4 ms·

Let the market forces deal with it?

roenxi 2y ago
Yeah. The way market forces will deal with it is some energy sink will be figured out for the mid-day peak, and prices will stop going negative. But when that happens the average price of power generated from solar panels will probably drop (because less of the power generated by a panel is wasted, so the capital cost/power generated ratio improves) and consumers will be better off. I expect. These market effects are complicated. It is the opposite of what happened in, say, Germany. They started seeing negative power prices on the wholesale market then they ended up with average electricity prices that were among the most expensive in the world.
- imtringued 2y ago
  The EEG subsidy program is a joke. The government guarantees a minimum price on your feed-in tariff. This means if the price is negative 8 cents and the feed-in tariff is positive 8 cents (numbers are for illustration purposes), the government pays 16 cents. It's no different from what the central bank does with its zero lower bound guarantee on interest rates. The market rate on capital is negative? Gotta subsidize private capital holders with infinite QE. The guaranteed minimum price floor is zero, the interest rate is say -3%, the central bank essentially pays 3% interest to keep the house of cards from collapsing. Since negative interest rates cannot be represented in the current system, we have inflation as the band aid. The thing is, negative prices or interest rates aren't evil or bad on their own, they become dysfunctional the moment there is a guaranteed price floor. It's no different than a price ceiling. The only difference is shortage vs oversupply.
  - tcfhgj 2y ago
    First of all, this isn't true. In case the prices drop negative, the solar plant will be disconnected from the grid remotely and the solar plant owner will get what he had gotten if the solar plant had not been disconnected from the grid. Second, subsidizing once expensive but mostly cleanenergy production technology, allowed renewable energy to thrive to the number 1 energy source worldwide, theoretically allowing to ditch fossil energy production completely by 2050 and stay within low risk climate warming - without significant degrowth, which otherwise would have been required for a certainty. So no, EEG isn't a joke, but a huge win for humanity.
    - pfdietz 2y ago
      It was a huge win for humanity, kickstarting the rapid decline in PV cost over the last 15 years, but don't pretend there wasn't a cost to Germany. Acknowledge this remarkable act of global altruism.
      - tcfhgj 2y ago
        It wasn't cost to Germany, because it resulted in lower electricity prices. I'd call it investment
        pfdietz 2y ago
        Yes, there was a decline in electricity prices, for the world as a whole. The cost was to Germany. Like I told you above, don't ignore that.
        ZeroGravitas 2y ago
        Are we talking about a specific policy or the whole transition? The Wikipedia page on the EEG suggests that it's globally recognised as a success, and even when political pressure was being applied to reduce solar PV feed in tariffs faster than the original plan called for due to better than expected uptake, the merit order effect introduced in the same legislation was reducing the spot price of electricity by more than the cost. https://en.wikipedia.org/wiki/German_Renewable_Energy_Sources_Act https://en.wikipedia.org/wiki/German_Renewable_Energy_Source...
pydry 2y ago
It's ironic that this is what the carbon industry used to preach back when solar and wind were very expensive and people believed it. Now, the carbon and nuclear industry preaches the opposite - that the market absolutely cannot handle this "problem" and we need the government to give them money instead. It was a lie both times, and it was widely believed both times.
- belorn 2y ago
  During the 2022 energy crisis, it was the citizens of practically every country in EU that declared in unions that the market had failed and that government had to step it to fix it. Multiple elections around that time was defined by political discussion around who was willing to pay more of citizens energy bills and save companies that would have gone bankrupt. Estimated €200 billions in a single year went towards that single purpose of fixing what the market failed to do. It was demonstrated beyond doubt that if governments let the market forces deal with instability in energy prices, then the citizens will vote to kick those politicians out and replace them with someone else.

Yeah. The way market forces will deal with it is some energy sink will be figured out for the mid-day peak, and prices will stop going negative. But when that happens the average price of power generated from solar panels will probably drop (because less of the power generated by a panel is wasted, so the capital cost/power generated ratio improves) and consumers will be better off. I expect. These market effects are complicated. It is the opposite of what happened in, say, Germany. They started seeing negative power prices on the wholesale market then they ended up with average electricity prices that were among the most expensive in the world.

imtringued 2y ago
The EEG subsidy program is a joke. The government guarantees a minimum price on your feed-in tariff. This means if the price is negative 8 cents and the feed-in tariff is positive 8 cents (numbers are for illustration purposes), the government pays 16 cents. It's no different from what the central bank does with its zero lower bound guarantee on interest rates. The market rate on capital is negative? Gotta subsidize private capital holders with infinite QE. The guaranteed minimum price floor is zero, the interest rate is say -3%, the central bank essentially pays 3% interest to keep the house of cards from collapsing. Since negative interest rates cannot be represented in the current system, we have inflation as the band aid. The thing is, negative prices or interest rates aren't evil or bad on their own, they become dysfunctional the moment there is a guaranteed price floor. It's no different than a price ceiling. The only difference is shortage vs oversupply.
- tcfhgj 2y ago
  First of all, this isn't true. In case the prices drop negative, the solar plant will be disconnected from the grid remotely and the solar plant owner will get what he had gotten if the solar plant had not been disconnected from the grid. Second, subsidizing once expensive but mostly cleanenergy production technology, allowed renewable energy to thrive to the number 1 energy source worldwide, theoretically allowing to ditch fossil energy production completely by 2050 and stay within low risk climate warming - without significant degrowth, which otherwise would have been required for a certainty. So no, EEG isn't a joke, but a huge win for humanity.
  - pfdietz 2y ago
    It was a huge win for humanity, kickstarting the rapid decline in PV cost over the last 15 years, but don't pretend there wasn't a cost to Germany. Acknowledge this remarkable act of global altruism.
    - tcfhgj 2y ago
      It wasn't cost to Germany, because it resulted in lower electricity prices. I'd call it investment
      - pfdietz 2y ago
        Yes, there was a decline in electricity prices, for the world as a whole. The cost was to Germany. Like I told you above, don't ignore that.
        ZeroGravitas 2y ago
        Are we talking about a specific policy or the whole transition? The Wikipedia page on the EEG suggests that it's globally recognised as a success, and even when political pressure was being applied to reduce solar PV feed in tariffs faster than the original plan called for due to better than expected uptake, the merit order effect introduced in the same legislation was reducing the spot price of electricity by more than the cost. https://en.wikipedia.org/wiki/German_Renewable_Energy_Sources_Act https://en.wikipedia.org/wiki/German_Renewable_Energy_Source...

pydry 2y ago

It's ironic that this is what the carbon industry used to preach back when solar and wind were very expensive and people believed it. Now, the carbon and nuclear industry preaches the opposite - that the market absolutely cannot handle this "problem" and we need the government to give them money instead. It was a lie both times, and it was widely believed both times.

belorn 2y ago
During the 2022 energy crisis, it was the citizens of practically every country in EU that declared in unions that the market had failed and that government had to step it to fix it. Multiple elections around that time was defined by political discussion around who was willing to pay more of citizens energy bills and save companies that would have gone bankrupt. Estimated €200 billions in a single year went towards that single purpose of fixing what the market failed to do. It was demonstrated beyond doubt that if governments let the market forces deal with instability in energy prices, then the citizens will vote to kick those politicians out and replace them with someone else.