> I've read somewhere
Before wondering why someone, somewhere is not doing something, confirm that the thing is actually happening in the first place.
Sounds like good investments are paying off, and bad investments (Germany collaborating with Putin despite Trump’s prescient advice & mockery) are not.
Capitalism at it’s finest! Too bad average people are paying the price, but in democracy, that’s literally what they voted for (non-sensical top-down EU bureaucratic green energy mandates, instead of investments into better tech & bottom-up sovereign energy investments).
Funny, I remember when we had similar discussions about negative electricity prices and people mockes those capital intensive legacy producers. Well, history is so old and context too complex to bother if polemism does as well.
Doesnt seem like a bad outcome tbh.
Also the people that are “making all the money” now that power prices are super high, stood to loose money if power prices were super low, why shouldn’t they be compensated for bearing that risk?
That’s not what is happening. If Austria was an isolated market the prices were significantly lower at the moment. But I would not want to separate the markets just because it works out better to us at the moment.
There were also a couple of curious deaths happening in the industry (the head of our State-owned hydro company, who died in his late 30s, the local boss of a power utility, who just threw himself from his balcony), but nothing came out of that, either.
Most probably part of the huge proceeds end up in the accounts connected to our intelligence agencies (the heirs of the former Securitate, which have split into several agencies after 1990).
* I choose energy provider x
* Friend has bought a part of those remote solar plants and also connected to provider x
* Friend sells his surplus energy to provider x at low price
* Provider x can now sell the power to:
a) His customers (me), and make next to nothing
b) Sell it to the international grid and make bank, then proceed to buy energy for me at going rates making me foot the whole bill.
Guess what happens, and who gets rich. This is market liberalization at work. You reap what you have sown.
Sorry if this is a dumb question but why can't he sell at the going rate for international grid?
So in essence, because they can't get it there.
The "competition" are resellers that have not installed a single MW of production, essentially leading to starving what used to be the most talented and biggest energy producer in Europe, all under the pretense of the free market. The resellers are actively dropping clients so they do not have to not buy on the open market.
It is happening, and is happening with the blessing of our leaders just greasing billionaire pockets.
Or, said in other ways, it took an extremely rare event that lasted long enough to throw off plans that are made on the scale of years, in addition with a bit of bad luck, and lasts a few months. I'd say they damn well can produce electricity in normal times, yes. But indeed, their need to buy electricity is compounded by that.
By whom?
Countries like Norway, which have abundant, cheap, generation, are paying EEA prices in its highly interconnected bidding zones (NO1,NO2). The next few months, if prices persist, are likely to see lots of pressure from Norwegians to curtail exports (i.e. close off transmission capacity to EEA). This would significantly decrease prices for Norwegians, but damage the EU's integrity. The same can be said of other countries with abundant, cheap generation that are suffering the consequences of other EEA countries' actions w.r.t their electricity supply.
I say this as a supporter of the EU, but the integrated electricity market's future is in peril this winter.
>Czechs produce electricity at 0.1EUR/MWh
so far so good. Now you have -0.1EUR and 1MWh of power.
>then sell it to an exchange in Germany
suppose the market price is 400EUR. after selling it to an exchange you have 399.9EUR and 0 MWh of power
>and buy it back for the "market" price.
so you buy it back at the market price. Now you have -0.1EUR and 1MWh of power. That leaves you off... in the same position as step 1? What's the point in selling it to the exchange and buying it back?
Moreover, I don't see anything interesting happening here. You can replace "electricity" with "oil" and you basically describe how petro states work (ie. pump oil out of the ground, sell it on the global market for far more than it costs for you to pump it out of the ground).
It is possible Czech producers sold energy to Germany for a very low price a few years ago on a let's say 5 year contract which is still valid. Now Czech Republic needs to buy at a high price the energy from Germany because it cannot meet its own demand. Again, this is speculation on how that could work.
EDIT: Just found out production costs from another source:
Dukovany Nuclear Power Plant - 20.31EUR/MWh
Temelin Nuclear Power Plant - 34.52EUR/MWh
your local costs in the US range from 5-25 cents per kilowatt hour (1/1000 of that), with ideal solar being the cheapest amortized at roughly 3 cents/kwh
What they don't say is: some of our hydro plants are being maintained and the rest are capable of generating a fraction of country's needs. Sure, some of the money goes to small privately owned plants, but the most goes to large state-owned plants, who are (ideally) using the money to upgrade their equipment and the rest goes to government as dividends, which will probably be spent to support heating expenses in winter..
If you're making electricity that cheaply right now you are indeed getting rich, and so you should.
The market is what is doing something about it. Prices will moderate over time as inefficient producers are pushed out and as consumers reduce their usage due to high prices.
Electricity isn't optional. "The market" didn't make water, or housing, or waste, or healthcare, or telecoms, etc, cheaper once privatized. In fact, it didn't make energy cheaper in the countries that privatized it.
