this post was submitted on 21 Jun 2024

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Europe faces an unusual problem: ultra-cheap energy (www.economist.com)

submitted 2 months ago* (last edited 2 months ago) by [email protected] to c/[email protected]

33 comments fedilink hide all child comments

Europe faces an unusual problem: ultra-cheap energy - https://web.archive.org/web/20240620151949/https://www.economist.com/finance-and-economics/2024/06/20/europe-faces-an-unusual-problem-ultra-cheap-energy

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[–] [email protected] 27 points 2 months ago (3 children)

“problem”?

[–] [email protected] 12 points 2 months ago (3 children)

A power companies largest expense is maintaining the grid. If their only product has to be sold at negative prices, then there is no money to pay people to maintain the grid. An under maintained gridgrid can lead to very serious consequences, ref:Texas.

[–] [email protected] 56 points 2 months ago (2 children)

It's almost like energy should be seen as a public service rather than a source of profits. Like education, health, water, etc.

[–] [email protected] 1 points 2 months ago (1 children)

Someone's gotta pay for it in either case

[–] [email protected] 7 points 2 months ago

You can have a system where the first few kWh free and then you pay the excess, or you pay it entirely through your taxes. Either way you're obviously paying for it.
Having it as a public service doesn't mean it's free, it means that everyone benefits from it but not everyone pays the same price, and that profit is not the ultimate goal.

[+] [email protected] -33 points 2 months ago (2 children)

Nothing should be a public service.

[–] [email protected] 9 points 2 months ago (1 children)

Yeah, like, just pay for it with your own money you poor fuck. And if you're poor it's probably your own fault, pull yourself up by the bootstrap like my CEO daddy did.

[–] [email protected] 8 points 2 months ago* (last edited 2 months ago) (1 children)

As a libertarian, I actually disagree. Natural monopolies should be a public service because the incentives to provide ethical service aren't there. You can't realistically have multiple power companies, so the city/state should provide electricity service.

Power generation could be a private service, since cities can choose their suppliers. They can also generate their own, and private energy would need to compete with that.

[+] [email protected] -10 points 2 months ago (1 children)

Of course you can have multiple power companies in the city! A quick search shows that I can choose from over 10 different energy providers for my home. There's no such thing as a natural monopoly, they only happen when legislation allows them to happen.

[–] [email protected] 5 points 2 months ago (1 children)

No, what you have are 10 different customer support companies. They probably don't own the wires coming to your house, or the substations and power poles and whatnot. Maintaining separate infrastructure for 10 companies isn't practical, so they either own joint ventures that do (less likely) or shift that onto cities and other government entities.

We're doing that with our municipal fiber initiative, the city owns the infrastructure and companies provide service on that infrastructure. I think "service" is a silly thing to compete on (how often do you really need something from your ISP or power company?), especially when they don't own the lines so they can't do much to help, but whatever. I think it's much better for companies to compete on extra services, like providing base power, energy storage, datacenters (going with the ISP example), etc. Then again, it works reasonably well for MVNOs, so I guess there's a chance it's a net positive.

[+] [email protected] -6 points 2 months ago (1 children)

You're wrong. Different companies own different parts of infrastructure, power generation and/or distribution. The system is no different to setting up a grocery shop. Grocery shops don't own farms (usually) or a building they're operating in, yet they can compete efficiently with each other.

As for fibre, again - no issues here. Britain has OpenReach as the main infrastructure manager, which leases it to ISPs, plus there's a selection of independent ISPs who have their own infrastructure.

And even trains can work successfully as proven by the EU.

[–] [email protected] 4 points 2 months ago* (last edited 2 months ago) (1 children)

different parts of infrastructure

So they have a monopoly on a given part of infrastructure. So if a transformer goes down, that company would need to come out and fix it? What happens if they don't fix it promptly? Surely you can't reroute your power lines through a transformer owned by a different company, no?

I don't live in the UK, so I don't know how it works. But I do know it's impractical to have parallel electrical systems. We've done that historically with internet (cable, dsl, and fiber would use separate, parallel infra), and putting in a competing service gets stuck in bureaucracy because existing players don't want competition, which is why many areas only have one or two ISPs (they block new ISPs from rolling out new infra with regulations and whatnot). So I'm guessing that's not happening, which means there's a monopoly at some point.

