Day ahead electricity prices for EU • Hacker News Board

Re: Day ahead electricity prices for EU

#91

Post by dazc » Sat, Aug 27, 2022, 2:01 PM UTC

sph wrote: post #66

bjourne wrote: post #60

Remember that, while prices have soared, electricity generation has not become more expensive. The "electricity crisis" is a crisis for European consumers but a massive windfall for producers. This is a market failure - not an electricity failure.

Can anybody explain why that is? Why a country that generates 99+% of its own electricity like UK is seeing price increases? Everybody blames the war, but AFAIK UK imports 1% of its gas from Russia, and its electricity is generated locally, so why are prices increasing? I would expect grain and wheat to increase 500%, not power.

We generate a lot of this electricity by burning gas which we have to buy from the market where prices are set relative to global supply and demand.

This is why we originally stopped mining coal - because Russian gas was so cheap at the time that it was a no-brainer.

What could possibly go wrong?

Re: Day ahead electricity prices for EU

#92

Post by dmw_ng » Sat, Aug 27, 2022, 2:01 PM UTC

bitL wrote: post #4

I've read somewhere that Czechs (day ahead price of 463EUR/MWh) produce electricity at 0.1EUR/MWh, then sell it to an exchange in Germany and buy it back for the "market" price. Somebody over there is getting extremely rich for no reason and I am wondering why nobody is doing anything about it...

That very much sounds like you're calling for the collapse of the integrated european energy market. This is not meant as an attack on you, just an observation that these nationalistic calls will continue growing louder from every part of the continent, and it is not even September yet. Already Norway has publicly commented on the possibility of rationing exports.

We have yet to even scratch the surface of the effects of this crisis

Re: Day ahead electricity prices for EU

#93

Post by mytailorisrich » Sat, Aug 27, 2022, 2:03 PM UTC

bjourne wrote: post #60

Remember that, while prices have soared, electricity generation has not become more expensive. The "electricity crisis" is a crisis for European consumers but a massive windfall for producers. This is a market failure - not an electricity failure.

Depends on the country. Certainly this applies to a country like France that produces most of its electricity through nuclear, which they are in the process of fully nationalising.

This gives them a lot of leeway to control prices without actually costing them anything.

Re: Day ahead electricity prices for EU

#94

Post by lawn » Sat, Aug 27, 2022, 2:03 PM UTC

speedgoose wrote: post #72

North of Norway has almost free electricity while the south is quite expensive. The only link between the two regions are through Sweden for now. A new power line will connect the two regions in Norway eventually. So the north will pay more and the south the same since everything will be absorbed by other European countries. The electricity companies in the south also follow well the business strategy of privatising…

And Sweden has the same problem with energy transfers, where it's very cheap in the north and very expensive in the south.

Re: Day ahead electricity prices for EU

#95

Post by locallost » Sat, Aug 27, 2022, 2:03 PM UTC

This is nothing. If you want to panic, check the futures markets for the next 2 quarters, especially France.

So I think short term we are pretty screwed. But I think if you can produce electricity at 1/10 or even 1/20 of the price, wouldn't you be adding new capacity now? The only fast option are renewables, so my wild guess is that there will be so much new capacity added in the next years, the bottleneck will not be production, but skilled labor to install it. That's the way a real market economy should react.

Re: Day ahead electricity prices for EU

#96

Post by dkjaudyeqooe » Sat, Aug 27, 2022, 2:03 PM UTC

sph wrote: post #66

bjourne wrote: post #60

Remember that, while prices have soared, electricity generation has not become more expensive. The "electricity crisis" is a crisis for European consumers but a massive windfall for producers. This is a market failure - not an electricity failure.

Can anybody explain why that is? Why a country that generates 99+% of its own electricity like UK is seeing price increases? Everybody blames the war, but AFAIK UK imports 1% of its gas from Russia, and its electricity is generated locally, so why are prices increasing? I would expect grain and wheat to increase 500%, not power.

