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The EU electricity market is very interesting if you are a trader. For everyone else, It is a giant shit show responsible of a price increase of around x2 in th

by adev_ 3y ago

The EU electricity market is very interesting if you are a trader. For everyone else, It is a giant shit show responsible of a price increase of around x2 in the last 3 years. And there is not a single valid physical or technical reason to that. It is fundamentally broken: - It has been designed around the marginal cost of production. Which implies that the price of Electricity is directly correlated on the price of Coal and Gas. A top level ludicrous move in middle of a green energy transition. - It is designed around the concept of energy (Twh) without any consideration on the notion of the power at peak. Consequently their is almost no financial incentive from investors to pay for storage capacity or production medium that will be needed during peak hours. It is a system that makes the grid more and more unstable with time and the states have to compensate that with massive subsidies for storage and fossil fuel power plants... - The general idea to propagate the variability of the energy price on the final customer by making small business pay themselves at market rate has shown to be a gigantic mistake. A Lot of small business were not able to afford "temporarily" 3-4-10x the average electricity price due to sudden envy of Vladimir Putin to visit his neighbour. The variability killed them, that was entirely avoidable. This article has been written by the financial people. The same gurus that put this idiotic system in pplace. Wierdly, every middle size company owner I know has a very different point of view about this when they receive their energy bill.

jnsaff2 3y ago
> almost no financial incentive from investors to pay for storage capacity or production medium that will be needed during peak hours. I don't follow your logic. If there is a large difference between prices during the day then there is a large incentive to build daily storage. You earn more the bigger the price differences there are and the more storage comes online the more prices even out over the day.
- adev_ 3y ago
  > If there is a large difference between prices during the day then there is a large incentive to build daily storage. Real peak does not happen during the day. The real peak happens around 10-15 days per year, during winter and when temperature drop. These are the days where protecting the Grid against blackout is challenging. No investor are keen to billions on the table for an hypothetical investment that will be profitable 10 days per year, at best.
  - jnsaff2 3y ago
    If it's only 10-15 days a year then it should not put consumers and businesses into problems either, no?
    - adev_ 3y ago
      > If it's only 10-15 days a year then it should not put consumers and businesses into problems either, no? Are you saying that 10 or 15 days of blackout per year at the level of the European is an acceptable situation to have ? If so there is a lot of problem in your perception of what is a power grid.
      - jnsaff2 3y ago
        What, suddenly your are talking about blackouts? Hows that? In your original comment you spoke about prices.
        adev_ 3y ago
        > What, suddenly your are talking about blackouts? Hows that? In your original comment you spoke about prices. Please read my section about peak power again. Their no mention of prices :) The main concern about peak power is related to the grid stability (risk of blackout) and not correlated to price.
pyrale 3y ago
> The variability killed them, that was entirely avoidable. Euphemistically acknowledged in the paper: "Governments will need to deal with significant distributional effects within and between countries."

by adev_ 3y ago

jnsaff2 3y ago

> almost no financial incentive from investors to pay for storage capacity or production medium that will be needed during peak hours. I don't follow your logic. If there is a large difference between prices during the day then there is a large incentive to build daily storage. You earn more the bigger the price differences there are and the more storage comes online the more prices even out over the day.

adev_ 3y ago
> If there is a large difference between prices during the day then there is a large incentive to build daily storage. Real peak does not happen during the day. The real peak happens around 10-15 days per year, during winter and when temperature drop. These are the days where protecting the Grid against blackout is challenging. No investor are keen to billions on the table for an hypothetical investment that will be profitable 10 days per year, at best.
- jnsaff2 3y ago
  If it's only 10-15 days a year then it should not put consumers and businesses into problems either, no?
  - adev_ 3y ago
    > If it's only 10-15 days a year then it should not put consumers and businesses into problems either, no? Are you saying that 10 or 15 days of blackout per year at the level of the European is an acceptable situation to have ? If so there is a lot of problem in your perception of what is a power grid.
    - jnsaff2 3y ago
      What, suddenly your are talking about blackouts? Hows that? In your original comment you spoke about prices.
      - adev_ 3y ago
        > What, suddenly your are talking about blackouts? Hows that? In your original comment you spoke about prices. Please read my section about peak power again. Their no mention of prices :) The main concern about peak power is related to the grid stability (risk of blackout) and not correlated to price.

pyrale 3y ago

> The variability killed them, that was entirely avoidable. Euphemistically acknowledged in the paper: "Governments will need to deal with significant distributional effects within and between countries."