Are you just drawing from today's figures? Or annual figures?
I just checked for NL and in the past 12 months it's 50/50 for electricity (fossil/renewable), with about 10% of the renewables being biomass which isn't particularly renewable.
For NL for example we import wood pellets from North America and then burn them. Yeah, not great. Essentially it's releasing emissions by burning 30-40 years of American forests, which might be replanted, and will have soaked up the Co2 around 2065. Therefore it gets to count those emissions as zero (renewable), despite having a full effect on climate change in the next half century which is critical. Not to mention there's a 15% roundtrip loss from logging, shipping etc.
Agree there's real momentum but these are misleading figures.
Even if ship displacement wasn't an observable thing, there's no real reason that empty oil ships enter the strait, and then again leave empty, after having obviously docked at an oil terminal, on any regular basis.
Public and observable information makes it trivial to make high-accuracy assessments about the veracity of the claim.
And $2m is sufficient budget to finance spot checks, especially given you'd have to apply them to an exceedingly small percentage of ships. A year salary of an average Iranian police guard is about 5k, for context.
Plus you can create a scenario where fraud being detected is prohibitively expensive, and may even result in the captain being imprisoned in Iran. I wouldn't expect a lot of lies.
Indeed. For others who may wonder why this is the case, a simple example will explain it:
Suppose Saudi can produce 100 barrels at $10 (cost+profit) each, and Brazil can produce 100 barrels at a price of $50 (cost+profit) each, and John wants to buy 120 barrels.
- John will pay what is necessary for his Oil, but seeks out the cheapest price available.
- Sellers Brazil and Saudi will accept a sale of their own production if their minimum price of $50 and $10 is met respectively, but will sell to the highest bidder for their supply.
You'd think John will go to to Brazil to buy 100 barrels at $50, and then buy 20 barrels in Saudi at $10.
But guess what, Brazil could simply go to Saudi and buy their 100 barrels for $10, and then sell them to you for $50.
So now Saudi has demand from both John and Brazil at a $10 price. Who gets to buy? Well whoever decides to bid more to convince Saudi to sell their oil.
If John increases his bid to $15, Saudi will prefer that to Brazil's $10 bid. But Brazil would then increase its bid to $20, knowing they can sell it to John for $50.
This bidding keeps going up until the $50 point. For Brazil there is no longer any profit in buying Saudi Oil at $50, and selling it to John for the same price. For John there is no point in bidding more than $50 for Saudi Oil, because he can get a $50 price from Brazil.
Any point below $50 means a bidding war starts between John and Brazil, because at less than $50, Brazil has a cheaper source of oil (Saudi) than their own production cost.
And this is true for every commodity in a free market. It's not some 'UK system', it's just the consequence of free trade.
Of course in reality it's trading intermediaries that do the bidding, it's not Brazil buying from Saudi, but traders jumping in to arbitrage. But this is a simplified example.
Even 20 years is much below what most studies show. Panels tend to keep functioning well beyond 30 years, with degradation at 86%. It might be true that economically in 30 years they're so much cheaper that it's worth replacing them with new panels, but that's an optimisation, not a question of replacement need.
Essentially it's not an isolated market, but part of a bigger whole.
As an example imagine a village that constituted 1% of the population of a country. The village was 100% renewable, and the country was 0% renewable. If the village disconnected its grid, in isolation its prices would be dictated by its renewables. But if its connected, its renewables just get traded on a market with marginal prices. If a person elsewhere in the country has more expensive generation, they'll but your cheap renewables at their price level. Thus the village will experience high prices like everyone else.
Now suppose Germany is that village in an interconnected EU market. Of course the numbers from my example are exaggerated, but the point remains: Germany's renewables aren't enough, if pricing is set at a much larger market, with fewer renewables.
Today about 20% of Germany's electricity was exported. While only about 6% of its demand came from gas. In other words if Germany was disconnected, it'd have needed no gas, and thus prices would've been lower.
Of course disconnecting isn't a good idea for other reasons, as on other days Germany imports. And Germany's ability to export its renewable excess generates significant revenues, creates incentives to build more renewables, and offsets emissions and pollution in other countries, too.
But long story short, it'll take more for one part of the whole to go renewable. As the EU is generally transitioning towards renewables we see a decoupling happen.
It's true that even 2% of usage being gas, means 100% of the demand pays the gas price.
But (!) that's only true for the spot market at that particular point in the day. And that changes all the time.
Example: if you use zero gas for 80% of the day, and use just 10% gas for remaining 20% of the day, then that day gas was just 2% of total demand, like we said earlier. But it's not true that gas prices dictated 100% of the price that day.
After all, gas prices dictated only 20% of the day's prices. The remaining part of the day there was no gas demand, and thus it did not dictate the price. And that happens more and more often.
The more renewables + storage are built out, the more time of the day that gas is displaced, not used and thus not part of the price mechanism.
