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In Defense of Electricity Markets

austinvernon.site

71–80 of 142 posts

Re: In Defense of Electricity Markets

#71
post #64
post #31

Earlier quoted context omitted.

Norway had trouble with hydro power because of low water levels. Compared to 2021, hydro power was down 10%, imports went up by 60%, and exports remained the same. And for the record, Germany didn't have any trouble with electricity last year, they exported records amounts of it, even increased the usage of gas to meet other countries' demands. Germany exported more electricity to Luxemburg than Norway exported to Ge…

I'm not saying it's Germany's fault, we're the ones selling them energy. Or rather a couple rich guys make shitloads of money while everyone else pays for their profits. Nothing against Germany.

By "a couple of rich guys" are you referring to the fact that roughly 90% of all power production capacity is owned by the public via municipalities, regions and the state? (https://energifaktanorge.no/en/om-energisektoren/eierskap-i-...)

Re: In Defense of Electricity Markets

#72

Earlier quoted context omitted.

That is mostly because there are no more large scale nuclear investments, lot of knowhow has been lost, everything is custom built now on every level of implementation (which SMRs promise to solve), and because people care about the initial investments, not for the TCO. Oh, and politically motivated NIH red-tape for getting some votes on the cost of whole society.

Nuclear benefits from stable output, but the world we're in doesn't require stable output so the economics become difficult.

This is not true.

Re: In Defense of Electricity Markets

#73
post #4

Earlier quoted context omitted.

This has almost nothing to do with the topic at hand, which was a commentary on the value of a functioning market for electricity (I hesitate to call it a "free" market because any electricity market ends up having a lot of rules). I personally think Gen IV nuclear reactors have stuff-all chance of competing in such a market, but if somebody believes otherwise and wants to put up the dollars to try, all power to them…

I wouldn't say that a technology which would dump a ton of supply, affecting, if not disrupting the market, has "almost nothing to do with the topic at hand". it's unfortunately a bit of a fantasy and years out from being possible due to a natural disaster setting the industry back by yet another a decade but it's totally relevant for a threaded forum.

Too much supply is just as bad a problem as too little & nuclear doesn't have the rapid startup needed to adjust the grid for sudden demand that the markets are intended to accommodate.

Re: In Defense of Electricity Markets

#74
post #43
post #8

Earlier quoted context omitted.

How is it worse in Europe? Where in Europe is it worse? I can't remember the last time the grid failed.

Europe is worse in carbon-free transition. The grid itself is fine, but it's backed by fossil fuels with no way out.

> Europe is worse in carbon-free transition.

Than whom? The parent comment referred to Texas, let's extend that to an US/EU comparison in electricity production

The latest numbers I could find for either:

EU: https://ec.europa.eu/eurostat/statistics-explained/index.php...

US: https://www.epa.gov/power-sector/electric-power-sector-basic...

Nuclear + wind + solar + hydro in the EU was 57.8% vs 36.9% in the US, doesn't seem that much worse

Re: In Defense of Electricity Markets

#75
post #5

Counterpoint: electricity markets are terrible for reliability. Markets are great, but there are no pricing signals for reliability. You won't know that your grid will collapse at the first strong breeze, until it happens (see: Texas). Theoretically, it can work because companies might invest in reliable generation, in the hopes of getting $$$$$$$$$ when the spot price goes up through the roof. But in practice, prett…

Europe has a very robust energy market. The Ukrainian war put a lot of stress on it last winter. The lights stayed on. Sure prices rose a little and that sent off a strong price signal for people to conserve energy and invest in alternative solutions. Exactly what you'd hope for in a well functioning market. The European market is all interconnected. You might get electrons from Norwegian hydro, German or Danish wind, or Spanish solar. Or a mix of all of those. And of course there are loads of coal, nuclear, and gas plants connected to the grid as well. There's plenty of generation capacity. The main technical challenge is cables, not generation. More cables means better energy distribution and more competitive pricing.

