Brian Zinchuk is editor and owner of Pipeline Online
@ReliableAB
How many businesses can stay in operation when fully one quarter of their product that they sell in a month brings in exactly zero dollars?
Because that’s exactly what happened for grid-scale power generators in Alberta for the month of June. According to data from the Alberta Electric System Operator and collected by X account @ReliableAB, 179 hours of the 720 hours in June saw a pool price of zero. That’s 24.9 per cent, or 7.5 days.
The pool price is the price paid to grid-scale power generators on the grid, unless they have some other sort of private arrangement, such as carbon credits.
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The largest variables impacting the pool price are the volume of wind and solar power generation. As they typically bid in at zero dollars per megawatt-hour, whenever there’s a surplus, the price of power for the entire pool goes to zero. Whenever you see a zero price, it is almost always associated with substantial wind and/or solar, but wind tends to have the most impact. Whenever wind power generation is over 50 per cent capacity, and especially over 60 per cent, it is common to see the pool price bottom out to zero.
Since the end of 2021, Alberta has doubled the amount of wind and solar generation capacity on its grid. The nameplate capacity of wind is now 5,684 megawatts, while solar is now 1,870 megawatts. And as a result, zero dollar pricing is becoming increasingly common.
While many people may applaud the notion of “free power,” the reality is that no business model is sustainable providing their product for free, especially for substantial lengths of time. And if you’re running a large natural gas plant, paying for staff, fuel, capitalization, taxes and more, any time the wind blows even sort of decently (half of capacity is not a lot) you get to pay for all of those items with zero income. The problem with no one making money is no one is making money.
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