All energy sector is very political. The question remains - will the surplus from CfDs for RES will be enough to sensibly lower the energy cost to more then a relatively small group of retail consumers. Although - it is a temporary solution anyhow, as larger volumes of renewables will lower the price anyhow. The key is then - how to encourage more investment in RES through right policies.
True. Renewables (widely defined) are >50% in Germany, and if you count nuclear and impose something similar there you'd have a substantial effect already - but ultimately yes, we have a supply shock and we need to reduce demand and that requires higher prices.
What about prices of electricity paid by industry? Shall they by compensated the same way as consumers? Their consumption is even bigger then consumers’ and they also need lower prices to stay competitive…
well. who the compensation applies to is a political decision. It depends if industry has access to wholesale markets or to regulated tariffs (in the latter case they could easily get access to compensation - in the former, they probably had the ability to hedge their purchases but chose not to, so it becomes a slightly different question...
What are your thoughts on Michael Liebreich's idea to split the market into a "Clean Power Market" (CPM) and a "Fossil Power Market" (FPM) in order to lower prices? He argues to "let gas set the price only for that part of the market which is fulfilled by fossil fuels - gas, the remaining bit of coal, and oil. Trade all clean energy on the other market: renewables, nuclear and power storage. To make this work, you would also need to place a price cap on the clean market." https://www.linkedin.com/pulse/uk-energy-crisis-time-split-power-market-michael-liebreich
There's a lot of "ifs" in his proposal (notably on making PPAs tradable) and he is blinded by the role of government i the market (as most Englishmen, it's communist and evil by definition), which makes him avoid the obvious solution: CfDs with a public ounterparty (like the LCCC) in the UK already exist, you can simply ask the LCCC to distribute the sums it collects from generators under these CfDs (the difference between the high spot price and the strike price of each CfD) to consumers via some simple formula - pro rata all consumers that are under a regulated retail tariff, basically. That would transfer the benefit if fixed price generation to consumers simply, without disturbing the market prices.
In the UK, you could consider doing someting with the ROC projects - maybe offer them to swap against new CfDs (with a maturity longer than the residual ROCs, to make it attractive) with an auction to get sensible prices.
All energy sector is very political. The question remains - will the surplus from CfDs for RES will be enough to sensibly lower the energy cost to more then a relatively small group of retail consumers. Although - it is a temporary solution anyhow, as larger volumes of renewables will lower the price anyhow. The key is then - how to encourage more investment in RES through right policies.
True. Renewables (widely defined) are >50% in Germany, and if you count nuclear and impose something similar there you'd have a substantial effect already - but ultimately yes, we have a supply shock and we need to reduce demand and that requires higher prices.
What about prices of electricity paid by industry? Shall they by compensated the same way as consumers? Their consumption is even bigger then consumers’ and they also need lower prices to stay competitive…
well. who the compensation applies to is a political decision. It depends if industry has access to wholesale markets or to regulated tariffs (in the latter case they could easily get access to compensation - in the former, they probably had the ability to hedge their purchases but chose not to, so it becomes a slightly different question...
What are your thoughts on Michael Liebreich's idea to split the market into a "Clean Power Market" (CPM) and a "Fossil Power Market" (FPM) in order to lower prices? He argues to "let gas set the price only for that part of the market which is fulfilled by fossil fuels - gas, the remaining bit of coal, and oil. Trade all clean energy on the other market: renewables, nuclear and power storage. To make this work, you would also need to place a price cap on the clean market." https://www.linkedin.com/pulse/uk-energy-crisis-time-split-power-market-michael-liebreich
There's a lot of "ifs" in his proposal (notably on making PPAs tradable) and he is blinded by the role of government i the market (as most Englishmen, it's communist and evil by definition), which makes him avoid the obvious solution: CfDs with a public ounterparty (like the LCCC) in the UK already exist, you can simply ask the LCCC to distribute the sums it collects from generators under these CfDs (the difference between the high spot price and the strike price of each CfD) to consumers via some simple formula - pro rata all consumers that are under a regulated retail tariff, basically. That would transfer the benefit if fixed price generation to consumers simply, without disturbing the market prices.
In the UK, you could consider doing someting with the ROC projects - maybe offer them to swap against new CfDs (with a maturity longer than the residual ROCs, to make it attractive) with an auction to get sensible prices.