5 ms·

I a huge fan of residential solar and photovoltaics. Under the right conditions (summer, adequate battery storage) it's possible to be self-sufficient, just abs

I a huge fan of residential solar and photovoltaics. Under the right conditions (summer, adequate battery storage) it's possible to be self-sufficient, just absolutely incredible. That being said, where is the disconnect between people claiming industrial-scale solar and wind is cheaper than burning fossil fuels, and the reality (in Europe, others?) that electricity prices have risen steadily with an increase in renewable energy production (even before COVID and Ukraine)? Is it the largely unaddressed battery storage problems? Other effects?

credit_guy 4y ago
The disconnect is due, in part, to a selection bias. The cost estimates for new solar and wind (for example Lazard's report [1]) is based on existing plants. These plants were built in the best places, for example in the US lots of solar power plants were built in sunny California, and lots of wind turbines in places with plenty of wind (the so-called wind corridor). If you take solar and install it in Europe, you will not get the same bang for your buck, for the simple reason that Europe is well north of California. As for wind, most of Europe is less windy than the US wind corridor, but offshore areas in the North and Baltic seas appear to be exceptionally good. Still, building offshore wind can't be done at a snap of your fingers. Going forward, both solar and wind will see huge increases in installed capacity, but only in the places where it makes sense. [1] https://www.lazard.com/perspective/levelized-cost-of-energy-levelized-cost-of-storage-and-levelized-cost-of-hydrogen/ https://www.lazard.com/perspective/levelized-cost-of-energy-... [2] https://earthlymission.com/wind-resource-map-europe/ https://earthlymission.com/wind-resource-map-europe/ [3] https://windexchange.energy.gov/maps-data/325 https://windexchange.energy.gov/maps-data/325
Al-Khwarizmi 4y ago
The EU has a pricing system where all the electricity is sold at the price of the most expensive source. For example, if at a given moment you need 100 MW of solar at €10, 100 MW of wind at €12, and 1 MW of gas at €150, consumers will be billed €150 for each and every MW they consume. I get the intended logic behind the system, which is to incentivize cheap sources (if you run cheap sources, you keep the difference with respect to gas as pure profit), but IMO it's prone to gaming (a lot of incentive to have that single MW of gas up, and electricity companies are an oligopoly...) and doesn't work well even without gaming (if the price of gas is disproportionately high with respect to the rest of sources, things begin to just not make sense). Spain and Portugal negotiated to (temporarily, I think) get out of this system and change it to something saner (with the same basic principles but some compensations so that gas price doesn't dominate anything). The so-called Iberian exception. And it's working: while our prices are still high with respect to historical standards (due to Ukraine and the general underlying energy crisis), they now tend to be much lower than the rest of the EU most of the time.
- ragebol 4y ago
  > or example, if at a given moment you need 100 MW of solar at €10, 100 MW of wind at €12, and 1 MW of gas at €150, consumers will be billed €150 for each and every MW they consume. Since the power is exactly the same, people don't buy a MW of solar or wind, they just buy a MW, regardless of the source. If you were (owning) a generator, why would you sell your electricity for €12/unit when people are willing to buy it at €150/unit? And since it's a free market, otherwise a middleman will come swooping in to rake in the difference. Market dynamics dictate that when people/businesses are no longer willing to buy a MW for €150, the demand drops, the most expensive generators are not needed anymore and the overall price drops to the new equilibrium price. Also: my fixed contract price per kWh is about €0.81 always, which is, uh, a lot. A friend of mine recently switched to a dynamic tariff and payed about €0.30-0.40 when I last asked him about it. Pondering...
  - implements 4y ago
    > Market dynamics dictate that when people/businesses are no longer willing to buy a MW for €150, the demand drops, the most expensive generators are not needed anymore and the overall price drops to the new equilibrium price. Not an economist, but “inelastic market / supply” answers that, I think.
    - ragebol 4y ago
      It might drop, but a little only. Apparently, paying €150 for a MW is acceptable for companies. But the alternative is shutting down, so the cost gets forwarded to consumers of their products eventually. This is of course dampened by middlemen who sell for a fixed price and take the risk of having buy for a high price. And a few small NL energy companies (or rather middlemen) have gone bankrupt when they didn't have the reserves.
  - dustymcp 4y ago
    I Also switchede from static to variable billing and saved about 50% on my bill, the static pricing contracts are not worth it currently, they where in August tho, at that point my contract was 50% cheaper than the variable price..
jahnu 4y ago
> people claiming industrial-scale solar and wind is cheaper than burning fossil fuels It's a lot cheaper if you price in the externalities.
- Omin 4y ago
  It's also cheaper if you don't. It's by far cheaper if you do.
  - bryanlarsen 4y ago
    Solar & renewables are cheaper than fossil fuels even without pricing in externalities. There are places where solar energy is priced below $1 / MW, and no place where fossil energy gets anywhere close to that.
  - sendfoods 4y ago
    That does not answer my question. Why doesn't the cheap price reach the consumer?
- ratdragon 4y ago
  Depends on when, that's why we need gas and other dispatchables. We've no grid-scale energy storage as of now. So saying they're cheaper isn't comparing apples to apples.
  - jahnu 4y ago
    The storage problem is wildly overstated when we look at data from real world experience. Great thread here explaining how we need far less storage than is often claimed: https://twitter.com/enn_nafnlaus/status/1565923581246091264 https://twitter.com/enn_nafnlaus/status/1565923581246091264
ragebol 4y ago
The majority of power generation in Europe is still based on fossil fuels. And thus those are the price setters according to the Merit order curve [0], since they have the highest cost still. [0] https://docs.energytransitionmodel.com/main/merit-order/ https://docs.energytransitionmodel.com/main/merit-order/
- antupis 4y ago
  And countries which relies on renewables have pretty cheap electricity(Nordics).
  - doikor 4y ago
    Nordic’s also have a lot of nuclear (well Sweden and Finland does)
    - the_third_wave 4y ago
      ...which is under constant pressure from "green" parties to be closed down in Sweden. The current government makes different noises and may in fact allow more nuclear power plants to be established but nearly all "progressive" governments in the last decades have worked to reduce reliance on nuclear power. Half of the available nuclear capacity has been closed down for political reasons - "green" politicians claim it was the market which decided to close down these plants but their claims are false [1]. Some of the recently closed down plants could possibly be restarted but this remains to be seen. Given the current "energy crisis" in Europe - which has driven up electricity prices in Sweden 5- to 10-fold for end users and with that is driving many companies into bankruptcy even though the actual cost for ~75% of power producers - hydro and remaining nuclear capacity - in Sweden has not changed. The profits from these price hikes mostly (~65%) flow to the state [2] through increased taxation, the so-called "flaskhalsavgift" (bottle neck surcharge) on electricity produced in the north but used in the south or abroad and the increased VAT income due to the higher prices. [1] https://naringslivets-medieinstitut.se/det-var-marknaden-som-stangde-karnkraften/ https://naringslivets-medieinstitut.se/det-var-marknaden-som... [2] https://www.dagensps.se/privatekonomi/bostad/analys-staten-stor-vinnare-pa-hoga-elpriser/ https://www.dagensps.se/privatekonomi/bostad/analys-staten-s...
_Microft 4y ago
Isn't the answer simply that the cost of producing something and the price that customers pay for it are different things?
paganel 4y ago
> Is it the largely unaddressed battery storage problems? Afaik those are not solved at scale, as in they're not even "problems" yet, the "battery storage" just doesn't exist at an industrial scale. As in many other past cases a form of pseudo-religiousness has taken over the discourse, hence the disconnect between what certain people believe can be done and reality.

