Success can cause problems. As wind and solar penetration increases the electricity it generates gets cheaper. If it stops being profitable we’ll stop building it, thus endangering our emissions-free goals. Dev Millstein at the Lawrence Berkeley National Laboratory summarises their research paper that looks at how market value changed over time at 2,100 utility-scale power plants across major power markets in the U.S., using 2019 data. It’s clear … [Read more...]
Financial incentives for Grid Modernisation: the problem with guaranteed returns on investment
Grid modernisation is going to be very expensive. What’s the best way to pay for it? The financial incentives governments put in place now will determine what investments get made, how cost-effectively it’s done, and who ultimately pays. Meredith Fowlie at UC Berkeley’s Energy Institute at Haas explains that a common method is for a government to give some sort of guaranteed return on investment for the new asset. But it’s far from ideal. … [Read more...]
Germany: will the end of feed-in tariffs mean the end of citizens-as-energy-producers
Germany’s feed-in tariffs ran for 20 years. The guaranteed electricity price and connection to the grid incentivised ordinary citizens and communities to invest in smaller scale solar, biomass and wind generation for their homes and local areas. But that guaranteed price is now too expensive, and so the tariffs are ending and lowest-bid auctions are taking over. It’s the bigger players who are winning those auctions, and some of the existing … [Read more...]
The standard models overestimate the cost of the low carbon transition
Why have forecasts for new low-carbon energy consistently underestimated their cost reductions? The IEA has, famously, repeatedly had to raise its estimates for solar’s contribution every year since 2009, and now describes it as the “cheapest electricity in history”. Writing for Carbon Brief, Alexandra Poncia at Arup and Paul Drummond and Michael Grubb at University College London explain that standard models focus on “technology-push” policies, … [Read more...]
A carbon tax on car fuel? A fossil car phase-out date is more effective
The EC is working on a carbon tax on car drivers as part of its big climate plan review in June. William Todts at T&E warns that the EC shouldn’t make the same mistake French President Macron made back in 2018 when severe gilets jaunes protests against a fuel price hike made him back down. A very high carbon price, caused by letting the market decide the price, may have the same effect, getting us nowhere. Instead, Todts gives his three point … [Read more...]
California: Designing electricity rates that are fair and encourage EV and Heat Pump take-up
Electricity prices in California are not fair and not good for incentivising electrification, says James Sallee at the Energy Institute at Haas, because of the way people are being billed. There is no doubt that electrification (grid upgrades, etc.) and climate mitigation (including controlling California’s wildfires caused by power cable failures) must add to the cost of transition. But Californians can now find themselves paying up to twice the … [Read more...]
Do government renewable energy auctions squeeze the PPA market?
Spanish government renewable energy auctions in January produced record-breaking low strike prices for both wind and solar. For solar the average price was €24.47/MWh (the lowest was €14.98/MWh), guaranteed for 12 years through contracts-for-difference (CfDs). As such auctions continue around Europe, Michael ClauĂźner at Energy Brainpool asks what impact these prices will have on future power prices in general and on solar power purchase agreement … [Read more...]
New Berkeley Lab Report Documents Trends in System Impacts, Reliability and Market Value of Solar in the United States
By Andrew Mills and Joachim Seel, Berkeley Lab As solar generation increases, it is expected to progressively impact the bulk power system—changing prices for energy and other grid services. Solar generation is driven by sunshine and thus often highly correlated over the course of a day within a region. Without the deployment of storage or an increase in price-responsive load, growth in solar capacity is … [Read more...]
A marketplace for energy data will enable Europe’s grid expansion
The growth of the decentralisation of energy generation and storage combined with the digitalisation of the metrics of supply and demand is pointing towards a marketplace for energy data, explain Veronika Spurná and Helena Uhde at the EU-China Energy Cooperation Platform. Such a marketplace will monetise the data itself, in recognition of its vital role in enabling the intelligent distribution of energy and investment. There will also be a place … [Read more...]
Oil’s decline will weaken its political influence
2020 was another bad year for the oil and gas industry. The pandemic made it worse but it was not the cause: a decline has been going on for a long time. Energy firms in the S&P 500 (overwhelmingly oil and gas) make up 2.3% of the total value, down from 16% just over a decade ago, and 30% forty years ago. Clark Williams-Derry and Tom Sanzillo at IEEFA explain why, how and what the likely consequences are for oil firms. For many years it’s … [Read more...]
Germany’s Renewable Energy Act 2021: how to implement the fine policy detail of emissions reduction targets
After much haggling and debate, Germany’s Renewable Energy Act (EEG) 2021 was finally approved in December and came into force on 1 January 2021. Sila Akat and Simon Göss at Energy Brainpool outline the most important changes imposed by the amendment. It gives an insight into how a nation is dealing with the finer details of increasingly ambitious emissions reduction targets. The authors cover the main issues and outcomes. How Germany is dealing … [Read more...]
Asia’s record Gas prices expose the need for faster market reform
After record lows in mid-2020, Asian spot prices for LNG rose tenfold to reach record highs in January 2021. This volatility is an obstacle to the development of the gas infrastructure that’s essential to the region where demand for gas is growing, explain Jean-Baptiste Dubreuil and Gergely Molnar at the IEA. There were multiple causes for the price spike, including the cold winter, limits to nuclear and coal generation, and outages at regional … [Read more...]
How to create four major regional Gas hubs in Russia
Kamil Sobczak at the Russian Gas Society has co-authored a report, “Opportunities and prospects for the development of gas hubs in Russia”, which he summarises here. It scopes out what is needed to create four major gas hubs in the Far East, North West, Central and Southern Russia. The plan will help develop and modernise Russia’s gas sector as well as increase exports. Transparency in prices and transaction volumes will be essential to create … [Read more...]
China’s 14th Five-Year Plan will reshape its growing Gas sector
Demand for natural gas in China is set to continue its rise, increasing by 7% to 9% annually to reach up to 500 bcm by 2025, explains Sylvie Cornot-Gandolphe at the IFRI Centre for Energy & Climate. Domestic gas production has continued its significant growth too, driven by a surge in shale gas. Even then, gas imports – both pipeline and LNG - should increase to fulfil the rising supply/demand gap. This growing importance of gas in the energy … [Read more...]
Optimising Wind and Solar needs new ways of weather forecasting
Weather forecasters are used to – and very good at – predicting large-scale weather patterns and then inferring what the actual surface weather conditions will be, based on a database of past events. Hannah Bloomfield at the University of Reading explains how the creation of a database of site-specific wind and solar generation, as well as grid demand, can be used it the same way to more accurately predict the impact of the weather on these … [Read more...]
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