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how is this sustainable in the long term? if the energy companies are paying their customers, won't the companies run out of money eventually? and if they run

how is this sustainable in the long term? if the energy companies are paying their customers, won't the companies run out of money eventually? and if they run out of money, then won't they have to be subsidized by the government? and if that happens, isn't that basically people paying taxes, which go to the electric company, which go back to the people?

YSFEJ4SWJUVU6 9y ago
The companies here (not Germany) can afford to pay for the right to put electricity in the grid because they are guaranteed a fixed compensation by the state for all the renewable electricity produced – at a rate that's several times the market price. Thus even at times when they have to pay, they still make more money than if they shut down the plants – which itself would just cost money.
tedsanders 9y ago
- The negative prices are always temporary, bounded in time and price by the cost to spin down a generator - Only the major industrial customers actually see the negative rates (residential customers are still paying retail) - In many regulatory environments the electric utility and power generators are different companies, so only the generators are at risk of losing money and shutting down plants
kwindla 9y ago
Yes, very large government subsidies created the current market situation in Germany. But, note that "very large" is only relative to typical subsidies of wind and solar in other countries. Also, all electricity markets in developed countries are pretty much completely regulated and the economics of electricity are determined much more by a combination of regulation and indirect subsidies than they are by anything remotely resembling a simple definition of market forces. In the United States, for example, we have an extremely complicated mixture of local and state-level economic, infrastructure, and supply regulations, environmental regulations that are mostly federal (though also state), zoning, eminent domain, and other kinds of permitting. Then, alongside all those, we have massive subsidies of electricity distribution infrastructure, extraction of coal and oil, transportation, and "homeland security." Finally, we also have relatively small subsidies for wind and solar. Germany made a policy decision some years ago that public subsidies of renewables would create large positive social externalities. So, yes, the money goes around in a circle, but -- to over-simplify -- in theory creates more money (technology development, improved resistance to economic shocks, jobs, public health) and better outcomes of various other kinds (public health, reduction of climate change risks of various kinds, reduction of risk from nuclear plants, perceived electoral advantages by the political parties in power) as it goes around.

YSFEJ4SWJUVU6 9y ago

The companies here (not Germany) can afford to pay for the right to put electricity in the grid because they are guaranteed a fixed compensation by the state for all the renewable electricity produced – at a rate that's several times the market price. Thus even at times when they have to pay, they still make more money than if they shut down the plants – which itself would just cost money.

tedsanders 9y ago

- The negative prices are always temporary, bounded in time and price by the cost to spin down a generator - Only the major industrial customers actually see the negative rates (residential customers are still paying retail) - In many regulatory environments the electric utility and power generators are different companies, so only the generators are at risk of losing money and shutting down plants

kwindla 9y ago

Yes, very large government subsidies created the current market situation in Germany. But, note that "very large" is only relative to typical subsidies of wind and solar in other countries. Also, all electricity markets in developed countries are pretty much completely regulated and the economics of electricity are determined much more by a combination of regulation and indirect subsidies than they are by anything remotely resembling a simple definition of market forces. In the United States, for example, we have an extremely complicated mixture of local and state-level economic, infrastructure, and supply regulations, environmental regulations that are mostly federal (though also state), zoning, eminent domain, and other kinds of permitting. Then, alongside all those, we have massive subsidies of electricity distribution infrastructure, extraction of coal and oil, transportation, and "homeland security." Finally, we also have relatively small subsidies for wind and solar. Germany made a policy decision some years ago that public subsidies of renewables would create large positive social externalities. So, yes, the money goes around in a circle, but -- to over-simplify -- in theory creates more money (technology development, improved resistance to economic shocks, jobs, public health) and better outcomes of various other kinds (public health, reduction of climate change risks of various kinds, reduction of risk from nuclear plants, perceived electoral advantages by the political parties in power) as it goes around.