credit_guy 4y ago

The disconnect is due, in part, to a selection bias. The cost estimates for new solar and wind (for example Lazard's report [1]) is based on existing plants. These plants were built in the best places, for example in the US lots of solar power plants were built in sunny California, and lots of wind turbines in places with plenty of wind (the so-called wind corridor). If you take solar and install it in Europe, you will not get the same bang for your buck, for the simple reason that Europe is well north of California. As for wind, most of Europe is less windy than the US wind corridor, but offshore areas in the North and Baltic seas appear to be exceptionally good. Still, building offshore wind can't be done at a snap of your fingers. Going forward, both solar and wind will see huge increases in installed capacity, but only in the places where it makes sense. [1] https://www.lazard.com/perspective/levelized-cost-of-energy-levelized-cost-of-storage-and-levelized-cost-of-hydrogen/ https://www.lazard.com/perspective/levelized-cost-of-energy-... [2] https://earthlymission.com/wind-resource-map-europe/ https://earthlymission.com/wind-resource-map-europe/ [3] https://windexchange.energy.gov/maps-data/325 https://windexchange.energy.gov/maps-data/325

Al-Khwarizmi 4y ago

The EU has a pricing system where all the electricity is sold at the price of the most expensive source. For example, if at a given moment you need 100 MW of solar at €10, 100 MW of wind at €12, and 1 MW of gas at €150, consumers will be billed €150 for each and every MW they consume. I get the intended logic behind the system, which is to incentivize cheap sources (if you run cheap sources, you keep the difference with respect to gas as pure profit), but IMO it's prone to gaming (a lot of incentive to have that single MW of gas up, and electricity companies are an oligopoly...) and doesn't work well even without gaming (if the price of gas is disproportionately high with respect to the rest of sources, things begin to just not make sense). Spain and Portugal negotiated to (temporarily, I think) get out of this system and change it to something saner (with the same basic principles but some compensations so that gas price doesn't dominate anything). The so-called Iberian exception. And it's working: while our prices are still high with respect to historical standards (due to Ukraine and the general underlying energy crisis), they now tend to be much lower than the rest of the EU most of the time.

