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“A naive observer, reading the reports of falling prices for photovoltaic cells and wind turbines, might conclude that the rising shares of solar and wind power

“A naive observer, reading the reports of falling prices for photovoltaic cells and wind turbines, might conclude that the rising shares of solar and wind power will bring a new era of falling electricity prices. Just the opposite has been true.” https://spectrum.ieee.org/energy/policy/electricity-its-wonderfully-affordable-but-its-no-longer-getting-any-cheaper https://spectrum.ieee.org/energy/policy/electricity-its-wond... this is the reality “Before the year 2000, when Germany embarked on its large-scale and expensive Energiewende (energy transition), that country’s residential electricity prices were low and declining, bottoming at less than €0.14/kWh ($.13/kWh, using the prevailing exchange rate) in 2000.” “By 2015, Germany’s combined solar and wind capacity of nearly 84 gigawatts had surpassed the total installed in fossil-fueled plants, and by March 2019 more than 20 percent of all electricity came from the new renewables. However, over an 18-year period (2000 to 2018) electricity prices more than doubled, to €0.31/ kWh. The E.U.’s largest economy thus has the continent’s highest electricity prices, followed by heavily wind-dependent Denmark, at €0.3/kWh.” and finally, “A similar contrast can be seen in the United States. In California, where the new renewables have taken an increasing share, electricity prices have been rising five times as fast as the national mean and are now nearly 60 percent higher than the countrywide average.”

jakozaur 6y ago
1. Early adopters pays premium. Especially true for technology that gets exponential cheaper. Rich countries such as Germany, Denmark and California pay R&D for rest of us. 2. If not renewables or other form of non-fossil fuel, the price of energy would be increasing anyway. We are reaching peak of fossil fuel production. Fracking make it cheap temporarily, but overall we are depleting cheap fields and would be forced to use ones which are harder to access.
- andromeduck 6y ago
  How do you explain France?
kilotaras 6y ago
> bottoming at less than €0.14/kWh + ???/kWh in environmental cost.
- andromeduck 6y ago
  Versus France, Germany is only twice as dirty for only twice the price which seems like a pretty good deal if you ask me. IMO the policy has been a natitonal disaster for German, not only have prices increased without materially offsetting carbon, it has also made them much more dependent on Russian gas which increases the economic cost of standing up to Russian aggression in Ukraine and elsewhere. The promises of jobs from domestic production of panels also never quite panned out due to competition from Europe and installation/maintenance related jobs are likely offset by reduced competitiveness from electrical costs not to mention increased strategic dependence on China for components. Wind has been quite a bit better but locals are starting to push back from what I've been reading.
  - ohgodplsno 6y ago
    > Germany is only twice as dirty Germany emits 485g of CO2 per kWh. [1] France emits 80g of CO2 per kWh. [2] [1] https://www.umweltbundesamt.de/en/press/pressinformation/co2-emissions-per-kilowatt-hour-of-electricity-in https://www.umweltbundesamt.de/en/press/pressinformation/co2... [2] https://www.rte-france.com/eco2mix/les-emissions-de-co2-par-kwh-produit-en-france https://www.rte-france.com/eco2mix/les-emissions-de-co2-par-...
phaemon 6y ago
Which has nothing to do with the cost of wind and solar. You can tell this because there are multiple European countries which have a higher proportion of renewables than Germany, yet (as you point out yourself) they have lower electricity costs.
geoduck14 6y ago
I had a really fascinating conversation with a leader at a local energy company. He discussed some challenges with pricing in producing electricity that might help here. The BIGGEST expense for a power company is infrastructure. They have all of these electrical lines running everywhere. When they run the lines, they are designed for growth YEARS from now AND for the HIGHEST demand time frame. This is to say: the company spends LOADS of money to run wires that are 99% unused. The cost of running the wires is a fixed expense that gets passed on to the consumers. As people move to solar power, they stop paying the power company. They stop paying for the electrical lines that were already run and already expensed. This cost is then shifted to the other consumers. Thus raising the cost of electricity for everyone else (in the short term).
pydry 6y ago
They front loaded capex in Germany and accelerated the shutdown of legacy power plants. They will probably end up paying less than everybody else in 10 years as the rest of the world plays catch up. Building out new capacity costs more than using existing capacity. When France's nuclear power plants EOL and they have to build out new capacity they will have to pay for it sometime as well.
jakewins 6y ago
> A naive observer, reading the reports of falling prices for photovoltaic cells and wind turbines, might conclude that the rising shares of solar and wind power will bring a new era of falling electricity prices. Just the opposite has been true. This is utter nonsense. The first sentence is about the future cost of power, and the argument is specifically about how the price is changing such that the future cost will be lower. The second sentence then argues that the past deployments have led to higher prices. Even the most uninformed observer of global energy markets can pull up 2020 PPA auctions and see the staggering void that has emerged between bids from gas, coal and nuclear vendors vs bids from solar+storage and wind+storage. As a random example, here is the draft plan Siemens is drawing up for my hometown, it includes PPA estimates for gas turbines, wind and solar+storage, current as of a few weeks ago. The recommendation from Siemens is to immediately stop all construction of anything other than solar+storage, a complete reversal from prior plans for my utility in bright-red Missouri. https://drive.google.com/file/d/1e8NCSh6VNJVpiUVyw5-XVCo-o1hojO6B/view?usp=sharing https://drive.google.com/file/d/1e8NCSh6VNJVpiUVyw5-XVCo-o1h... (see page 7)

