, some industrial companies will be able to stop their normal production and make money instead by not consuming the power they would normally use (or by using their backup- typically diesel - generators instead...

But that wouldn't help, would it? Not with negative electricity prices. What you would want to do is store the excess electricity somewhere... like in hydrogen

by mustakissa on Tue Jan 1st, 2013 at 10:09:25 AM EST
[ Parent ]
It does help - the negative price (received by the industrialist for not consuming (because it usually has longstanding orders for power with priority access, which it accepts to cancel) helps to pay for the higher cost of using diesel generators instead of normal power supplies.

Or the gain on cancelling existing power contracts is higher than the margin made with that power on their own industrial process (ie the industrial company makes more money selling its rights to power than actually using the power).


Wind power

by Jerome a Paris (etg@eurotrib.com) on Wed Jan 2nd, 2013 at 12:04:02 PM EST
[ Parent ]
the negative price (received by the industrialist for not consuming

Eh, that's a double negative. In what direction does the money move, and in consideration for what?

Confused

by mustakissa on Wed Jan 2nd, 2013 at 03:07:43 PM EST
[ Parent ]
If an industrialist had bid (the day before) for demand of, say, 1MW over a peak time hour, and agreed (at the last minute) to not consume that 1MW, the industrialist will obviously not pay for power it is not buying, but will in addition receive some money for having cancelled its demand.

Obviously, that means the industrialist does not have power in that period, which means that it can either (i) not produce during that period or (ii) use another source of power. The economics of either solution depend on the ability to stop production or not, the marginal cost of the production process (including and excluding electricity) and the availability - and cost - of backup power capacity on site.

The economics further depend on whether the industrialist had hedged or not its power purchases (if it has hedged its purchases, it will get the high spot market price from the counterparty and pay back the agreed fixed price, which can represent significant sums of money and make the interruption of production, or the use of expensive backup, still profitable given the negative payments and the rest)


Wind power

by Jerome a Paris (etg@eurotrib.com) on Wed Jan 2nd, 2013 at 04:51:40 PM EST
[ Parent ]

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