November 27, 2021

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Electricity Prices, Consumer |  These are the real reasons for the high electricity prices

Electricity Prices, Consumer | These are the real reasons for the high electricity prices

(Internet newspaper)

The energy crisis in Europe has sounded the alarm. In England, their electricity prices were above 30 kroner (!) per kilowatt-hour, coal prices were never higher, and important industry like fertilizers came to a halt because gas became too expensive – and experts would by no means rule out this happening. Energy rationing in the spring.

The situation is referred to as the “perfect storm”. Gas shortage, high carbon dioxide prices, increased consumption outside the pandemic, lack of wind for wind energy, lack of water for hydropower.

But these things are either required or expected. The primary objective of carbon dioxide pricing is to make emissions of carbon dioxide costly. Gas is fossil and something you want to get rid of. The “Norwegian argument” that gas is important to the phase-out of coal in Europe has been met with derision.

The historic lockdown of society due to the pandemic has ended and that the world’s return to normal is all that everyone has been hoping for for a year and a half.

So what exactly is the cause of the crisis?

Hungarian Prime Minister Viktor Orban recently tried to blame the Points to EU climate action as the root cause.

– He said that gas prices today are where they should be in 2035. Brussels is not the solution today, it is the problem, he said.

European Union President Ursula von del Leyen rejects this outright. She thinks the problem is that the EU uses a lot of fossils, and She thinks so instead “It is important to invest in renewable energy that gives us stable prices and greater energy dependence.”

Europe created the same energy crisis

The challenge for Europe specifically is that the renewable electricity production one wants is unstable, and low winds were just one of the main reasons why prices are so high. When it is not windy, the energy must be produced in another way, otherwise it will be dark.

In Denmark, wind and solar energy are the most important sources of energy. When they blow a lot, they have enough production to cover their consumption (black line in the graph), but they depend entirely on imports when they don’t blow enough.

I think that Europe itself created this crisis of power. They have cut back on their stable production and made themselves dependent on unpredictable production, Ketil Solvik-Olsen tells Nettavisen.

Solvik-Olsen was previously an energy policy spokesperson for Frp, and in recent years has worked for a number of companies after his resignation as Minister of Transportation. He is also the deputy leader of Frp. He believes that politicians have little understanding of the energy market.

People have politically closed their eyes to the fact that increased prosperity means more energy use. And then they were so busy counting the combined units that they almost likened a wind power plant to a coal-fired power plant, not including the energy volumes. It was politically correct to talk about the sun and the wind. I won’t talk about it, but the downside to sun and wind is that it’s not adjustable.


Missing something crucial to the transition

Replacing something stable with something unstable is very difficult. The electric current must always be in equilibrium:

When the electric vehicle starts charging, production must be increased. When finished, production should be cut off. With hydropower, it’s very simple. With coal power, it takes time.

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With wind power this is impossible. Alternatively, there is a risk of increasing your electricity production when you need less power. This is a big problem.

– In the long run, when you have a lot of hydrogen that you can use to produce electricity, you don’t have to worry about the weather changing, then you have energy storage like we have in hydroelectric plants. But we are not there now! this is the problem.

– In switching from oil and coal, to what you want in the future, I removed production very quickly without the buffer being tidy. Batteries are still expensive, and hydrogen is still expensive. Then we may have visions of how things will play out in 20-30-40 years, but now we are experiencing the result that change is not in tune.

– We’ve discontinued a lot of required underloading production, and we’ve become so dependent on the weather. After that, it won’t take much — just a little bit of gas withholding from Russia — before the entire system becomes unbalanced, says Solvik Olsen.

Create a double big problem

In Europe, the most important industrial country in Europe decided in 2010 to phase out coal power. Instead, they should allow nuclear power to play a major role in the green transition: Energiewende.

But in 2011, they panicked after the Fukushima accident. Thus, the policy was to shut down carbon dioxide-free nuclear power at a record pace, same time Climate goals should also be achieved by removing coal energy.

In 2010, Germany had 21 gigawatts of nuclear power. Now there are 8 gigawatts left. Sweden also reduced its capacity by about 1/3.

In comparison, the total electricity consumption in Norway in the summer is between 10-12 gigawatts.

From enough to very little

Germany today is almost self-sufficient in electricity, but next year all nuclear power will be gone from Germany. Then they don’t have enough energy for themselves, and renewable construction isn’t going fast enough. The possibility of coal power removal is just a distant dream.

Nuclear power has been largely replaced by coal power. There was no success in the climate.

The plan was to replace this with the wind and the sun, but the development was slower than one had hoped. The problem of underinvestment isn’t just a German problem, according to a new report from the International Energy Agency:

Public spending on sustainable energy in economic recovery packages has only mobilized about a third of the investment needed to push the energy system into a new set of bars, with the largest deficits in developing economies still facing an urgent public health crisis. Progress towards universal access to energy has stalled

The International Energy Agency’s World Energy Outlook

They couldn’t either Upgrade their power grid as often as necessary. The wind is still blowing in the north of Germany, while the industry is in the south. Monstermaster is not popular there either.

