How to reform the German electricity market? Perhaps a better question should be: "How to create a sustainable German electricity SYSTEM?" The answer is simple: reopen the nuclear plants, and build more of them. Prices and emissions will decrease, and there will be abundant, stable, clean energy.
> “We believe that a concept such as Levelized Cost of Load Coverage" (LCOLC) as developed by German economist Veronica Grimm “
i read the first few pages of that paper. a problem i see with LCOLC as opposed to conventional System LCOE or the other modelled approximations terms listed in that paper is that the profile of Wind and Solar vary dramatically from location to location and not just that, but the other wind or solar facilités in a networked system themselves determines the export “profile” of the sum of the facilities (network curtailment of exports aside).
so a system with wind power making 10% of all generation is gone g to have a completely different wind “profile” to the wind “profile” on the very same network at some later point in time with wind delivering 60%*of all generation.
so this means LCOLC will be very location and optimisation model specific, in the same way any modelled system LCOEs is. as opposed to technology specific LCOEs which are broadly extendable across a national network so long as good wind rand solar source locations are préférée over terrible ones.
i guess if it’s about solving particular network access questions on existing grids then these caveats are no problem. but if people start citing the LCOLC in dust ups on twitter between the nuke-bros and RE-fans it’s going to get very silly very quickly (and most nuke bros are already insufferably ignorant about energy economics).
see a thread i wrote this week for the confused Australian media Ombudsman. i talked about the difference between technology LCOE and “System LCOE” estimates and why the Nuke-bros consistently make false accusations about cost to backup, cost to balance, cost to augment transmission for RE facilities.
* 60/40 wind/PV was for a long time the sweet spot of balance between wind and solar on Australian grids NEM and SWIS, though in more recent years the PV price curve has nudge down below wind so you can model a range of mixes of Wind, PV and Storage (plus say 0-10% gas for wind droughts) that arrive at pretty similar system LCOEs. from 30%to 65% wind in the mix.
sorry that should read the Australian Broadcasting Comission (ABC) Ombudsman. just an internal office of the national broadcaster (ABC online, TV and Radio media) with no special prosecution or judicial role like a real Ombudsman might have.
Thanks for the interesting input on the LCOLC - and agreed. Each system has its advantages and flaws. Right now the network access question is indeed the critical one - but that may change over time as storage and flexible demand changes things as well. We know it's not a static system!
A key component to me is using all the domestic batteries installed by PV owners to help balance the grid in winter. Even if you are on a dynamic tarrif like Tibber the high fees per kWh (and absence of domestic dynamic export tariffs) mean that households optimize for their domestic consumption rather than the grid.
I'm thinking something like Octopus agile where fees per kWh are only added to spot market prices in times of grid congestion could be very benefitial
Can you develop this point, I’m don’t think I understand. Domestic PV owners who have installed batteries do it to tap their energy at night so what’s the point in them ceding it to the grid just to get it back, even if that was possible. They would need to have extra capacity to both meet their needs and feed to the grid, which is never or rarely the case.
Hi Isgv, it's all about how often it happens. Batteries are still expensive so you don't build one big enough to capture all of your excess electricity on the sunniest summer day. On the other hand due to seasonal variations you have many winter days where rooftop solar doesn't produce enough to fill up the battery. In winter it tends to be more windy, but all those batteries are not being used to balance out windy periods (and demand fluctuations throughout the day). Same with the batteries in cars. This has huge potential and should be a priority for countries like Germany.
(2) If you have your own generation plus a battery, that gives you even more opportunity to move demand from the grid around - and even to send back power to the grid some of the time - at the time when it's most valuable.
That requires pricing that's sensitive to the supply/demand balance, and the ability to react to that, thus smart meters, good software, and a good contract!
The point is that electricity has a different at different times, because demand varies over the day, and increasingly, production does too (linked to availability of wind or solar). If you have the flexibility to move some of your demand around, that's valuable - for instance just charging your EV at night (when overall demand is low) rather than in the early evening when you come back from work (when overall demand is high) is very valuable to the grid.
