Well spotted. The difference between the UK and the rest of the EU is that the latter relies more heavily on contracts for difference. Renewable projects and installations negotiate a strike price up front (and often on an ongoing or scheduled basis). If the highest bid price (e.g. gas) exceeds the strike price, the renewable installation repays or foregoes the difference. The UK is very slowly moving in this direction, but has been criticised for its lack of action on older installations (which retain their direct pricing mechanisms), and slow pace of change for newer installations.
This is compounded by the UK’s comparative lack of EU interconnections which help these other countries smooth out volatility. By, for example, relying more on France’s nuclear power generation. This means the UK more frequently sees high clearing prices.
Oh well. PV installations up to 99kWp in Germany also gets fixed rates for 20 years (e.g. most home installations get ~8c/kWh).
Beyond that, you do have the same licensing/backward auction/strike price thing you mention. It didn’t use to be that way though - the auction/licensing scheme was introduced as part of the “breathing cover” regulation by the conservative coalition around 2015. It was introduced specifically to slow down renewable growth, or in less kind terms: to keep Good German Lignite and Cheap Russian Gas energy in the grid longer. While it wasn’t nearly as effective as intended, that is only because prices for PV and wind installs came down very quickly.
And indeed, since 2022, operators also need to forego 90% of the strike-price/bid-price difference, as an outcome of the gas price crisis.
By, for example, relying more on France’s nuclear power generation
On a related note, France’s reliance on aging nuclear reactors that it isn’t competent enough to replace, despite a significant ideological investment in nuclear technology has a decent chance of biting its neighbor countries in the bum too. :)
I’m much more optimistic about nuclear power in Europe. Given the high pricing volatility induced by renewables and the gas supply shock after Russia’s invasion of Ukraine, nine European countries are now intending to build new reactors. Even Denmark is softening its stance on nuclear power, with the entire right wing bloc proposing lifting the ban. France intends to build 14 new reactors by 2050. While conventional reactors are expensive, they’re four times cheaper than solar and wind with all costs imputed. Further, we are about to enter a new age of SMRs, and all preliminary data suggesting a per unit capex cost of almost half, and the ability to extend networks as needed far more flexibly to better align with modern grids comprised of more renewables.
Well spotted. The difference between the UK and the rest of the EU is that the latter relies more heavily on contracts for difference. Renewable projects and installations negotiate a strike price up front (and often on an ongoing or scheduled basis). If the highest bid price (e.g. gas) exceeds the strike price, the renewable installation repays or foregoes the difference. The UK is very slowly moving in this direction, but has been criticised for its lack of action on older installations (which retain their direct pricing mechanisms), and slow pace of change for newer installations.
This is compounded by the UK’s comparative lack of EU interconnections which help these other countries smooth out volatility. By, for example, relying more on France’s nuclear power generation. This means the UK more frequently sees high clearing prices.
Oh well. PV installations up to 99kWp in Germany also gets fixed rates for 20 years (e.g. most home installations get ~8c/kWh).
Beyond that, you do have the same licensing/backward auction/strike price thing you mention. It didn’t use to be that way though - the auction/licensing scheme was introduced as part of the “breathing cover” regulation by the conservative coalition around 2015. It was introduced specifically to slow down renewable growth, or in less kind terms: to keep Good German Lignite and Cheap Russian Gas energy in the grid longer. While it wasn’t nearly as effective as intended, that is only because prices for PV and wind installs came down very quickly.
And indeed, since 2022, operators also need to forego 90% of the strike-price/bid-price difference, as an outcome of the gas price crisis.
On a related note, France’s reliance on aging nuclear reactors that it isn’t competent enough to replace, despite a significant ideological investment in nuclear technology has a decent chance of biting its neighbor countries in the bum too. :)
I’m much more optimistic about nuclear power in Europe. Given the high pricing volatility induced by renewables and the gas supply shock after Russia’s invasion of Ukraine, nine European countries are now intending to build new reactors. Even Denmark is softening its stance on nuclear power, with the entire right wing bloc proposing lifting the ban. France intends to build 14 new reactors by 2050. While conventional reactors are expensive, they’re four times cheaper than solar and wind with all costs imputed. Further, we are about to enter a new age of SMRs, and all preliminary data suggesting a per unit capex cost of almost half, and the ability to extend networks as needed far more flexibly to better align with modern grids comprised of more renewables.