5 ms·

Why is electricity spiking in Europe? Is this compensation for Gas being scarce due to the war?

by halotrope 4y ago

jl6 4y ago
A lot of electricity is generated by gas.
- bsaul 4y ago
  10% to 20% only in europe. However, because of the super bizarre pricing mechanism of the electricity market in Europe, the market price is automatically set to the most expensive one in cases of spikes (aka: the ones producing electricity out of gaz). This was certainly created with good intentions, but the result today is that even in countries with nuclear-dominated electricity (such as france), electricity prices will soar tremendously.
  - ZeroGravitas 4y ago
    It's basically accounting fiction. Imagine every bit of food you ate cost the same as the most expensive. The caviar goes up, and suddenly no one can afford to eat. Why don't we use less caviar and/or also suspend the stupid rule about food price? Owners of food businesses getting paid caviar prices for delivering scotch eggs. No, let's wait till some people die, because I'm getting rich.
    - bsaul 4y ago
      I must admit, i’m super curious to understand why nobody has pushed forward the idea of breaking down that pricing mechanism. My sincere hope is that there’s a good technical reason i’m not aware of.
      - ZeroGravitas 4y ago
        If they asked an economist, they'd say that the system is fine (you still don't want people using lots of gas and electricity made from gas when in a gas crisis) and you should just transfer the money to the people. Right wing governments really don't like that idea. See their reaction to COVID, they really heavily depend on the idea that the people with all the money 'earned it'. Much easier to blame renewables.
        stu432 4y ago
        Pretty sure the pricing mechanism was cooked up by economists to encourage investment into renewables who will be making stonking profits right now. Unlike gas plants...
        ZeroGravitas 4y ago
        Yes, lots of people seem really sure about a lot things they are wrong about. It's always the renewables isnt it. They kill birds and give you ear cancer and don't even really work. Not like those superb fossil fuels that have no drawbacks at all. Who wants to listen to experts when you can just create a crisis by ignoring them and then blame it on the experts you didn't listen to. https://en.m.wikipedia.org/wiki/Merit_order https://en.m.wikipedia.org/wiki/Merit_order > The historic methodology for economic dispatch was developed to manage fossil fuel burning power plants, relying on calculations involving the input/output characteristics of power stations.
    - makomk 4y ago
      The difference, of course, is that electricity is a commodity: every unit of electricity is essentally the same as every other unit, it's not really practical or useful to distinguish between them (they literally use the same wires), and buyers' need is satisfied by any of them. You'd be pissed off if you ordered caviar and got a scotch egg instead, but so long as the lights come on you don't think about where that particular electricity comes from. Other commodities apparently work in exactly the same way where the price is set by the highest seller, including bulk foods like wheat and rice. There's not really any obvious way to change it either; if there's someone willing to pay the higher price everyone obviously wants to sell to that buyer.
      - ZeroGravitas 4y ago
        I like the system, but it doesn't stop it being accounting fiction. We made these rules up to ensure fair prices. We can rewrite the rules if we want. Which seems relevant when people are talking about society collapsing and people freezing to death. And some people have strong financial incentives to not fix it.
        Ekaros 4y ago
        I wonder how many consumers would be ready to have remote-relays next to their power meters. Let's say they buy wind energy. When there is no supply from wind or there is some problem they would not get power anymore. That would be workable model.
  - rr808 4y ago
    > market price is automatically set to the most expensive one I think you need to read your economics text books again. Yes marginal costs can impact the marginal supply of electricity, but the price is set by basic supply and demand. In a shortage if there isn't any gas, gas powered stations are off, if isn't enough electricity to go around the prices goes up until people stop buying it.
    - bsaul 4y ago
      i double checked before posting, and what you're saying doesn't reflect what i've read regarding electricity market. FWIU, once the gaz station are active ( because of a surge in demand) the price is set to theirs for the whole electricity produced, not just the one they produce. This threshold effect is very peculiar and is very different from other markets (i assume oil extraction cost are lot different depending on where they take place, but for electricity in our current situation the cost difference are so wide that it sure makes the whole system look a bit absurd)
      - rr808 4y ago
        No this is the same in every commodity market. Say a bag of apples is normally a pound. If lots of orchards get destroyed and the price goes up to £3 because lots of people have to buy apples, the price at all markets will be the higher price. But incremental supplier is important by increasing supply at the higher price. Eg if it costs £1 to ship a bag of apples from Italy (and it costs £1 there), then the new price will be more like £2 as a new supplier can bring more apples. Right now there are new incremental suppliers waiting to deliver electricity so demand destruction is the only thing to stop the price going to infinity.
        bsaul 4y ago
        well, i don't know where you live, but apples prices are widely different in supermarket depending on where they come from... And the difference comes in great part from the cost it took to produce them (labor, regulations, transportation, etc).
- rr808 4y ago
  https://app.electricitymaps.com/ https://app.electricitymaps.com/ lets you look at historical sources. In the winter last year 40% of British electricity was generated from gas.
deleted 4y ago
[deleted]

