Here in Austria, grid costs are now on par with the actual electricity cost. Each are ca €0.1 per kWh now, plus again that in taxes.
Once the EU finally gets rid of the ridiculous pricing model where spot prices are dictated by the most expensive energy source (usually, gas), we might have a situation where grid costs exceed the cost of energy itself.
Oh and what do they do with that money? Hoard it for upcoming grid updates, which they supposedly have to make to accommodate solar peaks and EV charging. And buy solar parks in Spain, apparently.
>Once EU finally gets rid of the ridiculous pricing model where spot prices are dictated by the most expensive energy source (usually, gas), we might have a situation where grid costs exceed the cost of energy itself.
Why is it ridiculous? From a pure mathematical economics point of view it's genius I think. It means energy producers can just set their price at production price, knowing they will get the best deal that way and thus don't need to speculate on the electricity prices. It makes electricity as cheap as possible when it's abundant and expensive when it's not, also incentifying users of electricity to shift their consumption.
> Soon there is so much solar that you don't need the expensive gas most of the time.
In the EU (winters with weak solar radiation) this only works if you can store power over multiple months. Getting rid of gas means purchasing and maintaining a giant amount of batteries. Slow storage won’t save you from outages during peaks. We do have very cheap power from solar, during the hot months. In winter, its wind and offshore turbines that are prevalent, but they are as unpredictable.
So, solar and wind power is trivial. Storage is the issue. And consumers will pay that storage, in both grid cost, and spot prices.
I don’t understand why peak producers should dictate prices for all levels of service. Make an exception for them that’s adequate, like a second peak market, and done? Why should a solar producer (who doesn’t buffer!) get 3x the price only because Russia turns up gas prices and the big producers start panic buying expensive gas futures, poisoning their whole lineup in the process? Solar producers just pump whatever’s coming out of their panels into the market, with no regard for grid stability.
Right now providing grid stability is maximally rewarded because you get paid a lot when it's needed and little when there's a lot of electricity available. Storage providers can use this spread to make money and create grid stability.
I'm not sure what you mean by second peak market?
Let me turn around the question, why should a gas plant get more for its electricity when it's indistinguishable from solar electricity?
> why should a gas plant get more for its electricity when it's indistinguishable from solar electricity?
I already wrote it: levels of service. A gas plant powers up in minutes. A coal plant in hours. A nuclear reactor in years. Solar and wind isn’t controllable at all.
The cheaper suppliers actually bid with their prices, and why wouldn’t those prices be fair then? The EU then goes and gives them more than they offered. Make it make sense. Google „merit order“.
It‘s still a gamble for suppliers btw. The prices change every 15 minutes, and every cheap supplier is at the whim of more expensive suppliers.
Err, no, it's an actual system we built here to service an actual town to soak excess energy from midday solar and buffer an actual real town from blackouts.
The battery banks in Adelaide an elsewhere are real - you can kick them.
You can price these against gas peaker turbine plants, and then compare the robustness of mini distributed storage nodes against larger single point of failure fossil fuel gas plants.
I understand the Western Power link provided looks like media hype, it was put together years back at the start of the project with minal updates in the interim.
It's well out of date now that the Walpole project has been completed and is up and running for a few months now.
The point you appear to miss is that it works and can be easily distributed across a nation cheaply and robustly.
Single massive peaker plants Vs. many smaller battery parks and pumped hydro nodes.
It depends upon the population distributions, topologies, power grid, etc.
Adelaide is a state capital with massive battery banks and large amounts of renewable energy, they have long periods of self suffiency and export excess power to neighbouring states.
This is dull power infrastructure engineering reality, not woo woo imaginary hype.
Great profit to be had from solar because of expensive gas.
Let’s put aside that this isn’t good for the end user, as it openly admits the whole point of solar is great profit, rather than savings for the end user.
> Let’s put aside that this isn’t good for the end user, as it openly admits the whole point of solar is great profit, rather than savings for the end user.
The whole point of capitalism is that in a well-regulated, open, competitive market, an ecosystem of companies pursuing maximum profit drive down each other's profit margins as they compete for a limited pool of consumers. In other words, it is precisely the profit motive that creates savings for the end user.
Exactly. The same principles that apply for solar energy are already in place for natural gas and for every other form of energy and the fundamental logic of markets is that there's a price point consumers will pay that's also profitable for the company.