ragebol 4y ago
> or example, if at a given moment you need 100 MW of solar at €10, 100 MW of wind at €12, and 1 MW of gas at €150, consumers will be billed €150 for each and every MW they consume. Since the power is exactly the same, people don't buy a MW of solar or wind, they just buy a MW, regardless of the source. If you were (owning) a generator, why would you sell your electricity for €12/unit when people are willing to buy it at €150/unit? And since it's a free market, otherwise a middleman will come swooping in to rake in the difference. Market dynamics dictate that when people/businesses are no longer willing to buy a MW for €150, the demand drops, the most expensive generators are not needed anymore and the overall price drops to the new equilibrium price. Also: my fixed contract price per kWh is about €0.81 always, which is, uh, a lot. A friend of mine recently switched to a dynamic tariff and payed about €0.30-0.40 when I last asked him about it. Pondering...
- implements 4y ago
  > Market dynamics dictate that when people/businesses are no longer willing to buy a MW for €150, the demand drops, the most expensive generators are not needed anymore and the overall price drops to the new equilibrium price. Not an economist, but “inelastic market / supply” answers that, I think.
  - ragebol 4y ago
    It might drop, but a little only. Apparently, paying €150 for a MW is acceptable for companies. But the alternative is shutting down, so the cost gets forwarded to consumers of their products eventually. This is of course dampened by middlemen who sell for a fixed price and take the risk of having buy for a high price. And a few small NL energy companies (or rather middlemen) have gone bankrupt when they didn't have the reserves.
- dustymcp 4y ago
  I Also switchede from static to variable billing and saved about 50% on my bill, the static pricing contracts are not worth it currently, they where in August tho, at that point my contract was 50% cheaper than the variable price..

jahnu 4y ago

> people claiming industrial-scale solar and wind is cheaper than burning fossil fuels It's a lot cheaper if you price in the externalities.

Omin 4y ago
It's also cheaper if you don't. It's by far cheaper if you do.
- bryanlarsen 4y ago
  Solar & renewables are cheaper than fossil fuels even without pricing in externalities. There are places where solar energy is priced below $1 / MW, and no place where fossil energy gets anywhere close to that.
- sendfoods 4y ago
  That does not answer my question. Why doesn't the cheap price reach the consumer?
ratdragon 4y ago
Depends on when, that's why we need gas and other dispatchables. We've no grid-scale energy storage as of now. So saying they're cheaper isn't comparing apples to apples.
- jahnu 4y ago
  The storage problem is wildly overstated when we look at data from real world experience. Great thread here explaining how we need far less storage than is often claimed: https://twitter.com/enn_nafnlaus/status/1565923581246091264 https://twitter.com/enn_nafnlaus/status/1565923581246091264

ragebol 4y ago

The majority of power generation in Europe is still based on fossil fuels. And thus those are the price setters according to the Merit order curve [0], since they have the highest cost still. [0] https://docs.energytransitionmodel.com/main/merit-order/ https://docs.energytransitionmodel.com/main/merit-order/

antupis 4y ago
And countries which relies on renewables have pretty cheap electricity(Nordics).
- doikor 4y ago
  Nordic’s also have a lot of nuclear (well Sweden and Finland does)
  - the_third_wave 4y ago
    ...which is under constant pressure from "green" parties to be closed down in Sweden. The current government makes different noises and may in fact allow more nuclear power plants to be established but nearly all "progressive" governments in the last decades have worked to reduce reliance on nuclear power. Half of the available nuclear capacity has been closed down for political reasons - "green" politicians claim it was the market which decided to close down these plants but their claims are false [1]. Some of the recently closed down plants could possibly be restarted but this remains to be seen. Given the current "energy crisis" in Europe - which has driven up electricity prices in Sweden 5- to 10-fold for end users and with that is driving many companies into bankruptcy even though the actual cost for ~75% of power producers - hydro and remaining nuclear capacity - in Sweden has not changed. The profits from these price hikes mostly (~65%) flow to the state [2] through increased taxation, the so-called "flaskhalsavgift" (bottle neck surcharge) on electricity produced in the north but used in the south or abroad and the increased VAT income due to the higher prices. [1] https://naringslivets-medieinstitut.se/det-var-marknaden-som-stangde-karnkraften/ https://naringslivets-medieinstitut.se/det-var-marknaden-som... [2] https://www.dagensps.se/privatekonomi/bostad/analys-staten-stor-vinnare-pa-hoga-elpriser/ https://www.dagensps.se/privatekonomi/bostad/analys-staten-s...

_Microft 4y ago

Isn't the answer simply that the cost of producing something and the price that customers pay for it are different things?

paganel 4y ago

> Is it the largely unaddressed battery storage problems? Afaik those are not solved at scale, as in they're not even "problems" yet, the "battery storage" just doesn't exist at an industrial scale. As in many other past cases a form of pseudo-religiousness has taken over the discourse, hence the disconnect between what certain people believe can be done and reality.