Second, if the market pays at the gas price, the renewables reap all the profits (because their costs are far below the gas price). This incentivizes further renewable capacity build-out, eventually displacing gas entirely. This incentive structure pushes the market the fastest towards lowest-cost generation, which is renewable nowadays.
It's the same in Belgium, and I believe for the majority if not all of Europe.
What I never understood from this arrangement: can a renewable provider legally refuse to accept the gas-price (either by charging less, or simply refunding a large chunk of the difference?
I understand growth may appear to suffer if renewables refunded the difference between gas prices and renewable prices+profit+moderate-growth-expenses; but it would also mean the public would flock massively to that provider, which may allow for faster growth under certain conditions.
Are renewable bound by law to accept the instantaneous peak-demand-electricity-prices (typically gas peaker prices)? And even if they were forced to accept that payment, are they explicitly forbidden to return a large chunk of the extortionate difference to their customers, in order to comply with acceptance of the price while reimbursing their customers?
This may sound contradictory, but if a major expense for renewables is the siting and commissioning of a renewable wind/solar farm, it may be possible to rake in more profit by growing customer base instead, and then use that money to outcompete the competitors in the siting and commissioning landscape?
A bureaucrat can dictate that x Euro's correspond to y Dollars, but the free market tends to find a price rediscovery mechanism returning closer to true rates. Do we really believe that of the huge search space of all possible policies that this pricing strategy (of forcing everyone to sell at the instantaneously most expensively generated energy) happens to be the most optimal trajectory at a fundamental level? Or do we believe some undiscovered or unused known policy could actually grow renewables faster? If the real world differs from fiat, the market will find a way to bypass fiat and unmask its weak points, at the end of the day money talks.
Furthermore the current setup may result in unintended consequences: at a certain point renewables may be disincentivized to expand capacity, as it would decrease the percentage of time the peakers are needed, and thus decrease their income! It's almost a politically introduced stranglehold, to prevent gas peakers from being displaced.
It's not overpriced. If it was, the grid operator would be raking in massive profits because they're selling way above cost. In reality grid operators have small margins, this indicates there is no overpricing.
Do you get paid less for power fed to the grid than power sold at retail? Yes. Because they're different things. You get say 5 cents for a kWh fed back to the grid, while you pay more like 25c. But guess what? Wholesalers also get 5 cents to sell to the grid. It's just that there's an additional 20 cents in grid operation and taxes for a retail price.
Taxes you can't avoid, it's not a 'scam'. It's money you pay that goes into public funds and returns to the public, and is spent by people you can vote to elect to represent you.
Grid costs also aren't a scam, they're just a cost of doing business. Again, profit margins are small, so they're pricing based on cost, not based on scam.
And it's all entirely optional. You can just install batteries yourself. You can do whatever you want. You don't have to use the grid. But surprise surprise, there's no reason to think that a small network is on average cheaper than a big network. The bigger the network the easier it is to share storage capacity and offload excesses from one place to another. It's the reason most states and countries try to build interconnectors to even build international grids, and why islands like Cyprus that don't interconnect and have small markets have the highest electricity prices. It's why anyone who builds a home and has the choice to connect to an available grid or not, does so. And why land and homes in locations without grid-access are valued less, because they're more expensive to set-up.
The cost of a nationwide grid is significant. Depending on the terrain and population density, it usually nets out at somewhere between 30%-50% the overall cost of electricity. Sure, if you run a microgrid among a few houses, you won't pay those costs, but someone has to pay the cost to maintain the km of lines to reach deep into the mountains of Bavaria.
Microgrids also have some black swan events that can result in outage; if you are reliant on solar and storage but then experience a 7-day long period of stormy weather and no production. As you note, off-grid is always an option, and when you seriously look into it, you quickly find that costs to have that 24/7/365 service are many times more than just paying to connect to the grid.
At least in the us - the only way a utility can really make more money is by spending more money (as they get a return from the utility commission on a vested capital - massive oversimplification) but it means utilities are not incentivized to spend less rather than more…
Same in Australia, after they were corporatised (turned into companies run for profit rather than run as a service by some level of government) it was recognised that as natural monopolies there would need to be some sort of regulation on how much money they could recover, it was decided a method based on their costs was best, so they spent bad money agter good im expanding the network hugely (based on crazy projections of growth in demand to nowhere) rather than building resilience into the network and lowering their costs.
And that’s not even the cost of marketisation, that’s just the regulated network costs.
The government employees who approve or deny the utility’s priced have an incentive to not approve higher prices. Their bosses are usually elected, and higher utility prices are very unpopular.
I was told by a former southern company exec that the McKinsey did a study for them and their largest competitive advantage was regulatory capture in the states in which they operate - unfortunately I think the politicians are more beholden to the utilities than their constituents..
And winning athletes and sports teams don't go to the white house due to 'scheduling conflicts'. And Amazon paid $75m for a Melania documentary because they saw real profit and need there. And Qatar bought Trump an airplane because it was important for his work. And everyone nominates him for a nobel prize because he ends wars and doesn't get into wars (we're just in a special military operation atm).
reply