"The subsidies granted to wind and solar generation tend to depress the market prices for energy and capacity..."
I can easily see how solar and wind generation depress market prices for electricity, but it's not obvious to me how they depress prices for capacity. My intuition says they should raise prices for capacity. Can you elaborate?
Yes, I plan to do a post explains the point. The short answer for both markets is that it moves an offer price that should be more expensive and therefore higher in the stack down to the bottom of the stack, and as a result, pushes other relatively low offers up in the stack so that a lower price offer ends up being the marginal offer clearing offer. I plan to use some graphics to explain this for those people who, like me, have trouble visualizing the point..
Yes they are. Should they be? That's a different question. I plan to do a post on that, too. But my next post is going to be on subsidies, since you asked that question first.
Sorry, in the industry people refer to electricity as energy, as opposed to capacity, which represents the ability to generate electricity. I have tried to avoid the use of the word energy this way in my posts, but it is so ingrained in me that sometimes I slip up.
Thanks for a balanced discussion about the transition to renewable energy. I for one do not believe that you can supply a grid the size of ours; the western, eastern and Texas with 100% renewables. Intermittency is its greatest challenge and storage cannot possibly scale up to replace natural gas.
One correction, per the EIA, in 2023 the electrical energy supplied by wind was 10% and solar 4%, so your number of 20 is a little high.
As Robert likes to preach, N2N, natural gas to nuclear is the best solution.
Thanks. I certainly agree that 100% renewables is not attainable, nor would it be advisable even if it could be attained. I like natural gas, and think it should have a continuing role, perhaps primarily as backup generation, and nuclear should play an important role as base load generation. But there is also hydro, and I think that wind and solar can do a heavy lift for the reasons mentioned, provided there are adequate storage resources.
"The subsidies granted to wind and solar generation tend to depress the market prices for energy and capacity..."
I can easily see how solar and wind generation depress market prices for electricity, but it's not obvious to me how they depress prices for capacity. My intuition says they should raise prices for capacity. Can you elaborate?
Yes, I plan to do a post explains the point. The short answer for both markets is that it moves an offer price that should be more expensive and therefore higher in the stack down to the bottom of the stack, and as a result, pushes other relatively low offers up in the stack so that a lower price offer ends up being the marginal offer clearing offer. I plan to use some graphics to explain this for those people who, like me, have trouble visualizing the point..
But are solar and wind eligible to offer capacity?
Yes they are. Should they be? That's a different question. I plan to do a post on that, too. But my next post is going to be on subsidies, since you asked that question first.
I think you confused the word "energy" for "electricity" above
Sorry, in the industry people refer to electricity as energy, as opposed to capacity, which represents the ability to generate electricity. I have tried to avoid the use of the word energy this way in my posts, but it is so ingrained in me that sometimes I slip up.
Thanks for a balanced discussion about the transition to renewable energy. I for one do not believe that you can supply a grid the size of ours; the western, eastern and Texas with 100% renewables. Intermittency is its greatest challenge and storage cannot possibly scale up to replace natural gas.
One correction, per the EIA, in 2023 the electrical energy supplied by wind was 10% and solar 4%, so your number of 20 is a little high.
As Robert likes to preach, N2N, natural gas to nuclear is the best solution.
Thanks. I certainly agree that 100% renewables is not attainable, nor would it be advisable even if it could be attained. I like natural gas, and think it should have a continuing role, perhaps primarily as backup generation, and nuclear should play an important role as base load generation. But there is also hydro, and I think that wind and solar can do a heavy lift for the reasons mentioned, provided there are adequate storage resources.