A lot of French nuclear plants being down for maintenance right in the middle of the Ukrainian crisis did not result in rolling blackouts. Instead it resulted price signals for others to step up their energy production and serve that demand. The bad thing was that that was German coal. But the good thing is that it worked. Coal is expensive, so the price signals exist to get rid of it. Renewables are cheap, so there's a shift from coal to renewables in most places with a functioning market.

The European energy market is much more dynamic than the US. In the US you have Texas basically disconnected from the rest of the US market for ideological reasons and local monopolists both setting prices and dictating what home owners can and cannot do with things like solar.

The Texas grid collapsed there when it got a bit cold and gas pipes and coal piles froze up. The local monopolists created a price signal but were not able to produce the required energy supply. And as they were unable to import any energy, they had to do rolling blackouts. They should be exporting clean energy most of the time. There's plenty of it. Why is that not a thing? Don't they like money there? Classic example of a broken market. The fix is changing the policies that prevent competitors from challenging the status quo. There's no shortage of entrepreneurs in Texas. They could fix it in no time.

Re: In Defense of Electricity Markets

#76
post #62

Earlier quoted context omitted.

We are not stuck and these issues are solvable (as much as they exist): trade of electricity with neighbouring countries, storage etc. For example, a simple thing where Germany could try to follow the Nordic countries is heat pump installations to keep houses warm without fossil fuels.

It is true that heating should be electrified … but it’s important to note that this makes the Dunkelflaute problem more serious, not less. Because now your inflexible base-load has increased. And while spreading generation over a wider area helps, it rapidly reaches limits (unless your power grid extends close to the equator).

It makes it less serious in the north where shortage of electricity would mean freezing indoor temperatures. Heat pumps have reduced the amount of electricity needed (compared to direct electric heating) for heating a house and thus the amount of imports/storage needed. Also, if the heat pumps are a part of a district heating system, a heat storage solution can be included in the system.

In a country where heating isn't yet electrified, it's a way to reduce fossil fuel use and carbon emissions (the ultimate goal) without necessarily reducing the fossil electricity production. So even if it doesn't solve Dunkelflaute alone, it's a part of solving the climate and energy crises.

Re: In Defense of Electricity Markets

#77
post #35
post #18

Earlier quoted context omitted.

Exactly. If anything the electricity markets in Europe prove the point they can work.

It sort of depends on what you mean by markets. In most places in Europe the production of power is on the market, but the actual power grid is not freely traded. The grid is instead handed out to semi-permanent monopolies that are heavily regulated and controlled by governments and/or non-profit NGOs that are essentially a way we do efficient government in the supply sector. It works, but the benefit isn’t usually t…

> It works, but the benefit isn’t usually to the consumers despite that being the intention.

I'd argue that "it works" as in not experiencing blackouts is of significant benefit to the consumers.

Re: In Defense of Electricity Markets

#78

I don't think they can be defended. In the UK last winter, generators artificially "shut down" to drive up prices. It's a rigged game that hurts consumers: https://www.theguardian.com/business/2023/mar/23/uk-power-fi... The richest people I know (guys in their 30s worth 100 million) all made it through energy trading. Lots of hands in pockets here and is similar to most corrupt privatisation initiatives.

> generators artificially "shut down" to drive up prices

Isn’t that an argument for having a proper market with multiple suppliers? Competitors would normally step in to provide supply at non inflated prices to generate greater revenue.

Re: In Defense of Electricity Markets

#79
We develop software for the german energy market (just the economic parts of it). If you are interested, look the following (we germans loooove rules and specifications :D) https://www.edi-energy.de/index.php?id=38 This are just the specifications for exchanging data between participants.

Re: In Defense of Electricity Markets

#80

I don't think they can be defended. In the UK last winter, generators artificially "shut down" to drive up prices. It's a rigged game that hurts consumers: https://www.theguardian.com/business/2023/mar/23/uk-power-fi... The richest people I know (guys in their 30s worth 100 million) all made it through energy trading. Lots of hands in pockets here and is similar to most corrupt privatisation initiatives.

Is there not some work to be done on changing the price calculation to try and push back against this behaviour before abandoning the whole concept?
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