Any sufficiently big scam can waived away with "the market has spoken". It's like a religious belief
food isn't optional either. How well did nationalized food production work out?
>"The market" didn't make water, or housing, or waste, or healthcare, or telecoms, etc, cheaper once privatized.
I can get the source for each of those claims? Some of them seem dubious, eg. housing. Was housing ever not privatized?
>In fact, it didn't make energy cheaper in the countries that privatized it.
well if we're talking about "energy" in general (ie. not just electricity), I can point out a counter-example of PDVSA going to shit after it was nationalized.
If you really want to challenge your view, I'm sure you can read a book that lays it out better than I could in a quick YC comment.
For example, here's Chomsky's take:
"Privatization does not mean you take a public institution and give it to some nice person. It means you take a public institution and give it to an unaccountable tyranny. Public institutions have many side benefits. For one thing they may purposely run at a loss. They're not out for profit. They may purposely run at a loss because of the side benefits. So, for example if a public steel industry runs at a loss it's providing cheap steel to other industries. Maybe that's a good thing. Public institutions can have a counter cyclic property. So that means that they can maintain employment in periods of recession, which increases demand, which helps you to get out of recession. Private companies can't do that in a recession. Throw out the work force because that's the way you make money."
However, if we'd paid a little more attention to Noam's points about war (clandestine and overt, economic and military) and the media a few decades ago, we the people would be tens of trillions of dollars better off.
Millions of brown skinned folk would still be alive, tens of millions wouldn't have had to become refugees, and South America would be immeasurably better off.
If you have some kind of beef with Chomsky I suggest you take it up with him; I hear he's quite good at responding to people.
For example, only gaz-based electricity producers « needs » to be paid such a high price. Nuclear or renewable would be perfectly fine with much lower price.
Or, if we had not one market, but one market per type of energy used to produce electricity, we would also have a « market driven » pricing, however the end-result would likely be much much different.
There's some amount of market preference for different generation types, but that's a small portion of the load, so it's handled outside of the grid operation marketplace. It's also true that grids with limited interconnection have separate markets.
You could run a grid on a cost plus basis, but you lose the benefits of market economics as well as the negatives.
Some sellers will get more than they offered, but that's how the auction works, there can only be one market price to secure the given quantity of electricity.
https://www.nei.org/news/2018/cost-of-nuclear-generation-rea...
We have yet to even scratch the surface of the effects of this crisis
Energy is the economy, and the failure of an integrated energy market means the failure of so much more.
I mean, whenever electricity is being exported at high cost, that high cost is an indication that this other place has it even worse; and blocking trade would make electricity cheaper at the exporting place, but cause a larger spike (and possibly even blackouts with the associated economic disruption) at the importing place and also remove the economic incentives to increase surplus production at places who can do it cheaper than others.
If they hadn't done so, someone else might be getting even-more rich (per kWhr) by charging higher prices across an even wider geography.
Best not to believe everything you read :)
No, that's entirely unrealistic. 0.1EUR per KWh is realistic, so my guess is that you misremembered the units. The price per MWh would then be 100 EUR. But not even that is realistic anymore for the Czech Republic, given they produce most energy from fossil fuels[1], and the prices recently have skyrocketed.
Now you may ask why they'd be selling to an exchange and buying it back for more (if that actually happens to a degree that matters). One reason is of course profit. Although one must not confuse the production price with the final consumer price or even the exchange price. Production is one thing, getting the power to where it's needed is another thing, accounting, taxes and so on.
Another reason for putting it into exchanges, is that they might at times produce more than needed, so selling off excess production seems somewhat reasonable as the kind of plants they are running cannot be started and stopped at will. At other times, they might not be producing enough, and then need to buy at exchanges.
It's not as easy as assuming somebody is just grabbing a lot of money. Although some money grabbing is most likely part of the answer as well.
Germany is selling energy as well, by the way. Germany has thus far net exported around 20 TWh this year[2]. The entire energy need of Germany is around 540 TWh per annum. That would suggest Germany (thus far) has exported a little over 5% of it's energy production to other European nations in this crisis year. It may have something to do with France currently having temporarily shut down 32 of its 56 nuclear reactors[3], with a net 10 TWh being exported from Germany in the direction of France. And it probably has something to do with Germany producing a lot more energy than it needs when the sun is shining and the wind is blowing nicely.
The Czech Republic on the other hand exported 6 TWh net to Slovakia and another 4 TWh to Austria. But in turn Slovakia exported almost 9 TWh to Hungary[4].
That is to say... it's complicated.
[1] https://www.iea.org/countries/czech-republic
[2] https://www.energy-charts.info/charts/energy/chart.htm?l=en&...
[3] https://www.france24.com/en/france/20220825-france-prolongs-...
[4] https://www.energy-charts.info/charts/import_export/chart.ht... (might be lagging behind a little)
I don't like it but if that's the system we need to accept the pros and cons.