License to Print Money

There are unprecedented levels of renewable energy feeding into the electricity grids today from wind, solar PV, ocean wave/tidal, and others.  But it's not all good news.

Imagine if you will an electricity network with a solid baseload (24/7) supply such as a large coal plant or a nuclear plant, coupled with a large wind farm nearby.  In a situation where there is a coincidence between low demand and strong supply, for example at night when the wind is blowing,  then something unusual happens.

If the wind farm produces more electricity than is required, the baseload plant may have to shut down.  But shutting down a large plant is really expensive.  It isn't a simple process, it increases wear and maintenance costs, and re-starting it takes hours and sometimes days which can result in critical electricity shortages.  The operators of a baseload plant will do almost anything to avoid an unnecessary shut down - start up cycle.

In fact, they would happily pay people to use more electricity so they won't have to shut down, which would cost them even more.  Basically, in that situation the instantaneous spot price of electricity becomes negative.  Someone will literally PAY you to take it.

How can that be, you ask?  How can perfectly good electricity ever be worth less than zero?  Well, consider the analogy of music.  Most people happily pay for the music that they really enjoy.  But if someone were playing your favorite music loudly outside your house while you were trying to sleep, you'd try to get them to stop, wouldn't you?  Would you go so far as to PAY them to go away and come back at a more appropriate time?

Renewable energy is like that.  Sometimes there's a lot of it around when it isn't needed or wanted.  Sometimes the winds blow at inappropriate times from a power demand point of view.

Imagine though, if you could accommodate the plant operators in their dilemma. Suppose you agreed to take all the excess electricity they had if they paid you, say, 1 cent per kW-h.  Remember, this is a negative price, so the producers of the electricity are paying YOU for providing the service to them of absorbing unwanted electricity to avoid a costly plant shutdown.  So far so good.

Now, a few days later when there's a heat wave and everybody's AC is on full blast, and the power plants are cranked up to eleven producing every watt of power that they can.  And the wind?  What does it do?  It stops.  Dead calm.  Gee, thanks a LOT, renewable energy!

Ah, but you step forward and say, "Remember that surplus electricity I got from you for which you paid me?  Well, here it is back again, but this time the price is YOU pay ME $0.48/kW-h.  This will save your bacon until the weather cools off this evening, so it will be worth it."  And everyone cheers loudly.  Hooray, you.

But is this technically possible?  Can we actually store city-sized quantities of electricity?  The answer is "No, not yet."

People are trying everything imaginable, and even some things that couldn't possibly work.  Batteries?  Too expensive, environmentally questionable, and they wear out too quickly.  Flywheels, compressed air and ultra-capacitors?  These completely different concepts have the same problem: the energy is stored at variable levels of potential, making much of the energy unusable.  These are useful for very short-term storage (a few seconds' worth).

Some of the more promising schemes are liquified air storage, zinc-air mega-batteries, and double-basin continuous tidal hydroelectric, which can easily absorb unused renewable power.

Essentially, whoever figures out how to store massive amounts of electricity in the presence of increasing levels of installed renewable energy capacity will have nothing less than . . .

A license to print money.  That's how valuable it will be.