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Pricing Unscheduled Electricity Could Facilitate Financing of GE Turbines

August 7, 2009

Analysis of:Iraq can't pay for massive GE Energy contract | www.energycentral.com

India has implemented a bulk power pricing plan for unscheduled electric generation. The real time price uses a negatively sloped formula driven by system frequency. When there is a shortage of power, the physics of the electric system results in a decline in system frequency and an increase in the price for electricity. This type of pricing formula could provide a revenue stream for some of the GE turbines, a revenue stream that would support third party financing of the GE turbines.

Wind Energy--Too Much of a Good Thing

May 28, 2009

Analysis of:The Clean Energy Bubble Will Most Certainlky Burst | www.woodmacresearch.com

A surfeit of wind energy is pushing down the price of all electricity.  The real time price of electricity in West Texas, where almost all generation is wind, was negative for 23% of April 2009.  The negative prices spilled over to the rest of Texas for about 1% of the month.  This may be the future of the electric industry, with negative prices for a substantial amount of time each month.

Optimizing Profitability Regarding Aluminum Prices and Electricity Prices

January 9, 2009

Analysis of:Alcoa to slash jobs and sell 4 units | www.reuters.com

The aluminum industry has seen price pressure before: ·          The pull of aluminum prices ·          The push off electricity prices Optimization requires looking at both sets of prices.   Electricity is a major portion of the cost of making aluminum.  For any world wide price of aluminum, some local electricity prices result in certain smelters being uneconomic.  Though the price of aluminum has dropped by 50%, the price for electricity is likely to drop similarly in some parts of the world.   Alcoa may be well situated to take advantage of the mix of electricity prices available to it around the world, cutting production in high cost areas, while maintaining production in low cost areas.  Its flexibility depends on the contracts Alcoa has, mostly for electricity, but also for labor.

Wind Power Will Require Storage Devices and New Pricing Plans

July 28, 2008

Analysis of: When the wind stops - the other side of the wind turbine argument | www.telegraph.co.uk

Whether wind power is a good idea or not, the wind power concept has political traction and will be implemented.  Electrical engineers must develop better contingency plans for when the wind stops.  Regulators must create a competitive market forms both for when the wind surges and for when it stops.   The sudden loss of wind will require more backup generation: perhaps inefficient simple cycle gas turbines which can start in minutes; more likely storage devices such as pumped hydro, flywheels, superconducting magnets, and thermal storage in the form of load control, switch off water heaters, pool pumps, and aluminum smelters. These greater customer interactions will require unconventional pricing, most likely prices that can change dramatically in a matter of minutes, or even seconds.  An aluminum smelter with underfrequency relays may need to be off for a few seconds to keep the system stable.  There must be a real time way to provide that compensation.

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