this post was submitted on 28 Apr 2025
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Ughh, no, negative prices aren't some weird "capitalism" thing. When the grid gets over loaded with too much power it can hurt it. So negative prices means that there is too much power in the system that needs to go somewhere.
There are things you can do like batteries and pump water up a hill then let it be hydroelectric power at night.
But it doesn't say "it can generate too much energy and damage infrastructure", they said "it can drive the price down". The words they chose aren't, like, an accident waiting for someone to explain post-hoc. Like, absolutely we need storage for exactly the reason you say, but they are directly saying the issue is driving the price down, which is only an issue if your not able to imagine a way to create this infrastructure without profit motive.
Economists think in terms of supply and demand. Saying it drives prices down or negative is a perfectly good explanation of a flaw in the system, especially if you're someone on the operating side.
Why is it a flaw from an economic perspective?
Both generation and consumption of electricity have a supply and demand. This is perfectly accepted in many other markets as well. We also had negative oil prices during the first Covid spike because the excavation cannot be stopped immediately. Certain industries like foundries also struggle with fully shutting down and restarting operations so sometimes they rather sell at a loss than stop operations. Farmers sell at a loss when the market is saturated just to sell somewhere and in other years they make a good profit on the same produce (assuming they actually have market power and aren't wrung dry by intermediate traders).
In terms of energy per capital investment and running costs solar power is among the cheapest energy sources, cheaper than fossils and much cheaper than nuclear power. So it is profitable overall to run solar power, even if sometimes the price is negative.
Nobody here is suggesting that we should avoid solar power because of this.
But the point is that it is not even a flaw from an economic perspective. There is demand both for short term flexible and long term stable energy production and energy consumption in the grid. If you assume prices to be a suitable instrument, which most economists do, then the negative price of the production is a positive price for the short term consumption.
Boy do I hate economists.
Why? Economists ≠ capitalists.