I could totally be wrong though. What I do know is that the UK has some of the most expensive electricity in the world.

[–] [email protected] -4 points 2 months ago (1 children)

Are you trolling or what?

[–] [email protected] 4 points 2 months ago (1 children)

No, why would you think that? Your response was basically, "you're wrong, trust me bro," and I tried to interpret what you said in a way that makes sense.

If you want to convince me that it works, I'll need details.

[–] [email protected] -4 points 2 months ago (1 children)

I gave you a very simple example with a grocery shop. There's not much difference between setting up a new shop or energy provider.

[–] [email protected] 4 points 2 months ago* (last edited 2 months ago) (1 children)

There's a huge difference. You completely sidestepped the interesting bit, which is the monopoly on infrastructure (e.g. power lines in the city up to your residence). Someone owns and maintains those lines. That is the part I'm concerned about.

It's easy to compete on energy production (e.g. farms) or customer service (e.g. grocery delivery), but it's hard, if not impossible, to compete on infrastructure (e.g. the store itself). If there's an energy shortage (i.e. store runs out of food), you can't just go to another provider, they're all using the same grid. The analogy would work if you're assigned to a store, but you can choose the cashier, and perhaps cashiers are paid based on customers served. Or perhaps if prices are fixed across grocery stores and they somehow share inventory, but how they layout the store differs.

So it sounds a lot more similar to the municipal fiber initiatives in my area. Basically, there's one network owned by the municipality, and companies provide "service" on that network, but any maintenance goes to the city-owned network to manage (e.g. the local monopoly). In pretty much every case, it's a distinction without a difference, because they all just present the same underlying service with a different veneer. I don't know if the UK has the same concept, but it's also like an MVNO (a company offering mobile service on a major network's hardware), but with even less variety in pricing (how many pricing tiers can you actually have for electricity?). I like my MVNO, but I get the same service quality regardless of the MVNO I select, provided they're all backed by the same network.

[–] [email protected] 0 points 2 months ago (1 children)

I'm not sidestepping anything. When you're opening a grocery shop, you don't build a building for it, you're not doing plumbing, you're not supplying electricity to it. And you're not doing logistics and don't grow wheat. If there's an issue with bread producers, you don't get bread and you can't do shit about it. There's absolutely no difference between opening a shop and becoming an energy supplier.

[–] [email protected] 1 points 2 months ago (1 children)

Ok, I guess it makes a little sense if you're looking at it from the business owner's perspective, at least in terms of setting up a new business. But that applies to any form of retail.

But grocery stores provide value apart from just buying straight from their suppliers. They provide proximity so you can get products at any time. They provide a buffer so if one store runs out, you can go to another. They provide services, like doughnuts, cut fruit, and sliced meat. And so on.

Unless I'm mistaken, energy companies don't provide anything like that. To the customer, they just provide customer support and a portal to accessing the same stuff as their competitors. There's no difference between infrastructure and probably energy price, and that's the interesting part about an energy company.

So what value are they providing?

[–] [email protected] 1 points 2 months ago (1 children)

Energy providers also provide additional value. For example, some energy providers provide only 100% renewable electricity, while most provide electricity from all sources. Some of them have night tariffs, some have EV specific tariffs with integration with your charging station. They also have different incentives for people who want to install solar panels. For example, some might pay a portion of your installation bill, while others might provide a preferential buy back rate.

Some of them also provide additional services to their clients, like switching your house from standard 230V 100A supply to 230V 300A supply (that's how you get 22kW EV charging at home in the UK). The thing is that energy infrastructure in the UK is standardised, so any company with a correct licence can do upgrades.

[–] [email protected] 1 points 1 month ago (1 children)

Some of them have night tariffs, some have EV specific tariffs with integration with your charging station.

We get that too, but just from our one power company. I basically have two options for payment agreements, a block-based system (1st 400kWh at one price, everything else at a higher price) and a time of use system (half price off peak, double price on-peak). There's technically a third for low-income people.

