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Wind and solar bring power prices down

by Jerome a Paris Sun Jul 1st, 2012 at 05:55:06 AM EST

At least, the boss of RWE, the big German utility, says so:

'The Nuclear Power Chapter Has Come to an End'

Terium: The impact of current political decisions and market changes extends far beyond Germany. The large amounts of wind and solar energy that are being fed into the grid, together with the economic crisis, have led to a sharp decline in electricity prices.

RWE actually calls that "price cannibalisation" (not in this interview, but in public presentations at conferences), underlining how the main effect of wind is not to increase prices for consumers (an effect they exaggerate, focusing only on the gross cost of the support regimes for renewables), but a re-allocation of the revenues away from them - something which they understandably do not appreciate much.

Added to the Wind power series

Wind power
by Jerome a Paris (etg@eurotrib.com) on Sun Jul 1st, 2012 at 06:06:17 AM EST
Can we get rid of Henri Proglio now?
by Bernard (bernard) on Sun Jul 1st, 2012 at 06:20:36 AM EST

Germany's energy giants - Don't mention the atom

In the meantime, thousands of subsidised wind farms and solar arrays are hobbling the earning-power of conventional power stations. The midday peak, when the giants used to command premium electricity prices, is undercut by solar power. Winter winds whip away the margins that big, inflexible plants used to enjoy.

Taking the utility (and utility investor) point of view, this is a bad thing, but taking the consumer's point of view, is it a bad thing that "wind whips away the margins" of the utilities?

To add insult to injury, consumers and power-hungry industries still expect the power utilities to take up the slack when sun and wind are idle. Last February, with all the active nuclear plants working at full capacity, Germany's energy producers were only just able to keep the lights on.

Well, that's the thing about periods of peak demand (cold snaps in Europe) - most capacity is needed at this time. The Economist neglects to say that wind and solar actually provided a good contribution at that time (even allowing exports to France, which was similarly stretched at the time)

The firms need to build new capacity, but what kind of replacements should they invest in as nuclear plants and ageing conventional power stations go off stream? Offshore wind farms are expensive and their income unpredictable. Low gas prices make the returns on gas-fired plants too uncertain. New coal-fired stations may look attractive now, but could falter if, as seems likely, charges for carbon emissions go higher. As a result, it is almost impossible to calculate the future returns on a new power station over the next 20 or 30 years.

The notion that the income of offshore wind farms in unpredictable in Germany is a rather strange argument - with fixed prices, and variation of revenues linked only to the actual wind levels (which vary within a few percent points every year) and operational performance (something in the hands of the utilities or their suppliers the turbine manufacturers).

Gas-fired power plants do not look unattractive because of low gas prices, but because high wind penetration means that gas power plants are more profitable as mid-merit or peaking plants than as base load plants, which means different business plans for new plants and wrenching changes for existing plants.

Coal-fired plants face the same unattractive economics (physical difficulty to be base load) given renewable penetration, and uncertain economics for mid-merit, not to mention the rather more difficult permitting process and public acceptance (or lack thereof) for new plants.

In reality, gas-fired plants ARE being built, but not coal-fired plants. And wind plants are being built, because ether offer predictable revenues and a sound business case, barring the current teething problems linked to the need to construct massive new grid capacity in a short time period.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Sun Jul 1st, 2012 at 06:33:50 AM EST
You clearly fail to recognize the true horror of 'subsidised'. This horror is particularly egregious when it runs amok and goes to competitors of the currently dominant status quo. And when did Murdoch buy The Economist?  

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jul 1st, 2012 at 07:20:16 AM EST
[ Parent ]
There's a temporary plateau in the US, due to the temptation of believing in the current Natural Gas prices. In the meantime a lot of our political establishments (Oregon and Washington states for example) seem to recognize the true impacts of a fossil-fuel economy. Both states have published 'climate change' and renewable-energy strategies in the last few years that are strong statements.

Unfortunately, their incentives do not really support their rhetoric, but initiatives have established the mandates that will drive some transformation.

The good news for those of us trying to evolve the political economy is that your success, the Chinese investments in production and deployment, the new Japanese feed-in tariff, and the various RE developments around the world serve as the models that help to ground our rhetoric in reality. Thank you.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Mon Jul 2nd, 2012 at 11:35:03 AM EST
[ Parent ]
It's all going to depend on the slopes of the various curves, right?

  • How fast can sustainable sources be developed?
  • At what cost?
  • Compared to easy coal.
  • And natural gas, and oil.
  • And nuclear.

My bet is that even as the catastrophic results of climate change--that we are just now starting to see obvious evidence of--cause sweeping political change, there is so much hysteresis in the technical underpinnings of the energy industry that we are in for at least another decade or two of increasing dependence on coal and nuclear energy. How do you run your A/C if the power's out?

It was 48 C (118 F) in Kansas yesterday. Huge storm on U.S. east cost will have power out for weeks. Fires all over the west. All-time high temperature records broken in June instead of August...

More nukes is still probably, I think...

by asdf on Sun Jul 1st, 2012 at 11:27:01 AM EST
Bet there are not a few residents of the D.C. area who would really like to have residential solar just now. But gasoline generators big enough to run the AC are less than $1,000, so the total cost to run such a generator for a week every other year is not too bad. My 7500 VA unit used about 15 gallons a day during the '09 ice storm and hasn't been needed since. The trick is to have enough gasoline around to run for a few days. A couple of vehicles with full tanks helps if you have a siphon. Getting a mouthful of gasoline is a younger man's game, I hope.

Natural gas powered whole house generators are an even better technical option. 10KW for about $3 to 4,000. Natural gas is usually one of the last utilities to go down in a disaster, (other than a major earthquake), as the distribution infrastructure is burred.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jul 1st, 2012 at 11:41:32 AM EST
[ Parent ]
Exactly. When it gets hot, you want a solution now, not 20 years from now. If it takes coal or gas to generate the electricity to run the A/C needed because of the CO2 from the coal and gas, well, that's what you want.
by asdf on Sun Jul 1st, 2012 at 02:04:52 PM EST
[ Parent ]
Don't know if they still exist, but I bet that there are similar devices out there that do not depend on electricity.

I'd stick with the gasoline models, but it does depend on topping up your vehicle(s), rather than waiting for the low-fuel message to appear.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Mon Jul 2nd, 2012 at 11:38:47 AM EST
[ Parent ]
Most RVs have refrigerators that run on propane, mains power or 12 VDC. That can be a help for essential items.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Jul 2nd, 2012 at 12:29:50 PM EST
[ Parent ]
Eolien : Sarkozy m'a tuer | Alternatives Economiques Wind: Sarkozy kill me | Alternatives Economiques
La filière éolienne est moribonde, du fait des tracasseries administratives introduites par la loi Grenelle 2. La France est pourtant le pays d'Europe le plus en retard sur ses engagements pour 2020 en matière d'énergie renouvelable, avec le Royaume-Uni, Mais les mesures adoptées ces dernières années ont puissamment freiné le développement de l'éolien et du photovoltaïque, menaçant aussi des milliers d'emplois.The wind energy industry is dying, because of red tape introduced by the Grenelle 2 law. Yet France, with the UK, is the European country that most lags behind its commitments for 2020 for renewable energy. But the measures adopted in recent years have greatly hindered the development of wind and photovoltaic, also threatening thousands of jobs.

(Wind, MW installed in France, 6-month rolling average)

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jul 4th, 2012 at 10:14:25 AM EST

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