re: Even Before Long Winter Begins, Energy Bills Send Shivers in New England

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Which would ring a lot more true if they hadn't shut down Vermont Yankee specifically citing the low cost of natural gas. LINK

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I think the negative pricing effect was significant in this case. Maybe not as much as low gas prices, but the possibility of significant negative pricing occurrences increased the risk of keeping the plant operating.

LINK

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Wind power has two advantages. Green energy laws in many states require utilities to buy wind energy under long-term contracts as part of their clean-energy goals and take that power even when they don’t need it. Wind farms also receive a federal tax credit of $22 for every megawatt-hour generated.

Thus, even when there is no demand for the power they produce, operators keep turbines spinning, sending their surplus to the grid because the tax credit assures them a profit.

On gusty days in the five states with the most wind power - - Texas, California, Iowa, Illinois and Oregon -- this can flood power grids, causing prices to drop below zero during times when demand is light. Wholesale electricity during off-peak hours in Illinois has sold for an average price of $23.39 per megawatt hour since Jan. 1, after hitting a record low of -$41.08 on Oct. 11, the least since the Midwest Independent Transmission System Operator Inc. began sharing real-time pricing in 2005.

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LINK

Blog, not great but seemed like a reasonable explanation. And again, I think it's mostly natural gas prices, but this is another hit, and a reminder that we are talking about pricing at a singular moment (not an average).

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1) ISO-NE is now allowing negative bidding.

This is a change from the past, when the lowest bid was zero (take our power for free). Now the lowest bid allowed is minus $150 MWh (take our power, and we will pay you up to 15 cents per kWh to take it). I wrote ISO-NE about this several weeks ago, and called them. I am still unsatisfied with their answer on this (which was off the record, but very polite).

Here's part of my note to ISO-NE (edited, of course):

This bulletin
LINK
says that negative bids will now be allowed, up to minus $150 per MWh.
ISO also says (various planning documents) that one of ISO's goals is to reduce local dependence on natural gas.
My question is the following:
Won't negative pricing availability hurt baseload plants (coal and nuclear) far more than it will hurt natural gas plants? Won't negative pricing end up giving natural gas a competitive advantage?
The answer was that ISO-NE feel that negative pricing will allow power plants to bid in more rationally, and the decision on what plants run will then be purely economic. However, base load plants will be losing far more money in times of low demand, which undoubtedly factored into Entergy's decision, looking forward.

Furthermore, it's even worse. The wind tends to blow at night, and wind energy gets two types of supplements for its power: One is a 2.2 cents per kWh production tax credit, and the wind farms can also sell their Renewable Energy Certificates (RECs) for about 6 cents per kWh. That's 8 cents per kWh, before they get paid a penny for the actual power.

So when the wind comes up on a spring evening, wind can bid into the market at NEGATIVE 8 cents kWh (-$80 MWh) and basically break even. Other plants, to underbid wind and get their power on the grid, would lose a lot of money. In other words, the subsidies for wind are now directly aimed at the ability of baseload plants to function.

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Emphasizing wind over nuclear and coal makes you susceptible to a non-diversified baseload power source.