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Lion Hirth

@LionHirth

Aug 21

If you have the chance to build a solar park anywhere in Europe, do so.

Payback time for a solar PV investment in Germany has dropped below 2 years.

Yes, that's right: you will recover your investment within the first 10% project lifetime. Plenty of time to cash in.

No need to rely on subsidy schemes, no need to sign PPAs, just sell your output on forward markets today and lock in the cashflow.

Conservative assumptions:

Investment 800 €/kW
Capacity factor 11.4% (1000 FLH)
Value factor 85%

Cal-23/24 base prices currently at 573 / 370 €/MWh.

So your revenue in the first two years will be 802 €/kW.

Read 4 tweets

Lion Hirth

@LionHirth

Aug 18

Ich verstehe den Frust der europäischen Spitzenpolitik von Boris Johnson bis Ursula von der Leyen über die Strommärkte, weil sie einerseits hohe Preise für Konsumenten aber andererseits hohe (wenn auch kleinere als oft angenommen) Profite für manche Energieunternehmen bescheren.

Nur heißt ein unerwünschtes Marktergebnis noch nicht, dass ein Markt oder ganz ökonomische Grundprinzipien falsch sind.

Ich halte den Strom-Großhandelsmarkt im Kern für sinnvoll ausgestaltet und gut funktionierend. Das Problem ist, dass wir zu wenig Gas (wegen Putin) und zu wenig Strom (wg. Trockenheit in Europa und französischer Kernkraftkrise) haben – aber dafür kann das Strommarktdesign nichts.

Read 5 tweets

Lion Hirth

@LionHirth

Aug 18

It seems the gap between senior European energy policy officials and their economic advisors has never been greater.

Energy economists are asking for price signals and energy savings incentives.

Gov'ts hand out energy subsidies and tax rebates, consider price caps.

Well, those of us working on carbon pricing know how this feels.

I try not to be frustrated and figure out what we are doing wrong. But sometimes I struggle.

Read 4 tweets

Lion Hirth

@LionHirth

Jul 26

@ingmarschlecht

While we were all watching the 15% gas savings discussion, the Energy Council today also discussed a proposal by the Greek gov’t for an electricity market reform.

Here is our assessment. 👇

With @ingmarschlecht

data.consilium.europa.eu/doc/document/S…

What's the proposal? (our understanding)

Separating the market in two segments: First, a mandatory pool for low-variable cost technologies (RE, nuclear, cogeneration) where they are paid by CfDs based on full costs. Second, a conventional market for the rest. (2)

Consumers pay a weighted average of full-costs and marginal costs. It applies equally to existing and new generators.

One puzzle is that CfDs are financial contracts, it is unclear why you need the proposed two-stage spot market.(3)

Read 8 tweets

Lion Hirth

@LionHirth

Jul 26

Today, the leading European power exchange EPEX SPOT asked, once again, for the introduction of local markets for flexibility.

That’s surprising, since these markets simply do not make sense. Here is why 👇

As any American energy economists will know, local markets embedded in zonal markets will cause market parties game the system.

Everyone else: let me talk you through the basics. (2)

If network constraints can be anticipated, producers in scarcity regions can maximize profits by selling on the (local) redispatch market rather than on the (zonal) spot market. They increase bids on the spot market to not be awarded in the zonal dispatch. (3)

Read 8 tweets

Lion Hirth

@LionHirth

Jul 25

Meine 2 Cents zum Gas-Basisbedarf: charmante Idee mit vielen Vorzügen aber einem großen Problem - aus der verhaltensökonomischen Literatur wissen wir, dass viele Leute nach Durchschnitts- und nicht Grenzkosten.

Also ist zu befürchten: mit Gas-Basisbedarf wird mehr geheizt.

Mehr Verbrauch bei Haushalten heißt höhere Gas-Börsenpreise und mehr Einkürzung bei der Industrie.

Besser für Energiesparen ist es, Zahlungen zu trennen. Also Pauschalzahlung nicht per Gaspreis zu verteilen, sondern als Energiegeld über anderen Kanal.

Ich gebe zu: alle Instrumente haben ihr Probleme.

Read 5 tweets

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