Unreliable power generation needs on-demand backup generation, typically natural gas based. That’s the perverse effect of renewables: as grid scale seasonal storage is impossible, it increases dependence on gas. In Belgium we’ve even retrofitted jet engines to turbines as kerosine based emergency generation.
Now we’re paying for both the renewables and fossil infrastructure, both scaled to peak power usage. During dunkleflaute, you pay an arm and a leg. When unpredicted clouds or fog appear, you pay emergency balancing prices.
That is a naive way of looking at how the electricity market currently functions and is regulated.
Due to how the pricing is regulated in the market there is a perverse incentive for electricity producers to keep expensive gas plants running to increase profits from their renewable sources, as they can ask the highest production price for all the electricity produced regardless of the actual source.
This regulation was originally intended to increase profits of producers with a small base of renewables and incentivize them into investing in more renewables and I guess you can say that worked in the early 2000. But now that we have a substantial install base of renewables, it highly disincentivizes producers to retire their remaining expensive gas plants and invest in better transmission and energy storage.
Due to how the pricing is regulated in the market there is a perverse incentive for electricity producers to keep expensive gas plants running
You’re probably talking about the day-ahead market (1).
The price per kWh is indeed where bids and asks meet.
Only a small portion of electricity is traded on that market. It’s a marginal factor.
Most is traded OTC, longer term. There’s also the intraday-market. Finally, there’s the balancing price.
That is a naive way of looking at how the electricity market currently functions and is regulated.
I’ve worked as energy trader.
it highly disincentivizes producers to retire their remaining expensive gas plants and invest in better transmission and energy storage.
It is a fundamental problem of technology. Here in Belgium the government started subsidising gas plants, passing the costs on to end-consumers, as they’re necessary for balancing the grid, but unprofitable to run. (1)
As an analogy: it’s like buying a fleet of sailboats. As long as there’s a need for cargo to travel regardless of weather, you’ll still also be maintaining a fleet of motorized boats.
Cost for wind and battery back up is cheaper than nuclear
Similar for solar. So when people talk about the need for back up they don’t mention that the cost including back up is still cheaper than nuclear, which is cheaper than fossil fuels.
To supply germany for one week you need more than the world’s supply of batteries. It’s hard to speculate on the price of something that doesn’t exist.
Pumped storage is currently the only technology that could make grid-scale power storage work.
Is this in an imaginary world with no power from anywhere else, including international interchange? Total battery power is a society ending event. It’s hard to speculate on a power situation that doesn’t exist.
Costs are based on supply and demand. At current demand battery power back up is cheaper than non environmentally friendly forms of energy. Should that change due to supply issues, we can recalibrate.
Howevwrx the smart money, which happens to also benefit the environment, is on green energy.
Pumped storage is still great and has a plate but we need to consider the environmental effect of the dams and reservoirs too. Experimental usage of electric vehicles as a battery supply has also been positive.
You are so right. Thank you! In a situation where it is impossible to generate or import any electricity at all, a nuclear reactor would not be able to produce any electricity either, because the grid is non-operational.
Unreliable power generation needs on-demand backup generation, typically natural gas based. That’s the perverse effect of renewables: as grid scale seasonal storage is impossible, it increases dependence on gas. In Belgium we’ve even retrofitted jet engines to turbines as kerosine based emergency generation.
Now we’re paying for both the renewables and fossil infrastructure, both scaled to peak power usage. During dunkleflaute, you pay an arm and a leg. When unpredicted clouds or fog appear, you pay emergency balancing prices.
End result: Annualized price is high.
That is a naive way of looking at how the electricity market currently functions and is regulated.
Due to how the pricing is regulated in the market there is a perverse incentive for electricity producers to keep expensive gas plants running to increase profits from their renewable sources, as they can ask the highest production price for all the electricity produced regardless of the actual source.
This regulation was originally intended to increase profits of producers with a small base of renewables and incentivize them into investing in more renewables and I guess you can say that worked in the early 2000. But now that we have a substantial install base of renewables, it highly disincentivizes producers to retire their remaining expensive gas plants and invest in better transmission and energy storage.
You’re probably talking about the day-ahead market (1). The price per kWh is indeed where bids and asks meet.
Only a small portion of electricity is traded on that market. It’s a marginal factor.
Most is traded OTC, longer term. There’s also the intraday-market. Finally, there’s the balancing price.
I’ve worked as energy trader.
It is a fundamental problem of technology. Here in Belgium the government started subsidising gas plants, passing the costs on to end-consumers, as they’re necessary for balancing the grid, but unprofitable to run. (1)
As an analogy: it’s like buying a fleet of sailboats. As long as there’s a need for cargo to travel regardless of weather, you’ll still also be maintaining a fleet of motorized boats.
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
And yes, looking at the gas plants alone they are unprofitable to run, but they allow windfall profits from renewables if they run.
You’re incorrect in both your understanding of energy markets, and my paychecks.
Again, you’re basing this on the day-ahead market. A marginal market in terms of traded power volume.
Cost for wind and battery back up is cheaper than nuclear Similar for solar. So when people talk about the need for back up they don’t mention that the cost including back up is still cheaper than nuclear, which is cheaper than fossil fuels.
To supply germany for one week you need more than the world’s supply of batteries. It’s hard to speculate on the price of something that doesn’t exist.
Pumped storage is currently the only technology that could make grid-scale power storage work.
Is this in an imaginary world with no power from anywhere else, including international interchange? Total battery power is a society ending event. It’s hard to speculate on a power situation that doesn’t exist.
Costs are based on supply and demand. At current demand battery power back up is cheaper than non environmentally friendly forms of energy. Should that change due to supply issues, we can recalibrate.
Howevwrx the smart money, which happens to also benefit the environment, is on green energy.
Pumped storage is still great and has a plate but we need to consider the environmental effect of the dams and reservoirs too. Experimental usage of electric vehicles as a battery supply has also been positive.
You are so right. Thank you! In a situation where it is impossible to generate or import any electricity at all, a nuclear reactor would not be able to produce any electricity either, because the grid is non-operational.