Because electricity is sold across the entire European market. Low cost producers are going to sell to those who pay the most, to maximise profit, unless they're unable to move the electricity ( or more likely 'contra' it) to where it is intended to be consumed.

Just like oil. The US has cheap oil but it's a global market, so everyone pays the (more or less) the same price regardless of how close they are to the oil.

Re: Day ahead electricity prices for EU

#97

Post by im3w1l » Sat, Aug 27, 2022, 2:05 PM UTC

chii wrote: post #61

gruez wrote: post #24

Earlier quoted context omitted.

You must have omitted something in your example because it makes no sense. >Czechs produce electricity at 0.1EUR/MWh so far so good. Now you have -0.1EUR and 1MWh of power. >then sell it to an exchange in Germany suppose the market price is 400EUR. after selling it to an exchange you have 399.9EUR and 0 MWh of power >and buy it back for the "market" price. so you buy it back at the market price. Now you have -0.1EUR…

the OP meant that the producer is allowed to sell to the higher priced exchange, rather than being forced to sell it at a low price to the consumer. Therefore, the OP is assuming that someone at the exchange is going to profit nicely without having done any work by arbitraging the sale of electricity.

I'm guessing that the missing variable is "cost plus" pricing for consumers? By selling the electricity on the market and then buying it back they can increase the price for consumer.

Re: Day ahead electricity prices for EU

#98

Post by dkjaudyeqooe » Sat, Aug 27, 2022, 2:06 PM UTC

locallost wrote: post #85

sph wrote: post #66

Earlier quoted context omitted.

Can anybody explain why that is? Why a country that generates 99+% of its own electricity like UK is seeing price increases? Everybody blames the war, but AFAIK UK imports 1% of its gas from Russia, and its electricity is generated locally, so why are prices increasing? I would expect grain and wheat to increase 500%, not power.

It's because not all electricity costs the same to produce, but the price is the same, determined by the most expensive producer. There is a shortage of electricity because France is generating a lot less than normal and this is made up by other countries. I would guess the UK is impacted by higher demand as well, thus the more expensive producers are delivering jacking up the prices for everyone.

> determined by the most expensive producer

That's wrong. The price is determined by demand and supply, which in turn is determined by what prices producers are willing to sell at and consumers are willing to buy at, plus other traders in the market.

Re: Day ahead electricity prices for EU

#99

Post by [deleted] » Sat, Aug 27, 2022, 2:07 PM UTC

sph wrote: post #66

bjourne wrote: post #60

Remember that, while prices have soared, electricity generation has not become more expensive. The "electricity crisis" is a crisis for European consumers but a massive windfall for producers. This is a market failure - not an electricity failure.

Can anybody explain why that is? Why a country that generates 99+% of its own electricity like UK is seeing price increases? Everybody blames the war, but AFAIK UK imports 1% of its gas from Russia, and its electricity is generated locally, so why are prices increasing? I would expect grain and wheat to increase 500%, not power.

[deleted]

Re: Day ahead electricity prices for EU

#100

Post by bitL » Sat, Aug 27, 2022, 2:07 PM UTC

jdross wrote: post #49

bitL wrote: post #39

Earlier quoted context omitted.

Thanks, will need to find the source again and see if it was indeed 0.1/kWh and not MWh (talking about production costs at a cheaper country with nuclear power plants fully paid for in the past). EDIT: Just found out production costs from another source: Dukovany Nuclear Power Plant - 20.31EUR/MWh Temelin Nuclear Power Plant - 34.52EUR/MWh

10 cents for a megawatt of electricity is an unheard of marginal cost in any situation. your local costs in the US range from 5-25 cents per kilowatt hour (1/1000 of that), with ideal solar being the cheapest amortized at roughly 3 cents/kwh

I just cross-checked the source and the claim by one of their members of parliament was the price was 0.25CZK/MWh which is ~0.01EUR/MWh in fact.