Why is electricity spiking in Europe? Is this compensation for Gas being scarce due to the war?

jl6 4y ago

A lot of electricity is generated by gas.

bsaul 4y ago
10% to 20% only in europe. However, because of the super bizarre pricing mechanism of the electricity market in Europe, the market price is automatically set to the most expensive one in cases of spikes (aka: the ones producing electricity out of gaz). This was certainly created with good intentions, but the result today is that even in countries with nuclear-dominated electricity (such as france), electricity prices will soar tremendously.
- ZeroGravitas 4y ago
  It's basically accounting fiction. Imagine every bit of food you ate cost the same as the most expensive. The caviar goes up, and suddenly no one can afford to eat. Why don't we use less caviar and/or also suspend the stupid rule about food price? Owners of food businesses getting paid caviar prices for delivering scotch eggs. No, let's wait till some people die, because I'm getting rich.
  - bsaul 4y ago
    I must admit, i’m super curious to understand why nobody has pushed forward the idea of breaking down that pricing mechanism. My sincere hope is that there’s a good technical reason i’m not aware of.
    - ZeroGravitas 4y ago
      If they asked an economist, they'd say that the system is fine (you still don't want people using lots of gas and electricity made from gas when in a gas crisis) and you should just transfer the money to the people. Right wing governments really don't like that idea. See their reaction to COVID, they really heavily depend on the idea that the people with all the money 'earned it'. Much easier to blame renewables.
      - stu432 4y ago
        Pretty sure the pricing mechanism was cooked up by economists to encourage investment into renewables who will be making stonking profits right now. Unlike gas plants...
        ZeroGravitas 4y ago
        Yes, lots of people seem really sure about a lot things they are wrong about. It's always the renewables isnt it. They kill birds and give you ear cancer and don't even really work. Not like those superb fossil fuels that have no drawbacks at all. Who wants to listen to experts when you can just create a crisis by ignoring them and then blame it on the experts you didn't listen to. https://en.m.wikipedia.org/wiki/Merit_order https://en.m.wikipedia.org/wiki/Merit_order > The historic methodology for economic dispatch was developed to manage fossil fuel burning power plants, relying on calculations involving the input/output characteristics of power stations.
  - makomk 4y ago
    The difference, of course, is that electricity is a commodity: every unit of electricity is essentally the same as every other unit, it's not really practical or useful to distinguish between them (they literally use the same wires), and buyers' need is satisfied by any of them. You'd be pissed off if you ordered caviar and got a scotch egg instead, but so long as the lights come on you don't think about where that particular electricity comes from. Other commodities apparently work in exactly the same way where the price is set by the highest seller, including bulk foods like wheat and rice. There's not really any obvious way to change it either; if there's someone willing to pay the higher price everyone obviously wants to sell to that buyer.
    - ZeroGravitas 4y ago
      I like the system, but it doesn't stop it being accounting fiction. We made these rules up to ensure fair prices. We can rewrite the rules if we want. Which seems relevant when people are talking about society collapsing and people freezing to death. And some people have strong financial incentives to not fix it.
      - Ekaros 4y ago
        I wonder how many consumers would be ready to have remote-relays next to their power meters. Let's say they buy wind energy. When there is no supply from wind or there is some problem they would not get power anymore. That would be workable model.
- rr808 4y ago
  > market price is automatically set to the most expensive one I think you need to read your economics text books again. Yes marginal costs can impact the marginal supply of electricity, but the price is set by basic supply and demand. In a shortage if there isn't any gas, gas powered stations are off, if isn't enough electricity to go around the prices goes up until people stop buying it.
  - bsaul 4y ago
    i double checked before posting, and what you're saying doesn't reflect what i've read regarding electricity market. FWIU, once the gaz station are active ( because of a surge in demand) the price is set to theirs for the whole electricity produced, not just the one they produce. This threshold effect is very peculiar and is very different from other markets (i assume oil extraction cost are lot different depending on where they take place, but for electricity in our current situation the cost difference are so wide that it sure makes the whole system look a bit absurd)
    - rr808 4y ago
      No this is the same in every commodity market. Say a bag of apples is normally a pound. If lots of orchards get destroyed and the price goes up to £3 because lots of people have to buy apples, the price at all markets will be the higher price. But incremental supplier is important by increasing supply at the higher price. Eg if it costs £1 to ship a bag of apples from Italy (and it costs £1 there), then the new price will be more like £2 as a new supplier can bring more apples. Right now there are new incremental suppliers waiting to deliver electricity so demand destruction is the only thing to stop the price going to infinity.
      - bsaul 4y ago
        well, i don't know where you live, but apples prices are widely different in supermarket depending on where they come from... And the difference comes in great part from the cost it took to produce them (labor, regulations, transportation, etc).
rr808 4y ago
https://app.electricitymaps.com/ https://app.electricitymaps.com/ lets you look at historical sources. In the winter last year 40% of British electricity was generated from gas.

deleted 4y ago

[deleted]