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Electricity prices in France turn negative as renewable energy floods the grid

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Re: Electricity prices in France turn negative as renewable energy floods the grid

#51

Post by AaronFriel »

jerf wrote: post #38
paulsutter wrote: post #12

Earlier quoted context omitted.

Negative prices make storage very practical

Unfortunately you've got a massive term mismatch. You have negative prices today, but a lot of reason to believe that by the time you could bring your storage online the problem will already have resolved itself. Oil briefly went negative a few years ago. If you decided to build a storage business dependent on negative oil prices for profit, you might just be coming online around now, and very much poorer than you we…

Oil prices went negative due to an exogenous, rare event shocking demand. No one expected that would recur. (And indeed, many people did try to figure out how to store oil in one-off vessels, short term leases for storage, etc., though I don't know if anyone succeeded.)

Solar panel production on the other hand is exponential and growing much faster than overall power consumption. It can be very, very favorable to build batteries and that's why grid scale battery production is taking off. There is in fact a storage business dependent on energy arbitrage over time, it's lucrative, and all indications suggest it will continue to be lucrative for many years to come.

Re: Electricity prices in France turn negative as renewable energy floods the grid

#52

Post by hn_throwaway_99 »

EcommerceFlow wrote: post #26

What I never understood was how France gets 70-75% of their electricity from Nuclear, yet their energy prices aren't "too cheap to meter", and while cheaper than their neighbors, don't really raise any eyebrows. Wouldn't this be a major example of why Nuclear is NOT the future?

> Wouldn't this be a major example of why Nuclear is NOT the future?

Not at all. Nobody has really put forth "too cheap to meter" as a rationale for nuclear for 50 years or more.

The issue is that nuclear is currently the only reliable base load generation technology that doesn't produce carbon (except perhaps hydro for reasonable definitions of "reliable"). The other top technologies either produce carbon (natural gas and coal) or are unreliable (solar and wind).

I actually don't believe nuclear is "the future" because I think renewables + battery storage will be more economical going forward and less politically dicey. But France is currently the envy of the world for their energy generation save for some countries with unique environments that allow for a lot of carbon-free generation (e.g. Norway with hydro and Iceland with geothermal).

Re: Electricity prices in France turn negative as renewable energy floods the grid

#53

Post by dmurray »

bell-cot wrote: post #2

> French day-ahead power fell to -€5.76 a megawatt-hour, the lowest in four years, in an auction on Epex Spot. Germany’s equivalent contract dropped to €7.64. If true - how fast could a new transmission line from France to Germany pay for itself?

Let's see:

The line can't just go a few metres across the border. Let's say it connects Dortmund, in the German industrial heartland on the French side of the country, with Chooz, the site of a nuclear plant near the German border. French nuclear plants are evenly distributed around the country [0], so that should be a reasonable choice. That's 250 km.

High voltage transmission costs around €2m/km to build [1] and carries around 2 GW of power [2].

So your line costs €500m to build and makes €13 x 2000 = €26,000 an hour and pays for itself after 20,000 hours or three years.

You might reasonably say you wouldn't expect to capture all of the €13 per MWh in arbitrage profits, and perhaps this disparity was a short-lived aberration. But actually it's not: electricity futures in France are priced €25 cheaper than their equivalent contracts in Germany [3], so you could reasonably expect to capture a good portion of that - if you split the surplus between you, the consumer and the producer you can still get €9.

Of course, one problem with this free money is that your competitors are already doing it. The gap is expected to narrow over time thanks to interconnectors like this, increased generation in Germany, and French nuclear plants going out of service [3]. Still, with increasing electrification of the energy market, this kind of power transmission seems like a good business to be in and a good investment for national governments and grid operators.

[0] https://www.researchgate.net/figure/Map-of-French-nuclear-po...

[1] https://www.researchgate.net/publication/358793859_Cost_of_e...

[2] https://web.ecs.baylor.edu/faculty/grady/_13_EE392J_2_Spring...

[3] https://montelnews.com/news/e15ef79e-2905-41ca-9124-165d7469...