Indeed. That's one of the key uses of smart meters. It's mentioned briefly in our text above but agree that it might have been good to emphasize it more.
some good suggestions here - but some sound a bit too much lke locational pricing to me in a way that shows up locational pricing's faults. You say give higher CfD prices in the South - but that's precisely where there are less wind power resources, at least in terms of ability to get planning consent. This illustrates the weakness of locational pricing with renewable energy and threatens to reduce oppotunities for renewable energy developers to set up in places where it is realsitic to get schemes going. So we end up with less renewable energy. Not good.
David, I hear you, but we are at a point where we should not build more renewables in certain places, even if the resource is better than elsewhere, unless we can actually use that energy. Whether it's storage, transmission or new demand, you need to improve the local balance otherwise the additional renewable electricity will simply be curtailed and wasted.
We need renewables where it can be used, and locational signals are a vital part of that, giving incentives both to the demand side (including storage), and the supply side.
one problem with that argument is that it’s counting on future solutions and pricing staying the same as it is today. what if by 2035 thermal energy storage is being deployed for power grid energy storage at the rate LithIon BESS are going into the Australian grid today (you can’t keep up there’s so many). that would completely change the playing field and all the short term locational pricing fixes would be locked in economic rents on energy consumers.
as you say we need to improve the local balance with storage transmission or new demand - so we should focus on incentives for more storage, build new demand and improve demand flexibility, then we can use the renewable energy that would otherwise be constrained. That's a much better solution than deploying locational pricing that will mean there's no renewable energy in a lot of places, and much less renewable energy overall.
Locational pricing will incentivize storage and demand - and lead to better prices at that node once it happens. Then renewables can be profitable again, because they can be used. Again, there's no point deploying renewables if they can't be used. There needs to be real incentives for that use to grow - locational prices will encourage local demand, storage and transmission.
sorry to labour thenpoint, but if there's little or no renewable energy in am 'low price' locational zone then there won't be demand for storage services etc because there won't be much renewable energy. That's the point.
and the high price zones like Bavaria where it is difficult to get planning consent for windfarms anyway there won't be much renewable energy for resource reasons. It's lose lose for renewables under locational pricing. Maybe it's not so bad in some countries compared to others, but know from the UK that the results will be uncertainty folowed by slump
How to reform the German electricity market? Perhaps a better question should be: "How to create a sustainable German electricity SYSTEM?" The answer is simple: reopen the nuclear plants, and build more of them. Prices and emissions will decrease, and there will be abundant, stable, clean energy.
> “We believe that a concept such as Levelized Cost of Load Coverage" (LCOLC) as developed by German economist Veronica Grimm “
i read the first few pages of that paper. a problem i see with LCOLC as opposed to conventional System LCOE or the other modelled approximations terms listed in that paper is that the profile of Wind and Solar vary dramatically from location to location and not just that, but the other wind or solar facilités in a networked system themselves determines the export “profile” of the sum of the facilities (network curtailment of exports aside).
so a system with wind power making 10% of all generation is gone g to have a completely different wind “profile” to the wind “profile” on the very same network at some later point in time with wind delivering 60%*of all generation.
so this means LCOLC will be very location and optimisation model specific, in the same way any modelled system LCOEs is. as opposed to technology specific LCOEs which are broadly extendable across a national network so long as good wind rand solar source locations are préférée over terrible ones.
i guess if it’s about solving particular network access questions on existing grids then these caveats are no problem. but if people start citing the LCOLC in dust ups on twitter between the nuke-bros and RE-fans it’s going to get very silly very quickly (and most nuke bros are already insufferably ignorant about energy economics).
see a thread i wrote this week for the confused Australian media Ombudsman. i talked about the difference between technology LCOE and “System LCOE” estimates and why the Nuke-bros consistently make false accusations about cost to backup, cost to balance, cost to augment transmission for RE facilities.
https://x.com/alastairclimate/status/1861409973994950909?s=46&t=tnhXkOw1g8JLDaGIq0O-6g
* 60/40 wind/PV was for a long time the sweet spot of balance between wind and solar on Australian grids NEM and SWIS, though in more recent years the PV price curve has nudge down below wind so you can model a range of mixes of Wind, PV and Storage (plus say 0-10% gas for wind droughts) that arrive at pretty similar system LCOEs. from 30%to 65% wind in the mix.
sorry that should read the Australian Broadcasting Comission (ABC) Ombudsman. just an internal office of the national broadcaster (ABC online, TV and Radio media) with no special prosecution or judicial role like a real Ombudsman might have.
