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I've read this before and I don't understand how this doesn't become/is untenable. Doesn't this mean that solar/wind are insanely lucrative? Also, this would

by hvb2 6mo ago

I've read this before and I don't understand how this doesn't become/is untenable. Doesn't this mean that solar/wind are insanely lucrative? Also, this would mean that in order to really bring the price down, gas needs to be taken out as a source. But gas is typically the source that balances the grid because its output can be changed quickly. So price wise, you might get a drop but you would lose your ability to react quickly to fluctuations in demand

scratcheee 6mo ago
Yes, and I think that’s actually intentional, they’re rewarding renewables way over the odds without needing to give politically controversial benefits. The rewards are just an inherent result of the existing system. This is why renewables are growing rapidly in the uk. Of course we’ll need a way to resolve fluctuations both rapid and slower. Rapid fluctuations are handled by pumped hydro and increasingly by batteries. The slow fluctuations (day/night all the way to summer/winter and good/bad weather patterns) are much trickier, I think it’s still unclear how well handle them, but it will certainly be partly handled by having an excess of renewables, though we’ll likely need some other solutions too, nuclear is probably one of them.
- pydry 6mo ago
  The irony is that your comment should be entirely inverted. Renewables are not rewarded way over the odds - in fact the ruling party banned onshore wind entirely and i remember them banning at least one offshore wind farm. Luckily it is very cheap to build. Now Hinkley Point C is another story. It's a hugely expensive boondoggle which is taking decades to construct at enormous cost and the reward at the end is that they are rewarded with a strike price that is 3x that of solar and wind. That is an obsecene subsidy forced on to customers for a power source that cant even do load following and doesnt help with fluctuations in supply and demand. The slow fluctuations on cold, windless nights or when nuke plants are down for unplanned maintenance are going to be managed with gas. Maybe one day it'll be gas synthesized with electricity from solar+wind overproduction on a day like today. The roundtrip is expensive, but will still be cheaper than nuclear power on a windy, summer day.
beejiu 6mo ago
Not only is it insanely lucrative, but the government enters into "contract for difference" contracts that guarantees a price per MWh that are generally above market rates, taking out most of the financial risk.
appstorelottery 6mo ago
> Doesn't this mean that solar/wind are insanely lucrative? I used to work in wind energy in the Netherlands, it is only profitable there due to government subsidies. It was/is an enormously complicated system to understand on the whole. I was on the environmental impact side (visualizations) during the permitting process. It's high-risk & enormously expensive during the permitting process (i.e. getting permission to build the wind farm), and beyond that I understand it's a bidding process and again, super complicated on the energy trading side once you're operating. My experience was that the wind farm operators seemed to be doing well financially, but insanely lucrative? I'm not sure about that vs. non-renewables. Everyone I worked with (including myself) believed in green energy as a part of a larger mission to make the world a slightly better place. EU directives on renewables is what pushed the mission forward; the dutch on the whole (surprisingly), do not love wind turbines in their back yard.
- CalRobert 6mo ago
  :-( I'm sitting here looking at huge wind turbines out my front window and I absolutely LOVE them. I get to live in a solarpunk future where I can get where I need to without a car, my kids run out the door and play without getting run over, and I can see clean energy being made for my home (and that of my neighbours). I'm sure a lot of the cranky old people near me don't like them, but they hate everything and go out of their way to find things to complain about, to be honest.
  - appstorelottery 6mo ago
    Frankly I feel the same as you. I saw my first wind turbine in Newcastle Australia and was completely blown away & wanted to work in wind energy. I've been to Denmark and seen the Vestas V-164 offshore turbine at the on-shore test facility. The rotor area on the V-164 seems as big as a football field - it's the largest rotating object I've ever seen and my mind could barely understand the scale of it. For me, wind turbines are beautiful. I was called crazy a lot in the Netherlands ;-)
    - CalRobert 6mo ago
rlpb 6mo ago
> Doesn't this mean that solar/wind are insanely lucrative? This is how markets are supposed to work. It provides an economic incentive for production to increase, which is what we want. Consider what happens if you develop a farming method to produce potatoes for a fraction of the usual cost, but you can only meet 10% of total demand at your local market. What price are you going to sell your potatoes for when you show up to the market? You (like any free market seller) want to maximise your return, so you'll be able to sell for a fraction under the previous market rate, undercutting everyone else. Your farming method would be extremely lucrative.
- hvb2 6mo ago
  Sure, but those same free markets will happily see those expensive producers go out of business. In the electricity scenario, that would mean blackouts. If you triple the price, you don't have a new gas plant appear out of thin air. And the result won't really be lower consumption either, because most people would have fixed rate contracts (not in the UK so don't know specifically, but this is very common elsewhere)
  - rlpb 6mo ago
    > Sure, but those same free markets will happily see those expensive producers go out of business. No, because remember you are only able to meet 10% of market demand. The expensive producers will still get 90% of the business, and the market price for their product will remain basically the same. This is what we observe in the electricity markets today: the price to us is the cost of the most expensive product. The cheaper producers who cannot meet the full market demand still get to sell at the cost of the most expensive product.
    - hvb2 6mo ago
      > The cheaper producers who cannot meet the full market demand still get to sell at the cost of the most expensive product. Which would mean it's super lucrative and your same laws of economics will tell you that that means they'll be building like crazy. My while point was that as soon as you get to a day where no gas is needed you've lost the ability to react quickly because no supplier will just leave a gas plant around just for that
ZeroGravitas 6mo ago
Renewables (and nuclear) have high up front costs and comparitively low marginal cost. Comparing it against something that burns expensive fuel can be misleading (if you want it to be). One system is taking the money and turning round and handing it to their fuel suppliers, the other is turning round and handing it to the people who loaned them money to build a giant complex structure that would take a decade or more of risk and uncertainty to pay itself back. Gas bids high because it literally makes no business sense for them to operate for less than the gas input costs. They'd rather sit it out when electricity prices are lower. Renewables will take almost any price once built because wind and sun is free, but won't build in the first place without a path to paying off their investment over a certain timespan. (This is why more solar has been built in places with good low risk finance than where the sunlight resource is strongest) CfDs are a competitive bidding process and so give a market price for what developers need their price to be over 15 years or more for it to make a standard return on investment. Developers outside this process need to guess what electricity prices will be, at the times they generate for years to come.

