Friday, July 6, 2012

Solar Stories from Europe, Economic Lessons for Ontario

There are 3 solar articles the caught my attention in the past couple of days.  Two articles centred on Germany balance views on the costs/benefits of solar policies there, while a third from Germany displays the enormous market challenges presented by the large solar capacity that produces only a small share of overall power requirements.

Spiegel Online's Germans Cough Up for Solar Subsidies covers many of the multiple criticisms of Germany's solar policies, but also reports on some of the back-room influence peddling/profiteering driving up household energy costs in Germany (for Ontario similarities see Parker Gallant's multiple articles, but particularly Environmental "Don" or "El Hefe" of Sustainable Energy)

Germany's new environment minister Peter Altmaier had only been in office a week before he traveled to Bonn for an urgent appointment. Important representatives from the German renewable energy industry were expecting him, including Frank Asbeck, CEO of the Bonn based Solarworld AG. And they were not to be put off. They wanted to know from Altmaier, who assumed his office in May, what was going to happen with solar industry subsidies.
The results of those closed-door negotiations will soon be passed on to the general public via their electricity bills, which are once again about to go up -- even though Germans already pay the second highest energy prices in Europe. Next year, a three-person family will likely have to pay up to an additional €175 ($220) to finance the construction of renewable energy infrastructure.
The full article is worth reviewing, as is an article from the European Energy Review that acts as a rebuttal:  German solar bubble? Look Again!  The article argues that Germany is benefiting from early mover status at both ends of the supply chain (equipment manufacturing, and installation/grid integration) despite the problems in the middle section that is the actual production of solar panels.
Graphic from Source Article
The public eye may focus on the middle of the value chain - panels - but Germany clearly reaps benefits all up and down it. And thanks to massive deployment, German firms can be expected to stay on the forefront of innovations, such as the grid integration of solar with home systems that store excess solar power so that less of it has to be sold to the grid, allowing more PV can be connected. Another example is inverter technology that allows solar power plants to stabilize the grid even at night by acting as phase-shift oscillators.
From my Ontario standpoint, this article does leave me perhaps more perplexed at our anti-trade positioning of our Green Energy Act.

The most important of the three articles is probably the European Energy Review's article by Carlo Stagnaro, of the Istituto Bruno Leoni: How solar subsidies can distort the power market: the case of Italy.  Stagnaro cover the situation in Italy and concludes:
From Source Article
So we have at least four major problems.
The first problem is the cost of incentives...
The second problem is the increasing imbalance cost due to the amount of intermittent power capacity...
The third problem is that a large and increasing share of intermittent production creates technical problems in the power grid...
The fourth problem lies in the growing conventional overcapacity...
Ontario's overcapacity is different than Italy's, as it is very arguable that we have sufficient capacity to meet peak summer demand, yet clearly have a large excess of contracted supply (nuclear, non-utility generators, hydro and renewables) much of the year.  That is why the first graphic from Stagnaro's article I've displayed in so compelling - Ontario's "contestable demand" is an increasingly small part of Ontario's market.

Italy also has some lessons for Ontario in terms of time-of-use (TOU) pricing.

Ontario already shifted TOU periods to exclude the actual peak hours of much of the year (after 7 pm) for political reasons.  As Ontario is a northern jurisdiction, our winter, and much of the shoulder season's peak, see peak demand in the darkening hours of the day.

Stagnaro's graph shows peak pricing moving from the middle of the day into the dark hours as solar capacity increased.

There is likely to be an increasingly weak connection between demand, and price - with price being increasingly driven by the output of intermittent generators.

1 comment:

  1. Excellent articles. Deja vu all over again. The Italian article had lots of good detail. The only difference between Italy and Ontario is Italy's conventional generators get hooped while most private ones in Ontario are indifferent to the mayhem renewables impose on the market. Thank God all jurisdictions have the Swiss to make it all work !