smatovic wrote: ↑Mon Dec 05, 2022 1:30 pm
Dunno if this is of interest, but at the German electricity stock exchange in Leipzig they operate with the principle "Merit Order", means even if we have ~50% cheap, renewable power at peak times the price is defined by the most costly power plants (which are currently natural gas power plants) to ensure power grid stability....
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Srdja
This is how the law of supply and demand works (a law that applies to any market). The price of a commodity is the lowest price that can satisfy demand.
I disagree, if economic factors where the only one to apply, then we would have already 100% cheap, renewable energy since 10 years.
smatovic wrote: ↑Mon Dec 05, 2022 1:30 pm
Dunno if this is of interest, but at the German electricity stock exchange in Leipzig they operate with the principle "Merit Order", means even if we have ~50% cheap, renewable power at peak times the price is defined by the most costly power plants (which are currently natural gas power plants) to ensure power grid stability....
--
Srdja
This is how the law of supply and demand works (a law that applies to any market). The price of a commodity is the lowest price that can satisfy demand.
That works where there's a free market. In most places (all?), the energy system is an oligopoly where price fixing is a common practice.
smatovic wrote: ↑Mon Dec 05, 2022 1:30 pm
Dunno if this is of interest, but at the German electricity stock exchange in Leipzig they operate with the principle "Merit Order", means even if we have ~50% cheap, renewable power at peak times the price is defined by the most costly power plants (which are currently natural gas power plants) to ensure power grid stability....
--
Srdja
This is how the law of supply and demand works (a law that applies to any market). The price of a commodity is the lowest price that can satisfy demand.
That works where there's a free market. In most places (all?), the energy system is an oligopoly where price fixing is a common practice.
Well I was not stating an opinion about this but a fact. I think the law of supply and demand is more or less a tautology. But it is conceivable that under certain conditions (for example lax government oversight) the supply side of the equation can be manipulated.
Ideas=science. Simplification=engineering.
Without ideas there is nothing to simplify.
smatovic wrote: ↑Mon Dec 05, 2022 1:30 pm
Dunno if this is of interest, but at the German electricity stock exchange in Leipzig they operate with the principle "Merit Order", means even if we have ~50% cheap, renewable power at peak times the price is defined by the most costly power plants (which are currently natural gas power plants) to ensure power grid stability....
--
Srdja
This is how the law of supply and demand works (a law that applies to any market). The price of a commodity is the lowest price that can satisfy demand.
I disagree, if economic factors where the only one to apply, then we would have already 100% cheap, renewable energy since 10 years.
--
Srdja
There is nothing to disagree with in what I wrote. I was just stating a fact.
Now you probably think that in this case the law of supply and demand has rather perverse effects. This may be true, but consider this: (1) The huge profits from renewables provide a very strong incentive to bring more renewables online. (2) Those huge profits will be taxed by the government and that money can be used to soften the effect of high energy prices.
Concerning the "economic factors". Until very recently natural gas was very cheap (besides being extremely convenient) so we were indeed applying only "economic factors". In market economies it is very difficult do deviate from short term economic mechanisms. This requires a lot of political will - not only from politicians but also from the population that elects those politicians.
Ideas=science. Simplification=engineering.
Without ideas there is nothing to simplify.
smatovic wrote: ↑Mon Dec 05, 2022 1:30 pm
Dunno if this is of interest, but at the German electricity stock exchange in Leipzig they operate with the principle "Merit Order", means even if we have ~50% cheap, renewable power at peak times the price is defined by the most costly power plants (which are currently natural gas power plants) to ensure power grid stability....
--
Srdja
This is how the law of supply and demand works (a law that applies to any market). The price of a commodity is the lowest price that can satisfy demand.
I disagree, if economic factors where the only one to apply, then we would have already 100% cheap, renewable energy since 10 years.
--
Srdja
There is nothing to disagree with in what I wrote. I was just stating a fact.
Now you probably think that in this case the law of supply and demand has rather perverse effects. This may be true, but consider this: (1) The huge profits from renewables provide a very strong incentive to bring more renewables online. (2) Those huge profits will be taxed by the government and that money can be used to soften the effect of high energy prices.
So you basically agree that expensive fossil power plants are subsidized by cheap renewable power plants?
Michel wrote: ↑Thu Dec 08, 2022 8:50 am
Concerning the "economic factors". Until very recently natural gas was very cheap (besides being extremely convenient) so we were indeed applying only "economic factors". In market economies it is very difficult do deviate from short term economic mechanisms. This requires a lot of political will - not only from politicians but also from the population that elects those politicians.
Coal power plants produce about 33% of electricity in Germany, take a read about the story of the Hamburg-Moorburg coal power plant, one of the newest, cleanest, most efficient coal power plants in Europe, how it was build, run and shutdown, and then reason about economic factors in the decision process, or alike:
