4 ms·

The Germans had this really clever scheme where they tied the price they pay for solar power to the price from fossil fueled power. That really incentivized peo

The Germans had this really clever scheme where they tied the price they pay for solar power to the price from fossil fueled power. That really incentivized people to create more efficient solar and thus increase their profit margins.

dmurray 6y ago
Isn't that very close to how a normal electricity marketplace would work? The consumer mostly doesn't care if they got their electricity from renewables or not, so they pay the same price.
- renewiltord 6y ago
  No, a normal electricity marketplace would eat up the profits from getting more efficient renewables. e.g. If fossil is $4/kW and wind is $2/kW then normal market buys all the wind at $2/kW. Here, government will pay $2/kW premium on the wind. That means every cost gain on wind goes to the provider.
  - xyzzyz 6y ago
    In a competitive market, the surplus resulting from reduction in wholesale cost of electricity would fall mostly on consumer side: market would buy wind at $2/kWh, but the retail consumer prices would also fall correspondingly. Alas, utilities are rarely competitive markets, so the electricity retailers have more ability to capture some of the surplus.
    - renewiltord 6y ago
      Right, but here you don't want it to fall to $2. That's your mechanism of a subsidy to the generating side. It is intentionally non-competitive.
  - imtringued 6y ago
    Unfortunately you can't instantly turn off fossil fuel plants. Those coal plants will still get their $4/kW and the turned off renewables also get their $2/kW because we want to subsidize them. It would be foolish to punish renewables for the failures of fossil fuels. So in the end you pay $6/kW. A carbon tax would turn off the coal plants for good and replace them with something that can throttle faster. Ironically this means carbon taxes make energy cheaper.
- etimberg 6y ago
  A lot of renewables are connected into the distribution grid and the markets in general run on the transmission grid. Every jurisdiction is different, but in general the transmission system is run by a neutral party who is usually known as an "Independent System Operator". In contrast, the distribution system is run by the local distribution company (LDC) that supplies power to consumers. The LDCs have traditionally not run their own markets but that is starting to change. At my day job I built a distribution level market that is being deployed in California [0]. We've developed a method of pricing the energy from DERs to account for the local benefits they can provide to the grid at a micro level. Shameless plug, but if anyone is interested in these topics we are hiring for a number of roles [1]. 0. https://www.greentechmedia.com/articles/read/opus-one-tests-transactive-energy-for-california-rooftop-solar-behind-the-meter-batteries https://www.greentechmedia.com/articles/read/opus-one-tests-... 1. https://www.opusonesolutions.com/careers/ https://www.opusonesolutions.com/careers/

dmurray 6y ago

Isn't that very close to how a normal electricity marketplace would work? The consumer mostly doesn't care if they got their electricity from renewables or not, so they pay the same price.

renewiltord 6y ago
No, a normal electricity marketplace would eat up the profits from getting more efficient renewables. e.g. If fossil is $4/kW and wind is $2/kW then normal market buys all the wind at $2/kW. Here, government will pay $2/kW premium on the wind. That means every cost gain on wind goes to the provider.
- xyzzyz 6y ago
  In a competitive market, the surplus resulting from reduction in wholesale cost of electricity would fall mostly on consumer side: market would buy wind at $2/kWh, but the retail consumer prices would also fall correspondingly. Alas, utilities are rarely competitive markets, so the electricity retailers have more ability to capture some of the surplus.
  - renewiltord 6y ago
    Right, but here you don't want it to fall to $2. That's your mechanism of a subsidy to the generating side. It is intentionally non-competitive.
- imtringued 6y ago
  Unfortunately you can't instantly turn off fossil fuel plants. Those coal plants will still get their $4/kW and the turned off renewables also get their $2/kW because we want to subsidize them. It would be foolish to punish renewables for the failures of fossil fuels. So in the end you pay $6/kW. A carbon tax would turn off the coal plants for good and replace them with something that can throttle faster. Ironically this means carbon taxes make energy cheaper.
etimberg 6y ago
A lot of renewables are connected into the distribution grid and the markets in general run on the transmission grid. Every jurisdiction is different, but in general the transmission system is run by a neutral party who is usually known as an "Independent System Operator". In contrast, the distribution system is run by the local distribution company (LDC) that supplies power to consumers. The LDCs have traditionally not run their own markets but that is starting to change. At my day job I built a distribution level market that is being deployed in California [0]. We've developed a method of pricing the energy from DERs to account for the local benefits they can provide to the grid at a micro level. Shameless plug, but if anyone is interested in these topics we are hiring for a number of roles [1]. 0. https://www.greentechmedia.com/articles/read/opus-one-tests-transactive-energy-for-california-rooftop-solar-behind-the-meter-batteries https://www.greentechmedia.com/articles/read/opus-one-tests-... 1. https://www.opusonesolutions.com/careers/ https://www.opusonesolutions.com/careers/