I recently created two different graphs illustrating the declining market value of renewables, which have generated significant reactions on LinkedIn (see here and here).
Ah yes - arbitrage. Nah. Can't make enough money to justify the storage. Much better to sell locally - directly if possible since the LCOEs for PV are certainly much much lower than what industry has to pay. Main blockers are the DNOs.
In terms of the numbers - little to disagree with. However, the narrative focuses on "value" (and declining value for RES/PV) but circles around the reason for that - surplus elec looking for a home. The current mainstream narrative (fantasy?) is that "markets'll fix it" - which of course they won/'t/can't & at the risk of sounding like a broken record - markets functionally can only "do" cost optimisation - that's all (as any macro economist will tell you). Missing is storage - again, market fantasists think that "price signals" will do the trick. The charts suggest otherwise. All of this was obvious years back - e.g. look at charts for Spain - try 2019 vs 2020 for a view of a price collapsing future for RES MWh (due to rising RES and falling demand due to Covid). Repeating: what is needed is a policy that mandates the build out of storage to match RES development. Batts don't scale, electrolysers/H2 does. You could also throw in air-con with cold storage for hot & sunny regions (thus attacking the duck curve). None of this is hard - begging the question: why is it not being done?
I’ve not seen a recent solar proposal that doesn’t include BESS and I’d always assumed they would charge through midday to sell in the evening, then charge overnight from the grid to sell in the morning
France & Spain are fundamentally different "markets". In France, large amounts of nuke generatiron are sold ahead (sometimes up to 3 years agead) - day-ahead accounts for perhaps 4% (max) of market volume. By contrast, Spain has much more RES and day-ahead accounts for around 75% of market volumes. Spain/Port is something of an electrical island 3 - 4GW of interconnectors to France - with the run of elec usually France - Spain. The Euros warble on about an interconnected single EU elec market - the reality is that it is nothing of the sort - heterogeneous generation - and markets. I'm not offering a point of view - any and all of the above is confirmed by national energy regulator reports.
The Law of Diminishing Returns will be taking its toll. The sad part is that the lower and lower market value in the solar mid-day duck curve is hurting the innocent old time steady and reliable power generators - the very ones we need most. To add salt to the wounds, the solar and wind generators are subsidized for a guaranteed profit to compensate for those low market values that they themselves created.
for the case of France, indeed, similar patterns as Germany despite the lower penetration of solar capacity. However, there is a good 30-40 GW of nuclear running baseload whatever the spot price. I know the nukes are doing big hourly profiles already, but should not we expect lower production overall from EDF, on a merit order basis?
by the way, have you done the same study with Spain? The electricity mix is different as well with demand, and a rather insulated market.
A 4th reason could be the impact that domestic solar has on commercial solar. As domestic solar continues its inevitable increase the value that commercial solar offers inevitibly declines.
Commercial wind does not compete with domestic wind, as domestic wind simply does not work.
Ah yes - arbitrage. Nah. Can't make enough money to justify the storage. Much better to sell locally - directly if possible since the LCOEs for PV are certainly much much lower than what industry has to pay. Main blockers are the DNOs.
Have I understood the graphs correctly? Germany has 90 GW of solar and can generate up to 45 GW?
In terms of the numbers - little to disagree with. However, the narrative focuses on "value" (and declining value for RES/PV) but circles around the reason for that - surplus elec looking for a home. The current mainstream narrative (fantasy?) is that "markets'll fix it" - which of course they won/'t/can't & at the risk of sounding like a broken record - markets functionally can only "do" cost optimisation - that's all (as any macro economist will tell you). Missing is storage - again, market fantasists think that "price signals" will do the trick. The charts suggest otherwise. All of this was obvious years back - e.g. look at charts for Spain - try 2019 vs 2020 for a view of a price collapsing future for RES MWh (due to rising RES and falling demand due to Covid). Repeating: what is needed is a policy that mandates the build out of storage to match RES development. Batts don't scale, electrolysers/H2 does. You could also throw in air-con with cold storage for hot & sunny regions (thus attacking the duck curve). None of this is hard - begging the question: why is it not being done?
I’ve not seen a recent solar proposal that doesn’t include BESS and I’d always assumed they would charge through midday to sell in the evening, then charge overnight from the grid to sell in the morning
France & Spain are fundamentally different "markets". In France, large amounts of nuke generatiron are sold ahead (sometimes up to 3 years agead) - day-ahead accounts for perhaps 4% (max) of market volume. By contrast, Spain has much more RES and day-ahead accounts for around 75% of market volumes. Spain/Port is something of an electrical island 3 - 4GW of interconnectors to France - with the run of elec usually France - Spain. The Euros warble on about an interconnected single EU elec market - the reality is that it is nothing of the sort - heterogeneous generation - and markets. I'm not offering a point of view - any and all of the above is confirmed by national energy regulator reports.
The Law of Diminishing Returns will be taking its toll. The sad part is that the lower and lower market value in the solar mid-day duck curve is hurting the innocent old time steady and reliable power generators - the very ones we need most. To add salt to the wounds, the solar and wind generators are subsidized for a guaranteed profit to compensate for those low market values that they themselves created.
Just so that I understand, is the first graphic showing the renewable penetration for each day for all of Germany so there are 365 data point?
Thanks Julien.
for the case of France, indeed, similar patterns as Germany despite the lower penetration of solar capacity. However, there is a good 30-40 GW of nuclear running baseload whatever the spot price. I know the nukes are doing big hourly profiles already, but should not we expect lower production overall from EDF, on a merit order basis?
by the way, have you done the same study with Spain? The electricity mix is different as well with demand, and a rather insulated market.
A 4th reason could be the impact that domestic solar has on commercial solar. As domestic solar continues its inevitable increase the value that commercial solar offers inevitibly declines.
Commercial wind does not compete with domestic wind, as domestic wind simply does not work.