jakozaur 6y ago

1. Early adopters pays premium. Especially true for technology that gets exponential cheaper. Rich countries such as Germany, Denmark and California pay R&D for rest of us. 2. If not renewables or other form of non-fossil fuel, the price of energy would be increasing anyway. We are reaching peak of fossil fuel production. Fracking make it cheap temporarily, but overall we are depleting cheap fields and would be forced to use ones which are harder to access.

andromeduck 6y ago
How do you explain France?

kilotaras 6y ago

> bottoming at less than €0.14/kWh + ???/kWh in environmental cost.

andromeduck 6y ago
Versus France, Germany is only twice as dirty for only twice the price which seems like a pretty good deal if you ask me. IMO the policy has been a natitonal disaster for German, not only have prices increased without materially offsetting carbon, it has also made them much more dependent on Russian gas which increases the economic cost of standing up to Russian aggression in Ukraine and elsewhere. The promises of jobs from domestic production of panels also never quite panned out due to competition from Europe and installation/maintenance related jobs are likely offset by reduced competitiveness from electrical costs not to mention increased strategic dependence on China for components. Wind has been quite a bit better but locals are starting to push back from what I've been reading.
- ohgodplsno 6y ago
  > Germany is only twice as dirty Germany emits 485g of CO2 per kWh. [1] France emits 80g of CO2 per kWh. [2] [1] https://www.umweltbundesamt.de/en/press/pressinformation/co2-emissions-per-kilowatt-hour-of-electricity-in https://www.umweltbundesamt.de/en/press/pressinformation/co2... [2] https://www.rte-france.com/eco2mix/les-emissions-de-co2-par-kwh-produit-en-france https://www.rte-france.com/eco2mix/les-emissions-de-co2-par-...

phaemon 6y ago

Which has nothing to do with the cost of wind and solar. You can tell this because there are multiple European countries which have a higher proportion of renewables than Germany, yet (as you point out yourself) they have lower electricity costs.

geoduck14 6y ago

I had a really fascinating conversation with a leader at a local energy company. He discussed some challenges with pricing in producing electricity that might help here. The BIGGEST expense for a power company is infrastructure. They have all of these electrical lines running everywhere. When they run the lines, they are designed for growth YEARS from now AND for the HIGHEST demand time frame. This is to say: the company spends LOADS of money to run wires that are 99% unused. The cost of running the wires is a fixed expense that gets passed on to the consumers. As people move to solar power, they stop paying the power company. They stop paying for the electrical lines that were already run and already expensed. This cost is then shifted to the other consumers. Thus raising the cost of electricity for everyone else (in the short term).

pydry 6y ago

They front loaded capex in Germany and accelerated the shutdown of legacy power plants. They will probably end up paying less than everybody else in 10 years as the rest of the world plays catch up. Building out new capacity costs more than using existing capacity. When France's nuclear power plants EOL and they have to build out new capacity they will have to pay for it sometime as well.

jakewins 6y ago

> A naive observer, reading the reports of falling prices for photovoltaic cells and wind turbines, might conclude that the rising shares of solar and wind power will bring a new era of falling electricity prices. Just the opposite has been true. This is utter nonsense. The first sentence is about the future cost of power, and the argument is specifically about how the price is changing such that the future cost will be lower. The second sentence then argues that the past deployments have led to higher prices. Even the most uninformed observer of global energy markets can pull up 2020 PPA auctions and see the staggering void that has emerged between bids from gas, coal and nuclear vendors vs bids from solar+storage and wind+storage. As a random example, here is the draft plan Siemens is drawing up for my hometown, it includes PPA estimates for gas turbines, wind and solar+storage, current as of a few weeks ago. The recommendation from Siemens is to immediately stop all construction of anything other than solar+storage, a complete reversal from prior plans for my utility in bright-red Missouri. https://drive.google.com/file/d/1e8NCSh6VNJVpiUVyw5-XVCo-o1hojO6B/view?usp=sharing https://drive.google.com/file/d/1e8NCSh6VNJVpiUVyw5-XVCo-o1h... (see page 7)