Comment by mschuster91 | Hacker News Reader

Comment by mschuster91 | Hacker News Reader

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> Can you elaborate on the problems with France?

80% of their power is generated by nuclear. Of their nuclear plants, way over half the fleet has been offline for months because of inspections and sometimes substantial damages from age-related corrosion issues [1], and the other half is severely limited or cut off as well because the rivers that they depend on for cooling can't keep up [2]. And since the entire continent is a single synced grid, someone has to cover the gap, and that's German gas peakers [3].

Unfortunately, European energy markets operate at the "merit order" principle [4] which means that the highest bidder on the spot market sets the price for everyone else - which means while gas peaker plants generate extremely expensive energy for France, the operators of any other type of plant get the exact same high price leading to billions of euros in excess profit for them [5].

France also has another problem, and that's the EPR design that has led to severe budget and time overruns. Not just generic issues, but massive design defects [6]. They bet on Flamanville replacing a bunch of the aged plants, the bet failed, and no one knows when that reactor will finally come online. Flamanville was projected to cost 3.3 billion euros and be ready in 2012 - current estimates are at 12.7 billion euros at the least and a start in Q2/23 [7], and other EPR projects are just as bad.

[1] https://www.france24.com/en/france/20220825-france-prolongs-...

[2] https://www.theguardian.com/business/2022/aug/03/edf-to-redu...

[3] https://www.swr.de/swraktuell/baden-wuerttemberg/suedbaden/w...

[4] https://www.focus.de/finanzen/boerse/merit-order-wie-ein-gut...

[5] https://www.derstandard.de/story/2000137852348/gas-und-oelpr...

[6] https://www.express.co.uk/news/science/1645421/energy-crisis...

[7] https://www.reuters.com/business/energy/edf-hopeful-end-sigh...

Long term, the merit order makes sense.

All those plants make the max price, so if you can think of a way to cheaply generate power when it is expensive you get paid the high gas price up until all gas is removed from the market.

Short term, if a war or embargo is driving up gas prices, it still makes sense to charge high prices, because that gives people an incentive to not use electricity and so saves on the restricted resource.

But, this will really hit the poor or businesses that use a lot of gas through no fault of their own.

Since we are all in this together, the people earning the extra money should get it redistributed to the people. But some rich and powerful people think that sets a bad precedent, so they'll try to make poor people suffer as much as they can before doing it.

Are you sure all plants get to sell at spot price?

Doesn't that encourage collusion to generate artificial scarcity - all participants benefit from it?

Yes, this is actually why the Tesla Big Battery in Australia was so cost effective, it stopped gas plants from manipulating the prices:

https://www.theguardian.com/technology/2018/feb/06/how-tesla...

> The big gas generators – even though they have 10 times more capacity than is required – have systematically rorted the situation, sometimes charging up to $7m a day for a service that normally comes at one-tenth of the price.

> (You can read reports on how they do it here, here and here, and for a more detailed explanation at the bottom of this story.)

> The difference in January was that there is a new player in the market: Tesla. The company’s big battery, officially known as the Hornsdale Power Reserve, bid into the market to ensure that prices stayed reasonable, as predicted last year.

> Rather than jumping up to prices of around $11,500 and $14,000/MW, the bidding of the Tesla big battery – and, in a major new development, the adjoining Hornsdale windfarm – helped (after an initial spike) to keep them at around $270/MW.

> This saved several million dollars in FCAS charges, which are paid by other generators and big energy users, in a single day.

> And that’s not the only impact. According to state government’s advisor, Frontier Economics, the average price of FCAS fell by around 75% in December from the same month the previous year. Market players are delighted, and consumers should be too, because they will ultimately benefit.

Of course, just decent regulatory oversight can stop this kind of thing too, but fossil fuel producers seem to be really against that kind of thing for some reason.

Thanks, those are very cogent criticisms I wasn't aware of and I appreciate you taking the time to source them thoroughly

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