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Guarantees on future price is what Germany did/does as subsidies to the renewable sector. If prices fall significantly then it would be the German government th
by belorn 4y ago
Guarantees on future price is what Germany did/does as subsidies to the renewable sector. If prices fall significantly then it would be the German government that has to pay the difference between what investors expected and what the market is willing to pay.
With prices going the other, governments in EU (including Germany) is now considering subsidies again by creating a price roof. Any difference between the roof price and the market price will be paid by the government.
Nuclear plants can have similar subsidies. Price guarantees and price roofs are market tools rather than technology dependent tools, but they are more likely to trigger if the market price is fluctuating a lot. The more weather dependent the energy grid is, for now (and in general), the larger and more frequent the difference between max and min price are, the more likely the government will have to pay out in order to offer such subsidies.
Of course the government are not required to offer either subsidies.
- KptMarchewa 4y ago>With prices going the other, governments in EU (including Germany) is now considering subsidies again by creating a price roof. Any difference between the roof price and the market price will be paid by the government. Isn't it the other way around? The difference won't be paid; the whole idea is to stop paying over the roof.
- deleted 4y ago[deleted]
- deleted 4y ago[deleted]
- belorn 4y agoThere is multiple different strategies discussed by other countries and EU itself. The EU commission as of 9 days ago suggested a price floor of 180 EUR/MWh on all energy production except gas, coal and hydro, using the difference as an tax to fund lower gas and coal prices. The Norwegian government will pay 50% of their citizens electricity bill of anything that exceeds ~€0.07 per kw/h, a decision they made last year. The Danish government announced today that they will offer any citizen an interest free loan for electricity bills, and removed all the energy taxes for the next 6 months. Germany stepped in 18 days ago to save the energy company Fortums with 150 billions euros of government money. Fortums had a lot of long term contract to deliver cheap gas, betting that the price would remain low, and lost that bet. The government intervention was said to be done in order to prevent an other 2008 crash. The UK announced the "Energy Price Guarantee for families and businesses" at the 1st October. This price guarantee is done through a mix of lowered taxes and direct social support (government stepping in and directly pay part of the bill). It is expected to see a lot of similar initiatives in EU until winter, especially as the energy price is predicted to significant rise when gas supply start to deplete.