That didn't newly become an issue for the first time once solar entered the picture. There should be a word for this type of argument where people relitigate settled principles because they're discovering them for the first time.
> the fundamental logic of markets is that there's a price point consumers will pay that's also profitable for the company
Electricity demand is price inelastic, meaning the consumer has no direct influence on prices, and will pay practically any price (well, up to a point). In the EU, the day-ahead spot prices are published every day at 2PM CEST, and it's a bidding market driven only by suppliers. If gas price goes up by x3, total electricity price average will go up by some linear factor, because gas turbines are absolutely required for surges/peaks - at least until we have enough batteries.
I'm sorry, but somehow this manages to be the most incorrect comment in the entire thread so far, a textbook case of missing the forest for the trees.
For starters, numbers I've seen suggest something day ahead prices are something like 10% to 30% of the overall energy supply because most of it's sold outside of that context via things like regulated utility pricing, forward and futures markets which sell weeks to years ahead, and long-term bilateral contracts such as power purchase agreements. So most energy is not purchased this way over the short term.
Moreover, for goodness sake, inelasticity at the margin doesn't make something not a market, that's simply not what inelasticity means, and none of these considerations have anything to do with whether solar power in particular can be profitably offered to customers. (Again, why would it be just applying uniquely and exclusively to solar power but not other forms of energy?)
Investments of various kind occur over horizons of days, months, and years where these market dynamics unfold. Every energy source on offer whether it be solar panel, gas turbine and storage facility is financed built and dispatched based on the expectations of cost and profit. Demand is quite elastic over the horizon of months and years, and demand inelasticity is sometimes a feature of markets not something that identifies any specific phenomena that prevents solar power in particular from entering markets.
Solar power rises and falls throughout the day in a manner that conveniently aligns with actual energy consumption patterns, and its net effect on the grid is de-stressing peaking infrastructure.
So it's certainly true that there are day ahead markets but if you think the upshot of that is that it somehow means solar can't be provided at a price point affordable to consumers that simultaneously profitable to the companies providing it, well, the phrase "missing the forest for the trees" was practically invented for moments like this.
Even more generally, this applies to commodity markets. Price of potatoes is x EUR/kg, set by supply and demand. If some farmer can produce potatoes for 0.1x EUR/kg, they get to make a good profit.
Now electricity wholesale markets are an artificial construct, but it has been designed to mimic other commodity markets in that the producer on the margin sets the price.
It’s not like I’m discovering the concept for the first time.
I just think when people say things like “solar is cheaper than gas” they should say for who.
Solar is cheaper than gas for the capitalist.
And there’s no guarantee the capitalists savings will ever be passed on to the consumer.
In my market, Australia, the energy retailers are regulated to increase prices once a year. Increase prices. Never a saving for the retail customer. They’ve worked out that can skip all that messy market bullshit and just regulate annual increases.
It sounds like what you are talking about is the "Default Market Offer", aka the Australian equivalent to the "standard offer" in the United States. I cannot possibly stress this enough: nothing about the existence of the standard offer has anything to do with the relative economics of solar to other energies, so it's bizarre that you're showing up in a middle of a thread about solar power specifically, and treating a phenomenon that applies to the energy market as a whole like it's only a problem for solar.
And remember what this thread is about - Solarpunk in Africa, off the grid, which is a case that has nothing to do with regulated utility grids, so it couldn't possibly have less to do with the article that this thread is about.
You're insisting you're not discovering the concept for the first time, yet even in this comment you're still doing the same thing, treating systemic regulations that apply to energy markets writ large like they somehow only apply to solar. You wouldn't be doing that if you understood beforehand that these systemic problems had nothing to do with solar in particular, you would be doing it if you were just starting to look into solar and discovered those issues for the first time, which I what I think is happening.
> In my market, Australia, the energy retailers are regulated to increase prices once a year. Increase prices. Never a saving for the retail customer. They’ve worked out that can skip all that messy market bullshit and just regulate annual increases.
Have you actually read the regulation?
The AEMC said the new rules were in response to requests from Australia's energy minsters. They will:
* prevent retailers from increasing prices more than once a year
* ban excessive charges like late-payment fees for all retail contracts
* ensure all consumers are entitled to a fee-free payment method
* prohibit retail fees for vulnerable consumers
* ensure vulnerable Australians are receiving their retailer’s best offer
* prevent retailers from charging more than the standing offer price if the customer's initial offer changes or expires. This will protect customers from paying higher prices for their loyalty.