Re: Electricity prices in France turn negative as renewable energy floods the grid

#54

Post by yongjik »

EcommerceFlow wrote: post #26

What I never understood was how France gets 70-75% of their electricity from Nuclear, yet their energy prices aren't "too cheap to meter", and while cheaper than their neighbors, don't really raise any eyebrows. Wouldn't this be a major example of why Nuclear is NOT the future?

The nice thing about nuclear is that you can plan how much electricity you're going to generate. (Well, not counting project delays and stuff...)

Ergo, if you're using nuclear and energy became "too cheap to meter" then someone was not doing their job properly. If Tesla overestimated market demand and has to give away cars for free, would you say it means Tesla is the car of the future?

Re: Electricity prices in France turn negative as renewable energy floods the grid

#55

Post by WheatMillington »

EcommerceFlow wrote: post #41
robertlagrant wrote: post #30

Earlier quoted context omitted.

I'm confused. The way you've phrased this certainly doesn't sound like it couldn't be the future.

I've heard for years that if we just had "tons" of Nuclear plants, our energy costs would essentially be too cheap to meter. Yet France is not experiencing this even at 75% Nuclear.

Where did you hear that? I've only ever heard about how nuclear is both capital and opex intensive and very expensive.

Re: Electricity prices in France turn negative as renewable energy floods the grid

#56

Post by helsinkiandrew »

EcommerceFlow wrote: post #26

What I never understood was how France gets 70-75% of their electricity from Nuclear, yet their energy prices aren't "too cheap to meter", and while cheaper than their neighbors, don't really raise any eyebrows. Wouldn't this be a major example of why Nuclear is NOT the future?

> yet their energy prices aren't "too cheap to meter"

French nuclear power is run by EDF, which although 85% owned by the French government has “a mandate to make a profit for its shareholders”

Re: Electricity prices in France turn negative as renewable energy floods the grid

#57

Post by bryanlarsen »

littlestymaar wrote: post #45

Econ 101: with a marginal cost equal to zero, a competitive electricity market (with a price driven to marginal cost because of competition) cannot be sustainable because electricity price it cannot pay for the fixed costs. Solution: we must stop electricity pricing based on energy produced (which made sense when using fossil fuel) and switch to a pricing mechanism where you pay for available power because that's whe…

Many markets already do this: for example California pays generators a mixed rate per kWh and kW.

But just pricing per kWh can work. If the limit is available capacity at 6PM, then those kWh are the most profitable and capacity will be built to meet demand at 6PM.

Re: Electricity prices in France turn negative as renewable energy floods the grid

#58

Post by gruez »

jnsie wrote: post #28

Potentially ignorant question. How does this impact the consumer? Do they actually get paid/credited for electricity used?

Consumers don't pay the market rate, because that'd expose them to price shocks (see: the griddy fiasco in texas a few years ago). They get a fixed rate from their utility.

Re: Electricity prices in France turn negative as renewable energy floods the grid

#59

Post by robertlagrant »

EcommerceFlow wrote: post #41
robertlagrant wrote: post #30

Earlier quoted context omitted.

I'm confused. The way you've phrased this certainly doesn't sound like it couldn't be the future.

I've heard for years that if we just had "tons" of Nuclear plants, our energy costs would essentially be too cheap to meter. Yet France is not experiencing this even at 75% Nuclear.

You're remembering a (mis-)quote of a speech given in 1954[0].

And even if it weren't a misquote, "Living up to a quote from 1954" is not how we judge whether a power source is still worth investing in for the future.

[0] https://www.thisdayinquotes.com/2015/09/too-cheap-to-meter-t...

Re: Electricity prices in France turn negative as renewable energy floods the grid

#60

Post by Neil44 »

risyachka wrote: post #44
Neil44 wrote: post #29

This happens frequently in the UK too, if you have a compatible supplier you can set it up to charge your EV or some batteries during negative spikes. Ultimately if enough people were set up that way then prices would not get negative I suppose. * https://octopus.energy/smart/agile/

I wonder how many people need to do that in order for it to become not negative.

Interesting question! Maybe someone cleverer than me can work it out :)
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