by hvb2 6mo ago

scratcheee 6mo ago

Yes, and I think that’s actually intentional, they’re rewarding renewables way over the odds without needing to give politically controversial benefits. The rewards are just an inherent result of the existing system. This is why renewables are growing rapidly in the uk. Of course we’ll need a way to resolve fluctuations both rapid and slower. Rapid fluctuations are handled by pumped hydro and increasingly by batteries. The slow fluctuations (day/night all the way to summer/winter and good/bad weather patterns) are much trickier, I think it’s still unclear how well handle them, but it will certainly be partly handled by having an excess of renewables, though we’ll likely need some other solutions too, nuclear is probably one of them.

pydry 6mo ago
The irony is that your comment should be entirely inverted. Renewables are not rewarded way over the odds - in fact the ruling party banned onshore wind entirely and i remember them banning at least one offshore wind farm. Luckily it is very cheap to build. Now Hinkley Point C is another story. It's a hugely expensive boondoggle which is taking decades to construct at enormous cost and the reward at the end is that they are rewarded with a strike price that is 3x that of solar and wind. That is an obsecene subsidy forced on to customers for a power source that cant even do load following and doesnt help with fluctuations in supply and demand. The slow fluctuations on cold, windless nights or when nuke plants are down for unplanned maintenance are going to be managed with gas. Maybe one day it'll be gas synthesized with electricity from solar+wind overproduction on a day like today. The roundtrip is expensive, but will still be cheaper than nuclear power on a windy, summer day.

beejiu 6mo ago

Not only is it insanely lucrative, but the government enters into "contract for difference" contracts that guarantees a price per MWh that are generally above market rates, taking out most of the financial risk.

