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The market should deploy the cheapest grid possible that can produce emission free energy. We should be using those market forces. The problem that we have is
by belorn 4y ago
The market should deploy the cheapest grid possible that can produce emission free energy. We should be using those market forces.
The problem that we have is that governments steps in to subsidize grid stability. Industries and citizens in general do no accept a government that allows for black outs, and they also do not accept a government that allow the energy price to reach the natural market price when supply is very low and demand is high.
A second major problem is that if cheap renewables can produce 90% of supply and we need to 10% of expensive storage to meet demand, the cost that customers will have to bear is as if 100% of the produced energy came from the expensive storage. This make it very expensive to customers to have a combination of very cheap and very expensive energy production.
And finally, EU law dictate that if a country has surplus energy production then they must sell it to countries that has a deficit in energy production. This makes grid stability an EU wide issue, and even if a single country has an very stable production they will still share the high costs of energy unstable countries.
All of it create a market where the cost of $/kWh of energy created within a country is just loosely connected by the real price that customers pay. This winter demonstrated that multiple times, and all the governments subsidizes and price roofs illustrated how ready governments are to pay when the real cost of grid stability lands.
- Gwypaas 4y agoWe are. Marginal cost + paying for CO2. https://en.wikipedia.org/wiki/European_Union_Emissions_Trading_System https://en.wikipedia.org/wiki/European_Union_Emissions_Tradi... You are missing the time factor. Supplying 90% means that a vast majority of time they fulfill 100% and the expensive storage is not required. All based on the marginal price market Europe employs. The storage would still be needed, but it is not the marginal cost and maybe storage is not the right path? Maybe it is sector coupling? Maybe it is demand response from hydrogen production for industrial use? Maybe it is not charging most cars for a couple of days? As with all capitalistic systems a holistic organic approach will emerge. If it is not good enough adjust the market conditions. Sweden is already putting most stabilization services on an open market, with the goal to trade all day-ahead like power. Pulling out a five-year plan of having nuclear solve it in 20 years will only lead to pain.
- belorn 4y agoIf that were true then we wouldn't see large wind/solar regions where the average cost during this winter were at $0.3/kWh or above. Wind and solar did contribute a lot, but it was quite rare that they hit 100%. Instead it was gas prices that controlled what the energy prices was. It was this fact that resulted in many country implementing a roof of how much profits those renewables could earn, redirecting those profits in order to pay the bill for more fossil fuels. Sweden is a prime example of a country that is paying the cost of stabilizing the grid for the rest of the continent. They could have had one of the cheapest energy grid in EU thanks the the large stable production from nuclear and hydro, but because of how the EU system is setup the opposite occurred. The result is the highest inflation rate in EU coupled with a significant hit to the economy. Germany in contrast is using the profits they historically gained by using cheap natural gas from Russia and injected billions to their industry in the form of energy subsidizes, sheltering their economy from the same fate. Who cares if the energy prices reaches well above $1/kWh if the government foot the bill? Massive subsidizes and huge difference between marginal cost and actually price is not a free market. There is nothing free about it.