The rules to improve consumer confidence in retail energy plans will come into effect on 1 July 2026. Those that assist hardship customers take effect from 30 December 2026.
There is a difference between
A) regulation that forces a price rise once a year.
and
B) regulation that stops more than one price rise (if any) in any year.
If solar is cheaper to produce (which it often is), there's room for undercutting natural gas and room for profit, a mutual benefit to customers and the solar industry where only natural gas loses.
comments like this really show that many people with strong opinions do not understand how the electricity grid, electricity markets or electricity economics work.
Electricity is priced at the edge entirely because demand must match supply at all times. You either meet all electric demand or someone will go without power. This is why marginal pricing exists and this is why the most expensive generator is always the last to be accepted. This is why electricity at night is cheaper that during the day.
Please, if you do not understand what you are talking about, it's ok to just say that you don't know. Don't spread misinformation like this.
> Electricity is priced at the edge entirely because demand must match supply at all times. You either meet all electric demand or someone will go without power.
There's also more to it than just that. Supply-demand imbalance affects the frequency on the grid. Too high or too low frequency damages the turbines in the base load power plants, and they will shut down to avoid damage if the frequency goes too far out of range. Hence, too little or too much power actually causes grid collapse.
Solar actually has to be managed a lot more carefully than people realise.
In the Japanese market in summer during the day the spot price nose dives to almost nothing because of an oversupply of solar. Yet most installed solar is operating under the FIT system where all generation is guaranteed to be bought by the regional generation company for a fixed price, regardless of what the spot price is. This worked to incentivise bringing lots of solar online, but its paid for by adding a levy as a line item to everyone's electricity bill. To lower the financial burden the government is ending the FIT system and transitioning to FIP where from memory solar operators still make similar money as they did under FIT but it's sold on the spot market and then the government pays a premium on top.
The TSOs have to manage the supply-demand balance and there's things like the balancing market to help with this. However the government is also changing the regulations to put more of the burden of managing the supply-demand onto the solar operators themselves and not lump it all on the TSOs. Lots of people invested in solar under the FIT system because operation and expected revenue was straightforward. Now with shifting to FIP it's less straightforward. Additionally when the burden finally falls to the solar operators to proactively manage the supply-demand balance, there aren't good systems they can readily leverage to do so, and the average Joe with solar panels on their roof isn't necessarily going to want to be submitting 30 minute generation plans to their regional TSO, hence they'll eventually have to wind up going through aggregators and such becoming part of a virtual power plant where you may have things occur like negawatt transactions to incentivising reducing demand to help manage the supply-demand balance etc.
PPAs are also an increasingly popular option for purchasing/selling solar power. They're usually fixed price contracts, but depending on how it's setup money either changes hands directly between the generator and consumer (via a retailer) or sometimes the generator sells it all on the spot market and then settlement of the difference between the contract price occurs afterwards between the parties. Even with fixed price contacts the revenue isn't completely guaranteed because the TSO might need to issue curtailment orders to the generator in order to manage supply-demand balance when there is oversupply or grid congestion.
It's not all sold on the spot market.
Anyway, my comment was less about how it's priced more about hidden operational complexity of renewables non-industry folks aren't aware of. In particular turbines have inertia and so if you stop generating power they will still run for a while, and this helps keep the frequency on the grid stable, but solar doesn't have inertia since it isn't turbine based, so large swings in generation can have an instantaneous impact on grid frequency, which can be destabilizing, unless you do stuff with batteries and inverters to produce pseudo-inertia. TSOs need to manage fluctuations with frequency containment reserve, frequency restoration reserve, and replacement reserve. These costs all wind up as part of the wheeling charges which affect the bills in the end.
There's also things like capacity payments/capacity market which impacts solar operators, but I don't know specifics on how that stuff works.
Once the EU finally gets rid of the ridiculous pricing model where spot prices are dictated by the most expensive energy source (usually, gas), we might have a situation where grid costs exceed the cost of energy itself.
Oh and what do they do with that money? Hoard it for upcoming grid updates, which they supposedly have to make to accommodate solar peaks and EV charging. And buy solar parks in Spain, apparently.