Comment by littlestymaar | Hacker News Reader

Comment by littlestymaar | Hacker News Reader

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> As long as solar demand is driven by actual market forces, then it'll follow the usual market dynamic of more entrants with lower costs leading to lower prices

Nope. With actual market forces you end up with Texas-like situations.

The fundamental problem with the electricity market is that as soon as you're not using fossils fuel to produce it, there's a disconnect between what you pay for(energy, in kWh) and what you actually need the supply side to provide (power, in Watt).

When using fossil fuel it's all good because the costs for the producer come from the fuel cost, which is cost for energy. But with whatever else (be it nuclear, solar, hydro, wind…) the producer costs aren't related to energy production but to power installation, hence the market is fundamentally unable to reconcile the two sides.

Exactly, with renewables the marginal cost is zero (once the system is installed producing a kWh is free, no fuel to pay for).

And when marginal cost is zero price goes to zero as well (unless there is scarcity or artificial scarcity thanks to a sort of monopoly or cartel)

This easy to understand: imagine that A and B have invested in capacity production. If A sells at x dollars, B will sells at x-0.1 dollars stealing the market to A. Etc... there is no bottom since the marginal cost is zero.

> Nope. With actual market forces you end up with Texas-like situations.

The Texas situation was low costs leading to low prices.

But the reliability of renewables isn't to a high enough standard so it'll do odd things to the profits of the remaining suppliers. They probably won't drop by as much as a naive prediction would estimate.

> The Texas situation was low costs leading to low prices.

Yes, see the sibling comment: it was low (marginal) cost leading to low price, leading to insufficient investment in anything else that would have been more reliable, leading to crash.

That's because you don't pay for available power, you pay for energy and then there exist situations where the market equilibrium is blackout. Oops, too bad.

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