[hn_throwaway_99]

To deal with the inherent fluctuations in renewable energy sources, you have 2 options: 1) Storage, and right now while there is a lot of R&D into large-scale energy storage, there aren't really any great solutions yet, and 2) Non-renewable backup, e.g. natural gas plants. Since it's easy to have cloudy or windless conditions for days or weeks on end, your backup plants basically need to be able to run at full capacity if you want to prevent blackouts.

Thus, with renewable sources, you need to have the capital investments of both the renewable plant and the backup plant(s).

[kahnjw]

This does not answer my question.

The identifying characteristic of capital cost is: does not change over small time intervals, it is fixed up front and amortized over the lifetime of the asset.

This article and OP are talking about price spikes which are a symptom of short term (days, hours, minutes) market dynamics.

The reason that prices spike has nothing to do with capital cost and everything to do with short term demand/supply fluctuations.

[gwright]

Fair enough. You were focused on the short term spikes and I jumped to the larger issue of a reliable grid that had backup power.

The connection in my mind is that if you shift your mix of generation plants towards renewables then you have less ability to respond to outages of any kind. Could be cloudy days, windless days, failed transmission lines, and so on.

The advantage of a coal/gas/hydro/nuclear plants is that you can control the amount of power they are producing. That isn't true with wind/solar. You certainly can't turn them up and I think (but I'm not sure) it is difficult to shed power that they generate (i.e. turn them down).

Those price spikes are last ditch attempts to purchase power to meet demand before moving to brown/blackouts. Just another side-effect of not having an appropriate mix of generation capacity.

[hn_throwaway_99]

The argument is that in order to be able to deal with the higher short-term variability inherent with renewables you have higher up front capital costs.

[8bitsrule]

>there is a lot of R&D into large-scale energy storage, there aren't really any great solutions yet

Re#1: Storing water in a reservoir behind a set of generators is a pretty good solution.

R&D isn't needed. Energy storage is not rocket science or necessarily expensive. You just use excess energy to lift something high ... pump it or railroad it uphill, or stack it. Reverse to power generators. Of course that's just a boring, cheap, low-tech, well-proven solution.

Re#2: Of course if you try rewewables in the wrong place, you get unsatisfying results. With a big enough reservoir,'days or weeks' isn't hard ... and so you don't need backup plants. Even then, while costs of backup plant fuels are high. renewable fuel costs are nearly zero. At the right sites, the average costs are at least competitive.

[hn_throwaway_99]

FWIW, the proposed costs for doing what you recommend with Hoover Dam is $3 billion:

https://www.nytimes.com/interactive/2018/07/24/business/ener...

Couple this with water shortages exacerbated by global warming and hydrostatic storage is by no means a panacea.

[cma]

Isn’t less AC used when cloudy, meaning less than full capacity needed? Presumably some industrial uses can adapt with changing supply as well. If the biggest peak usage is in wintertime the AC thing may not apply, but I don’t think that is the case in Australia.

[kwhitefoot]

There is a third option and that is demand management. Just turn off the load when the price is high. This can work for things like domestic water heating, space heating if coupled with modest amounts of heat storage, charging electric vehicles when the price is low.

We need to use all of them.