Trade · 6 pages · 12 min
Why negative prices can be rational
A generator may pay to keep producing when stopping costs more than the negative price.
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From the opening
A negative price means a generator pays to produce, or a consumer is paid to use more, for that interval. It can be rational when the cost of shutting down, restarting, or missing a contractual or physical constraint is larger than the money lost by running at a price below zero. The opening covers shutdown can cost more, credits can reward running, and surplus meets inflexible plant.
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Inside
- Shutdown can cost more
- Credits can reward running
- Surplus meets inflexible plant
- Congestion makes local negatives
- Where the idea stops applying
- A distinction worth keeping
Sources
- Negative wholesale electricity prices
- Must-run generation constraints