Seven countries now generate nearly all their electricity from renewables (2024)

The way energy markets work is that prices change based on supply and demand. So you build a lot of solar and then the price goes down at times when solar generation is high. (There isn't really enough solar in the grid for this to have happened yet in most places.)

Because nuclear has high capital costs but low unit costs, it continues generating all the time even if prices are lower some of the time. It needs to hit a particular average price but will take essentially any instantaneous price. It can't operate with an average price of $0.02/kWh but it can sell for that at noon in July as long as it's getting enough to offset it at midnight in December.

So, you add a bunch of solar to the grid and as a result the price of electricity during daylight hours in the summer falls below the average breakeven cost for solar. Nuclear is still getting more than that at night, when the price won't fall below the daytime price plus the cost of storage, and in the winter, when solar output is lower and heating demand is higher.

Because it's still recovering a lot of its costs on summer nights and even a little bit on summer days, the winter price nuclear needs never gets to be 4x as high, but it goes up some.

Now the solar companies are looking at that price and trying to decide whether it's worth getting. If they add more solar it's going to generate e.g. 4kW in summer, 2kW in spring, 2kW in fall and 1kW in winter. So for every 9kWh they generate, only 1kWh comes in winter, and that's during the day.

Suppose solar needs to average $0.04/kWh to be sustainable but we're already at $0.02/kWh in the spring, summer and fall. Then solar needs the price during the day in winter to be at least $0.20/kWh before wanting to add more. On top of that, if they do add more, then the price during other seasons drops. If those hit $0.01/kWh during the day then solar needs the price during the day in winter to be $0.28/kWh. And, of course, then the price in the other seasons would drop again, until solar would need to have $0.36/kWh in the winter because by then they would only be getting paid in the winter. Whereas nuclear still makes some in the summer at night.

On top of this the demand is higher in the winter at night, but it's not higher in the summer at night. So to use solar with storage, you would also have to amortize the cost of the additional storage during only the winter months. And the winter nights have more hours than the days, don't forget. So for solar to supply all power in the winter it needs the daytime price to be $0.36/kWh and the nighttime price to be more than twice that.

Then solar is intermittent. People still need heat when it's cloudy. Overbuilding solar sufficiently to handle the heating load on a cold cloudy day in winter? Nope. Hopeless. You'd have to use long-term storage in addition to short-term storage and that's a whole new category of expensive when we were already looking at prices nobody was going to like.

So what happens instead? Well, probably the daytime price in the non-winter months gets to something like $0.02/kWh and the daytime price in the winter gets to something like $0.20/kWh and you fall below the breakeven point for building more solar. Then nuclear takes the same $0.02 and $0.20 during the day and something more than that at night and continues to cover its costs.

Really the problem here is not that solar is going to push out nuclear in the winter, it's that natural gas could unless you have a price on CO2. Or more likely, without a carbon price people might not switch to electric heat instead of continuing to heat with natural gas and fuel oil.

So we kind of need a carbon price to do heating. Or to solve it from the other side (which would be even better), we need to get nuclear to be more cost efficient so it can out-compete natural gas since solar won't.

That isn't a future cost, it's a past cost with a future payment date. It's like taking out a mortgage on a piece of land to buy some lumber and build a house on it. The past cost is buying the lumber; the hardware store isn't going to give you a refund six months after you already paid them and used the lumber to build the house. What you have now is a house instead of money and separately a mortgage against the house.

What do you think happens if you don't pay the loan? Is the bank going to get a refund from the hardware store? No, they're going to take the house, sell it to someone else for whatever they can get for it and apply the money to the loan. And then the house continues to operate as a house.

The same thing happens with a power plant. If the plant company itself has a bank loan and isn't making enough to pay it, the bank is going to foreclose, sell the plant to someone else, possibly take a partial loss, and the new owner -- who might have gotten the plant for a lower price than it originally cost to build -- is going to continue to operate it as long as its revenue exceeds its operating costs.

And that's assuming the plant was funded with a bank loan. If it had investors then there is no loan payment; the "loan payment" is when the company pays the owners dividends. If they were expecting the plant to pay enough dividends to recover their initial investment plus interest and its operations only generate enough revenue to repay most of the original investment but no interest, then they continue to operate the plant (or sell it to someone who does) because "recover 90% of the original money instead of the expected 200% of the original money" is still significantly more than "recover 0% of the original money by closing the plant".

For the French to do load following they sync their entire fleet to manage it. Letting plants take turns and spread out where they are in their fuel cycle.