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Why has the price of electricity in Europe reached record highs?

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Re: Why has the price of electricity in Europe reached record highs?

#181

Post by _ph_ »

PeterisP wrote: post #141
_ph_ wrote: post #113

Earlier quoted context omitted.

Probably not, but the gas price is peaking for several, mostly temporal reasons. Especially if the overall gas usage drops due to more renewable electricity, the gas price will drop also. But the real competition for nuclear energy shouldn't be gas (which is expensive even in better times), but renewables. We need much more of them.

Winter is yet ahead, in the coming 6 months gas usage is only going to increase, so I don't think that this peak will decrease any time soon.

When we talk about possible new nuclear plans, we are not talking about the next months but years. Short term not much can rectify the situation other than trying to buy more gas. Ironically, the much criticized north stream 2 pipeline has just become ready to put into operation.

Re: Why has the price of electricity in Europe reached record highs?

#182

Post by ToJans »

jabl wrote: post #95
ToJans wrote: post #33

Earlier quoted context omitted.

My best guess is that the energy providers speculated on the energy trading market and lost, creating a huge gap. There's almost no risk for them, because when they win, they make a lot of profit, and when they lose they can just tell consumers there is a shortage in energy. Ofc. this market is highly regulated, but if I understood correctly there's a lot of room in between the whitespace for interpretations. (Note :…

Energy retailing is, AFAICS, a very low fixed cost business. You don't need to own any expensive infrastructure. You just buy electricity from the wholesale market (usually time-varying, although careful operators can of course hedge their positions), and sell at fixed price to consumers. You essentially need a web site and a bunch of annoying telemarketers. It seems what has happened is that many of these retailers…

The org I mentioned in my previous post was not a reseller but an energy producer; they were the largest producers of energy both in our country and the neighboring countries.

The calculations for plant scheduling took a gazillion of parameters into account (CO2 emission rights, pricings of different kinds of fuel, weather predictions, ...)

These markets not only trade energy, but also fuel, logistics, CO2 emissions, ... (using direct quantities, options, leveraged products, things like insurance, ... If you could imagine it, there was probably someone trading it.)

If you are into this stuff: I built the prototype that validated their portfolio position with the other suppliers; it was a protocol called EPM (Electronic position matching), developed by the EFET (European Federation of Energy Traders). I am not sure how it evolved, as this was the first iteration of the protocol...

Re: Why has the price of electricity in Europe reached record highs?

#184

Post by Brakenshire »

pfdietz wrote: post #20
mhandley wrote: post #10

The strike price for nuclear power from Hinkley Point C when it becomes operational will be £92.50/MWh. This has received a lot of criticism for being too high. With current wholesale rates at £385/MWh, suddenly Hinkley Point C doesn't look so expensive any more.

Except Hinkley Point C would require those high prices persist for a decade in order to pay off. That's unlikely to happen.

For 3 and a half decades.

Re: Why has the price of electricity in Europe reached record highs?

#185

Post by mjburgess »

jeffbee wrote: post #175
the_mitsuhiko wrote: post #60

For the UK it's a tripple whammy right now: high gas prices, a fire at an interchange to France and with Brexit they left the EU’s internal energy market. As a result the prices for electricity are skyrocketing at certain times of the day. That's what weekend pricing looked yesterday: https://i.imgur.com/U275C5r.png

I mean, £1/kWh is pretty high, but it's not totally outrageous and it appears to have been capped by some kind of regulatory limit. 42¢/kWh is the standard retail price in California during peak demand hours, and that's not a huge difference.

We usually pay 15-20p

Re: Why has the price of electricity in Europe reached record highs?

#186

Post by Enginerrrd »

ben_w wrote: post #74
adrianN wrote: post #66

Earlier quoted context omitted.

Well yes, but I'm a bit skeptical that nuclear is also cheaper.

IIRC nuclear is cheaper than the batteries, if that’s the limit, but land use of PV is a bit of a red herring: it can scale up or down, fit in spaces other things don’t. Rooftops, waste land, mounted on top of road noise barriers… There’s no reason that I’m aware of not to cover the grounds of nuclear power plants in PV.

>There’s no reason that I’m aware of not to cover the grounds of nuclear power plants in PV.

I'd be hesitant to impede access to various parts of the facility for safety reasons. Also, until a permanent storage solution is developed, reserving space for onsite storage is a very sensible thing to do.

Re: Why has the price of electricity in Europe reached record highs?

#187

Post by Enginerrrd »

ben_w wrote: post #121
bcrosby95 wrote: post #112

Earlier quoted context omitted.

Some companies are buying up old farmland in California's central valley and turning them into solar farms. Seems like a great transition of land use, especially if water is going to be a continual problem over here.

Huh, I’d have assumed they’d do that in Nevada rather than in Central Valley. But yeah, it can go anywhere that’s otherwise unused.

Central Valley is a lot closer to large population centers.

Re: Why has the price of electricity in Europe reached record highs?

#188

Post by jeffbee »

mjburgess wrote: post #185
jeffbee wrote: post #175

Earlier quoted context omitted.

I mean, £1/kWh is pretty high, but it's not totally outrageous and it appears to have been capped by some kind of regulatory limit. 42¢/kWh is the standard retail price in California during peak demand hours, and that's not a huge difference.

We usually pay 15-20p

I get that it's more, but I clicked through to read the article expecting something insane like the $9/kWh rates in Texas earlier this year.

Re: Why has the price of electricity in Europe reached record highs?

#189

Post by Retric »

cbmuser wrote: post #150
Retric wrote: post #140

Earlier quoted context omitted.

Germany is a net exporter of electricity to France 13.7TWh in 2017. But they trade a lot of power back and forth. https://www.agora-energiewende.de/fileadmin/Projekte/2018/Ja...

Yes, _net_ exporter. But we are often exporting at low or even negative prices.

The accounting gets tricky. France is generally paying more per kWh of nuclear than they generally get it from exporting it. However, the marginal costs per kWh is below what their receiving.

French nuclear power is such a bad deal for the country they try really hard to avoid showing the public how massive the subsidies are. Oddly enough this seems to have worked, and meanwhile they significantly reduced emissions which is a win for the environment.

Re: Why has the price of electricity in Europe reached record highs?

#190

Post by ToJans »

dan-robertson wrote: post #86
ToJans wrote: post #33

Earlier quoted context omitted.

My best guess is that the energy providers speculated on the energy trading market and lost, creating a huge gap. There's almost no risk for them, because when they win, they make a lot of profit, and when they lose they can just tell consumers there is a shortage in energy. Ofc. this market is highly regulated, but if I understood correctly there's a lot of room in between the whitespace for interpretations. (Note :…

Energy generation (at least in Europe) has changed a lot in the last 20 years. So have many financial markets. I would strongly suspect that the dynamics of energy markets are quite different today to how they were 20 years ago.

Even though the landscape might have changed, I don't see a reason why trading should change (except maybe for opening up the market to smaller players who are "energy resellers"...)

In the end, trading is betting on arbitrage, and I don't see why an energy producer would stop leveraging this "free money".

A simple example: if there was good weather expected in another country, the org would set up a contract to buy the energy surplus in that country at a cheaper price. Whether or not or bio-gas & coal plants were running or not was mostly based on how much energy we needed after taking into account what happened on the trading floor, the price of our fuel and how much the other country would be charging. Of course, the other country could decide we didn't offer a good price and decide to tone down it's amount of energy it produced.

I recall a lot of market making on the CO2 emission rights for example, but that's another story.

This is a simple scenario, in real life it was way more complex. (Just think about planning something like the delivery of coal at a plant.)

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