Renewables pay you to take their electricity

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From The Age today:

Germany, the world leader in installing renewable energy, had a moment last month. It was producing so much electricity from solar, wind and biomass that more than half of the country’s electricity was flowing from these renewable sources.

There was so much, in fact, that the price of electricity actually fell to zero. And the price kept falling. It went negative. There were times on April 17 when wholesale electricity in Germany was selling for minus 14.91 euros for a megawatt hour. So it wasn’t free – it was cheaper than free.

Now, I’m not overly knowledgeable about economics and that kind of thing, so bare with me here. But is negative pricing for your product not a bad thing? Do the above facts not simply show that on April 17th Germany’s renewable energy plants were simply producing a lot of electricity which has more or less no market value?

I don’t think this is an overly complex point. Yet, occasional negative pricing is put forward as a positive for renewables. Can someone explain to me how it is not a negative?

If a Rome street vendor is standing around the Trevi Fountain trying to hawk umbrellas on a balmy August evening, the fact that tourists aren’t willing to give him a dime for them is not evidence umbrellas are cheap.


10 thoughts on “Renewables pay you to take their electricity

    Christopher Dunne said:
    May 26, 2015 at 3:15 pm

    We get the same thing here on some sunny days in the Australian northern state of Queensland, when for a few hours, near solar noon (no Shit Sherlock!), power prices go negative.

    Twitter lights up with euphoric whoops from the usual phalanx of of PV warriors, but none of them seem to grasp the fact “you can’t give the stuff away” is not a good advertising slogan for their preferred mode of rentseeking (yes, the government mandates “renewables” over real generation on demand).


      Robert Wilson said:
      May 26, 2015 at 3:21 pm

      And what is your preferred mode of rentseeking?


    Christopher Dunne said:
    May 27, 2015 at 12:20 am

    Not solar, and not wind. Personally, I’d be happy to see Australia use nuclear to replace coal but the green cult here is all pervasive and hostile to real solutions that would in fact cut our GHG emissions beyond the level of a token gesture.


      Robert Wilson said:
      May 27, 2015 at 6:49 am

      The “green cult is all pervasive” in Australia? I think your grip on reality is excessively lubricated.


        Christopher Dunne said:
        May 27, 2015 at 11:05 am

        Thank you so much for your insight into my “grip on reality”, but the simple fact is that a big majority in Australia support renewables and the media, private and govt, run endless nonsense about them.


    donoughshanahan said:
    May 27, 2015 at 8:07 am

    A basic understanding of why retail and wholesale prices are not the same would also help. Generation costs are only one part of retail and wholesale mainly reflects only those.

    Wholesale prices go negative indeed due to over generation at that time. Renewables can cope because a. The FIT gets applied after the wholesale is complete b. Exports go from after the wholesale is complete meaning that if nobody in Germany wants it, you can sell abroad and still get the FIT.


      kakatoa said:
      May 27, 2015 at 12:58 pm


      We are running into some congestion issues on the CA grid. Some sources of generation that had accepted bids in the day ahead market are being required to be curtailed for grid stability, and limitations on capacity of the transmission system. It looks like the majority of the curtailments are affecting the Southern part of the state. At this time of year when we are having rather ideal spring time temperatures with lots of sun and a normal wind year (from what I can tell) curtailments are bound to be mandatory for someone.

      It appears, from a grid stability perspective, adding more PV at our place isn’t going to improve the situation in the coming years. A lot has changed sense our system was installed back 2006. It is a bit disconcerting that our focus on flexible generation sources of power are hitting various limits-

      With no curtailment of renewable resources, the CAISO identified upward and downward reserve
      and load following shortfalls and unsolved over‐generation in both the Trajectory and 40% RPS in 2024
      scenarios. The unsolved over‐generation is significant in the 40% RPS in 2024 scenario. Simply adding
      more flexible generation resources cannot solve the problem. The frequency and magnitude of the
      reserve shortfalls and unsolved over‐generation reflect conditions that do not support reliable grid
      operations. As a result alternative options must be explored, including:……”


    Jarmo Mikkonen said:
    May 27, 2015 at 6:31 pm

    “Renewables pay to you to take their electricity”

    First, it is electricity consumers or taxpayers (depending on how FIT is financed) who pay. Renewable electricity producers get paid a guaranteed price even if there is negative demand for their product.
    Second, even many industrial customers buy electricity
    Third, since FITs are the difference between guaranteed wholesale price for renewables and market price, this “free” electricity during spells of negative wholesale prices actually becomes an even greater burden to consumers or taxpayers.

    Renewable electricity subsidies create jobs but they also destroy jobs in conventional electricity generation …jobs which did require subsidies.


      Robert Wilson said:
      May 27, 2015 at 6:34 pm

      Do you understand the concept of irony?


    kinimod said:
    May 27, 2015 at 6:31 pm

    It is part the stimulus, to guarantee the private investors in solar/wind their return. But clearly, there is a distortion: we have a transport/storage/flexibility issue in Germany. With enough high voltage long distance transport capacities, the energy could be sent to russia or elsewhere far away, were it is needed more. With enough storage, it could be used during evening-night-morning. With enough flexibility of the fossil power plants , i.e. gas instead of coal, we could decrease / increase their procuction quickly . Or any combination thereof.
    So the system cost of renewables are a lot higher than just the PV- or wind installations. But I am in favour of them anyway.


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