We also have a net metering incentive as well, so basically if you supply power to the grid, you only pay the net between your production and your use. If you go negative, it rolls to the next month, and that extra resets at the calendar year.

We can also pay for blocks of 100% renewables ($2 extra per 100 kWh per month), and there are a few incentives again (e.g. discounts/rebates for smart thermostats, low-power appliances, etc).

So it sounds like I'm getting pretty much the same choices you are, I just don't get to choose who handles my billing.

any company with a correct licence can do upgrades.

Interesting, but that has nothing to do with the privatized electrical companies. If we had triple phase power at the street, I could pay any electrician to do the swap, and they'd probably just notify the power company (and maybe pull a permit from the city). What's odd is that triple phase seems possible on the power company's website (i.e. there are different charges in the rates disclosure), but I really don't think it's common at all.

Anecdotally, I can get up to 11kW @ home w/o needing triple phase power. I have a 50A 220V circuit at home for my oven, as well as 3 220V circuits in my garage that could probably be upgraded to 50A (two are 30A, the other is 20A). That's plenty for me, but it would be cool to have faster charging I suppose.

[–] [email protected] 1 points 1 month ago (1 children)

Anyways, private energy works great in the UK.

Speaking of power supply, you have multiple lines. That's an option here too. We also have an option to have a triple phase 415V (these are rare in domestic applications, but in my home country in Latvia that's how you hook up an electric oven and a hob). Somehow there's no limit on how much power the 415V line can deliver, I've seen some tables that allow up to 1700 Amps, which is completely bonkers. That's a bloody megaWatt of power!

[–] [email protected] 1 points 1 month ago (1 children)

That's an insane amount of power! I'm guessing they don't have a difference between industrial and residential lines? Because that much power could make sense for a factory, but it certainly doesn't make sense for a house.

[–] [email protected] 1 points 1 month ago

I don't think residential properties can get all the Amps (:

[–] [email protected] 4 points 2 months ago (1 children)

Sounds like a good reason for the state to sponsor some energy intensive environmental work. Like desalination plants or those ungodly carbon capture rigs that are super energy inefficient.

[–] [email protected] -3 points 2 months ago

Best I can do is lots and lots of crypto.

[–] [email protected] 1 points 2 months ago (1 children)

In Norway we pay a fixed monthy fee, a fee based on the maximum load we use during the month, in addition to a fixed fee per kWh to the company owning/maintaining the grid in our area. This is in addition to and completely independent of the price we pay to the "power company" based on for example the spot price.

[–] [email protected] 2 points 2 months ago

This is the same in the US, but it's possible that the flat fee might not be enough to cover maintenance if kW prices go down. Seems like the solution should be to raise the flat fee, or implement one if it doesn't exist yet.

[–] [email protected] 9 points 2 months ago (1 children)

Grids need to be carefully balanced. If the cost is approaching, or lower than 0 then that means the grid is actually in a critical state. A lot of generators cannot be switched off (or at least not quickly). If more power goes into the grid than is used, then it can destabilise the whole grid and cause a blackout.

The solution to the problem is actually 2 fold. We need more sinks, and a smarter grid.

More sinks is mostly in the form of storage. They buy power when it's cheap, and sell it when the cost spikes. It also extends to other heavy uses. Traditionally, aluminium smelting helps a lot with this. It uses huge amounts of electricity, and and switch on and off rapidly.

We also need a smarter grid. We need homes that know what the grid needs. E.g. electric cars than can actually as local buffers, or air conditioning that times it's draw to help balance the grid.

[–] [email protected] -1 points 2 months ago (1 children)

sell it to who? This is just like saying you'll just find shelter under another tree when enough rain has started making it through the leaves of the one that's sheltering you now.

[–] [email protected] 3 points 2 months ago

And that's why it's currently a problem. There's not enough buyers, and not enough capability to switch supply in and out.

Without the price incentives to build large scale storage, it hasn't been done. The problem is that there is a delay between needing the storage, and it actually being built at scale.

[–] [email protected] 5 points 2 months ago

Oh no how tragic.