Thanks for the interesting input on the LCOLC - and agreed. Each system has its advantages and flaws. Right now the network access question is indeed the critical one - but that may change over time as storage and flexible demand changes things as well. We know it's not a static system!
A key component to me is using all the domestic batteries installed by PV owners to help balance the grid in winter. Even if you are on a dynamic tarrif like Tibber the high fees per kWh (and absence of domestic dynamic export tariffs) mean that households optimize for their domestic consumption rather than the grid.
I'm thinking something like Octopus agile where fees per kWh are only added to spot market prices in times of grid congestion could be very benefitial
Can you develop this point, I’m don’t think I understand. Domestic PV owners who have installed batteries do it to tap their energy at night so what’s the point in them ceding it to the grid just to get it back, even if that was possible. They would need to have extra capacity to both meet their needs and feed to the grid, which is never or rarely the case.
Hi Isgv, it's all about how often it happens. Batteries are still expensive so you don't build one big enough to capture all of your excess electricity on the sunniest summer day. On the other hand due to seasonal variations you have many winter days where rooftop solar doesn't produce enough to fill up the battery. In winter it tends to be more windy, but all those batteries are not being used to balance out windy periods (and demand fluctuations throughout the day). Same with the batteries in cars. This has huge potential and should be a priority for countries like Germany.
(2) If you have your own generation plus a battery, that gives you even more opportunity to move demand from the grid around - and even to send back power to the grid some of the time - at the time when it's most valuable.
That requires pricing that's sensitive to the supply/demand balance, and the ability to react to that, thus smart meters, good software, and a good contract!
The point is that electricity has a different at different times, because demand varies over the day, and increasingly, production does too (linked to availability of wind or solar). If you have the flexibility to move some of your demand around, that's valuable - for instance just charging your EV at night (when overall demand is low) rather than in the early evening when you come back from work (when overall demand is high) is very valuable to the grid.
Indeed. That's one of the key uses of smart meters. It's mentioned briefly in our text above but agree that it might have been good to emphasize it more.
some good suggestions here - but some sound a bit too much lke locational pricing to me in a way that shows up locational pricing's faults. You say give higher CfD prices in the South - but that's precisely where there are less wind power resources, at least in terms of ability to get planning consent. This illustrates the weakness of locational pricing with renewable energy and threatens to reduce oppotunities for renewable energy developers to set up in places where it is realsitic to get schemes going. So we end up with less renewable energy. Not good.
David, I hear you, but we are at a point where we should not build more renewables in certain places, even if the resource is better than elsewhere, unless we can actually use that energy. Whether it's storage, transmission or new demand, you need to improve the local balance otherwise the additional renewable electricity will simply be curtailed and wasted.
We need renewables where it can be used, and locational signals are a vital part of that, giving incentives both to the demand side (including storage), and the supply side.
one problem with that argument is that it’s counting on future solutions and pricing staying the same as it is today. what if by 2035 thermal energy storage is being deployed for power grid energy storage at the rate LithIon BESS are going into the Australian grid today (you can’t keep up there’s so many). that would completely change the playing field and all the short term locational pricing fixes would be locked in economic rents on energy consumers.
as you say we need to improve the local balance with storage transmission or new demand - so we should focus on incentives for more storage, build new demand and improve demand flexibility, then we can use the renewable energy that would otherwise be constrained. That's a much better solution than deploying locational pricing that will mean there's no renewable energy in a lot of places, and much less renewable energy overall.
fair enough!
Locational pricing will incentivize storage and demand - and lead to better prices at that node once it happens. Then renewables can be profitable again, because they can be used. Again, there's no point deploying renewables if they can't be used. There needs to be real incentives for that use to grow - locational prices will encourage local demand, storage and transmission.
sorry to labour thenpoint, but if there's little or no renewable energy in am 'low price' locational zone then there won't be demand for storage services etc because there won't be much renewable energy. That's the point.
and the high price zones like Bavaria where it is difficult to get planning consent for windfarms anyway there won't be much renewable energy for resource reasons. It's lose lose for renewables under locational pricing. Maybe it's not so bad in some countries compared to others, but know from the UK that the results will be uncertainty folowed by slump
Very beatiful ❤️