appstorelottery 6mo ago

> Doesn't this mean that solar/wind are insanely lucrative? I used to work in wind energy in the Netherlands, it is only profitable there due to government subsidies. It was/is an enormously complicated system to understand on the whole. I was on the environmental impact side (visualizations) during the permitting process. It's high-risk & enormously expensive during the permitting process (i.e. getting permission to build the wind farm), and beyond that I understand it's a bidding process and again, super complicated on the energy trading side once you're operating. My experience was that the wind farm operators seemed to be doing well financially, but insanely lucrative? I'm not sure about that vs. non-renewables. Everyone I worked with (including myself) believed in green energy as a part of a larger mission to make the world a slightly better place. EU directives on renewables is what pushed the mission forward; the dutch on the whole (surprisingly), do not love wind turbines in their back yard.

CalRobert 6mo ago
:-( I'm sitting here looking at huge wind turbines out my front window and I absolutely LOVE them. I get to live in a solarpunk future where I can get where I need to without a car, my kids run out the door and play without getting run over, and I can see clean energy being made for my home (and that of my neighbours). I'm sure a lot of the cranky old people near me don't like them, but they hate everything and go out of their way to find things to complain about, to be honest.
- appstorelottery 6mo ago
  Frankly I feel the same as you. I saw my first wind turbine in Newcastle Australia and was completely blown away & wanted to work in wind energy. I've been to Denmark and seen the Vestas V-164 offshore turbine at the on-shore test facility. The rotor area on the V-164 seems as big as a football field - it's the largest rotating object I've ever seen and my mind could barely understand the scale of it. For me, wind turbines are beautiful. I was called crazy a lot in the Netherlands ;-)
  - CalRobert 6mo ago

rlpb 6mo ago

> Doesn't this mean that solar/wind are insanely lucrative? This is how markets are supposed to work. It provides an economic incentive for production to increase, which is what we want. Consider what happens if you develop a farming method to produce potatoes for a fraction of the usual cost, but you can only meet 10% of total demand at your local market. What price are you going to sell your potatoes for when you show up to the market? You (like any free market seller) want to maximise your return, so you'll be able to sell for a fraction under the previous market rate, undercutting everyone else. Your farming method would be extremely lucrative.

hvb2 6mo ago
Sure, but those same free markets will happily see those expensive producers go out of business. In the electricity scenario, that would mean blackouts. If you triple the price, you don't have a new gas plant appear out of thin air. And the result won't really be lower consumption either, because most people would have fixed rate contracts (not in the UK so don't know specifically, but this is very common elsewhere)
- rlpb 6mo ago
  > Sure, but those same free markets will happily see those expensive producers go out of business. No, because remember you are only able to meet 10% of market demand. The expensive producers will still get 90% of the business, and the market price for their product will remain basically the same. This is what we observe in the electricity markets today: the price to us is the cost of the most expensive product. The cheaper producers who cannot meet the full market demand still get to sell at the cost of the most expensive product.
  - hvb2 6mo ago
    > The cheaper producers who cannot meet the full market demand still get to sell at the cost of the most expensive product. Which would mean it's super lucrative and your same laws of economics will tell you that that means they'll be building like crazy. My while point was that as soon as you get to a day where no gas is needed you've lost the ability to react quickly because no supplier will just leave a gas plant around just for that

ZeroGravitas 6mo ago

Renewables (and nuclear) have high up front costs and comparitively low marginal cost. Comparing it against something that burns expensive fuel can be misleading (if you want it to be). One system is taking the money and turning round and handing it to their fuel suppliers, the other is turning round and handing it to the people who loaned them money to build a giant complex structure that would take a decade or more of risk and uncertainty to pay itself back. Gas bids high because it literally makes no business sense for them to operate for less than the gas input costs. They'd rather sit it out when electricity prices are lower. Renewables will take almost any price once built because wind and sun is free, but won't build in the first place without a path to paying off their investment over a certain timespan. (This is why more solar has been built in places with good low risk finance than where the sunlight resource is strongest) CfDs are a competitive bidding process and so give a market price for what developers need their price to be over 15 years or more for it to make a standard return on investment. Developers outside this process need to guess what electricity prices will be, at the times they generate for years to come.