Wednesday, April 16, 2014

Electricity Market Prices Fall In Europe - retail prices likely don't

I cite this articles because I've seen it referenced as if it states something positive about Germany's renewables escapade, and that demands clarification.

Electricity Prices Fall In Europe As German Renewable Energy Increases:
For the fifth consecutive month, electricity prices in countries neighboring Germany have decreased, recently released Platts data reveals, due in large part to increased solar and wind generation in Germany. The Platts Continental Power Index (CONT), described as a “demand-weighted base load average of day-ahead contracts assessed in Germany, Switzerland, France, Belgium and the Netherlands,” dropped steadily in early 2014. The index decreased to €35.06 (or about $48.50) per megawatt hour in March, an 18 percent drop from February. Overall, the index is down by more than 39 percent since peaking at €50.50/MWh in November of last year.
Continue reading...

A simple review:
The market recovers cash to pay for supply
It does not cover the contracted cost of supply
A surcharge is applied to recover the full cost of supply.

The EEG-Umlage is the surcharge in Germany, and working with data from the German Transmission System Operators, and pulling some figures from that data it appears to me the EEG-Umlage recovered, from Germany's consumers, about ~$1.1 billion more Euros in the first quarter of 2014 than it did in the first quarter of 2013.

The first quarter, for Germany's electricity sector, is unique from the full year - probably because demand is greater and solar generation less (so supply is cheaper).

Comparing full years, the EEG-Umlage moved from 68% from overall revenue in 2010 to over 88% of revenue in 2013 (the documents are in German, so I may be missing some subtlety here. Presumable for the generation with contracts where the difference from market value and contract value needs to be recovered by the EEG-Umlage) ).
These figures aren't "clean" because the system operated in a deficit for 2010 and a surplus of 2013. Regardless, the first 3 months of 2014 show the EEG-Umlage collecting 93% of all revenues - it's up 23% in total euros, from Q1 2013 while the collected Q1 surplus (usual in Q1) is down 21%.

So... Germany had a good first quarter for renewables output and demand was low due to a mild weather.

Good things - but tempered by exports at lower prices, with the German consumer paying to support those exports through the EEG.

As Ontario consumers do through the global adjustment in similar circumstances.

There might be a message that feed-in tariffs are a good thing for neighbours to implement - but no message that they should be pursued at home.

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