Wind news | 144 comments (144 topical, 0 editorial, 0 hidden)

Re: More renewables power (none / 0)

In a new article, IWR also discusses prices, which I'm gonna paraphrase only.

EEX released numbers for September which show the average price of baseload electricity dropping to 4.47 c/kWh (from 5.26 c/kWh in September 2011), and that of peak load to 5.47 c/kWh (from 6.24 c/kWh), a development IWR is fully justified to credit to the increase in renewables (as discussed several times this year on ET). However, IWR attacked EEX for calculating the average for peak load solely on the basis of trade for workday and holiday peak load, and said the real average (including trade for Saturdays and Sundays) was just 4.92 c/kWh.

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Fri Oct 5th, 2012 at 02:15:23 PM EST
[ Parent ]

Re: More renewables power (none / 0)

I must say that I don't understand the IWR criticism. You should count only the peaks that matter, and weekend peaks do not test the envelope.

by mustakissa on Sat Oct 6th, 2012 at 05:36:29 AM EST
[ Parent ]

Re: More renewables power (none / 0)

I don't understand your argument. If power is traded as peak power, then it should count as peak power, no?

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Sat Oct 6th, 2012 at 11:41:11 AM EST
[ Parent ]

Re: More renewables power (none / 1)

What I mean is this. This is about the price of electricity, not the volume sold. Two prices are used to represent the whole price structure: baseload price and peak price. If you choose this representation, you want those two data points to be maximally separated. You achieve this by choosing for peak load the highest peaks only: working-day peaks, when power companies have to throw in their most expensive, rarely used resources.

Now the interesting thing in this comparison is not the prices themselves but their development over time (in response to the spread of renewables). Then it doesn't matter precisely how you define peak load, as long as you do it consistently over time. Then the IWR method is just as good -- just a different convention. What I don't buy is their claim that it is better.

by mustakissa on Sun Oct 7th, 2012 at 02:21:46 AM EST
[ Parent ]

Re: More renewables power (none / 1)

Two prices are used to represent the whole price structure: baseload price and peak price. If you choose this representation, you want those two data points to be maximally separated.

In what way maximally separated, beyond price? The way I see it, if there is separation in trading, anything above is artificial. Any way I look at it, EEX's number is not average peak load, it's average weekday peak load, and doesn't represent the whole price structure. If one wants to know how high prices can get, then standard deviation could be calculated.

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Sun Oct 7th, 2012 at 03:55:47 PM EST
[ Parent ]

Re: More renewables power (none / 0)

The only way to represent the whole price structure exactly is to give all the raw data. If you are allowed to give only two numbers, the best way to characterize it is IMO the one I outlined above. But there are various almost-best alternatives, and if all you're interested in is evolution over time, it doesn't matter too much which one you choose as long as you're consistent. Meaning, IWR's critique has no merit.

by mustakissa on Mon Oct 8th, 2012 at 06:37:04 AM EST
[ Parent ]

Re: More renewables power (none / 1)

If you are allowed to give only two numbers, the best way to characterize it is IMO the one I outlined above.

Best, for what purpose? It is certainly not fit for a complete representation. Regarding IWR, they aren't interested in the time evolution only; the context of this criticism is public perception of price levels.

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Mon Oct 8th, 2012 at 06:42:20 AM EST
[ Parent ]

Re: More renewables power (none / 0)

the context of this criticism is public perception of price levels

Then I think they are over-sensitive. Come on, there is more to life than spin :-)

by mustakissa on Mon Oct 8th, 2012 at 11:09:29 AM EST
[ Parent ]

Re: More renewables power (none / 1)

Spin can kill real energy policy. Price levels are the focus of the energy debate in Germany at present, with conservatives and liberals and traditional Big Energy claiming renewables cause high prices and need to be curbed.

But, you still haven't answered my question regarding for what purpose you (and EEX) consider the sans-weekend average of peak power the best measure. You obviously have something in mind when you say weekday peak power is typically more expensive, but I honestly don't know what and I'd like it spelled out.

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Mon Oct 8th, 2012 at 03:58:43 PM EST
[ Parent ]

Re: More renewables power (none / 1)

On second thought, let me be more explicit. You did write this much about the speciality of workday peak power:

working-day peaks, when power companies have to throw in their most expensive, rarely used resources

However, the situation when power companies have to throw in their most expensive, rarely used resources is not average peak load, nor average weekday peak load, but peak loads higher than that. Such peaks can appear at any time in the week when caused by a baseload plant shutdown. With the spread of intermittent renewables, these peaks can appear at any time of the day or week. Hence my earlier contention that using the standard deviation would be a good measure of price extremes. With that background, I can imagine two possibilities: either I'm not aware of something special about the usefulness of the weekday measure, or that usefulness is dated (reflecting the pre-renewables, pre-deregulation structure of the power market).

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Mon Oct 8th, 2012 at 04:21:33 PM EST
[ Parent ]

Re: More renewables power (none / 0)

Best practice would in any case be to use the full sample and then test for weekday effects. It's not that hard - we expect undergraduate economists to understand how to do it.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Oct 9th, 2012 at 04:29:07 AM EST
[ Parent ]

Re: More renewables power (none / 0)

Nothing special really. Just the highest peaks that are still somewhat common. But yes, it will always be a rough-and-ready measure. Like standard deviation for what is likely a highly non-normal distribution.

by mustakissa on Tue Oct 9th, 2012 at 05:59:30 AM EST
[ Parent ]

Re: More renewables power (none / 1)

if all you're interested in is evolution over time, it doesn't matter too much which one you choose as long as you're consistent

This is an interesting question on its own. Is the renewables-induced price reduction uniform on different days of the week?

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Mon Oct 8th, 2012 at 06:49:19 AM EST
[ Parent ]

That might be an interesting paper to write (n/t) (none / 0)

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Oct 8th, 2012 at 08:01:12 AM EST
[ Parent ]

Wind news | 144 comments (144 topical, 0 editorial, 0 hidden)

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