The network is so bad that Germany You will not guarantee that they will get electricity from Norway, when a new power cable was built there.

It’s about understanding the sizes. Nuclear power plant 1200-1600 MW (1.2-1.6 GW), and then we talk Completely even production all the way. If you want the same amount of power output from a wind turbine, you need to have three times the installed capacity. That means you have to build 4,800 megawatts of capacity to cover it, says Solvik Olsen.

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Modern wind turbines for the Earth, about 6 MW. This means that you have to build around 800 pieces to replace them One Nuclear power plants.


A big problem

One of the arguments behind wind power is that it is cheap to build, but it does have an expensive problem: What do you do if it doesn’t explode when you need electricity?

In practice you should have an alternative. In Europe, the alternative is largely coal and gas-fired power plants, which are just waiting to be needed. It is very expensive, and means that these power plants must have a very high electricity price before they can be commissioned.

Imagine you got a job where you had to buy a new car, be available 24 hours a day in a very short time and need 1-20 hours a month. How high a watch should you get then?

In the electricity market, the price determines the most expensive source of energy to be used at any time. If you need a little extra electricity, all electricity producers will be paid well.

I have no doubts that we are moving in the direction of renewables and that makes sense, but it is taking longer than you think. Nuclear power is likely to be a reasonable part of the energy mix to a much greater extent than it is today. First, it doesn’t take up much space, and it’s very predictable.

The world is not investing enough to meet its future energy needs, and uncertainty about policies and demand trajectories creates a strong risk of a volatile period ahead for energy markets.

International Energy Agency

Thought to be closely related to hydrogen investment:

– If you had nuclear power at the bottom of the renewable system, you could have used nuclear power to produce hydrogen when there was a lot of sun and wind. Then nuclear energy can mature and go to the end. Then you could put the hydrogen plant in there, practically using nuclear power for storage and transportation capacity.

– It will give a more robust system and more predictable prices, rather than having a bunch of oil, gas and coal power plants packed into mill bags, ready for production in short order. It’s massive capital that you’re locking up in reserves you’d rather not use. The shirt costs.

Would you like to be a fly on the wall?

Solvik-Olsen believes that the decision to eliminate nuclear power in Germany must have been made against better knowledge.

– I would like to be a fly on the wall at the German Energy Ministry when they discuss this professionally, because it is not related to reality. The challenges are that energy prices are an important part of the input factor for industrial production and business.

– You can survive periods of fluctuation, although not nice, but when you get a price level like in parts of Europe and England – where you have 20-30 kWh per kWh for short periods – How do you run the business that Way? Everything produced can be shipped. Then you can avoid price hikes by setting yourself up in other countries, he says.

For the industrialized nation of Germany, this is likely to be disastrous.

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High electricity prices make everything more expensive

Solvik-Olsen says he works every day at a company that works with organizations:

We use a lot of steel and concrete. Only in the past week have we received messages from several suppliers about higher prices due to higher energy prices. Steel prices more than doubled, and one supplier was forced to increase concrete prices by 30 percent. What does this mean for Obos or the Norwegian Public Roads Administration? What does this mean for the prices of the product you will be delivering? What does that mean for the price per square meter of new apartments? Selvaag doesn’t sell for the same price if prices go up 30 percent.

– Many people talk about seeing it on their electric bill and gas pump. But they don’t think you’re looking at everything that has been produced in the industry. We frame ourselves to this degree, both directly through energy prices, but also indirectly through how they affect other links in the chain.

– The president of the European Union thinks that more renewable energy will give more stable prices?

– On the day when you have so much hydrogen production and battery capacity that you can think about all the wind energy production out there when there’s a lot of production – and extract it again when you need it – then she has a point. But I think it’s been a long time until we get there.

It has nothing to do with Acer

At the same time that Solvik-Olsen believes the EU has a long way to go to thank itself, he rejects the popular theory that it is Acer that is giving higher electricity prices:

Acer should not be allowed to remove liability from those who have already made the decisions. They have nothing to do with this. We had the exact same interchange cables today even though we weren’t at Acer. The strategy put forward by Åslaug Haga in 2008 that Norway should be Europe’s battery, was a conscious strategy that Norwegian hydropower should help Germany phase out coal power. We’d go sell electricity, buy it cheap when they were in surplus – and pump water back into the tanks. In practice, the strategy was to exploit Norwegian hydroelectric power to aid the Germans. Solvik Olsen says it has nothing to do with Acer, but about crazy high-profile politicians who wanted to save the world.

Everything is connected to everything

But the energy crisis is not just about what is happening in our neighboring countries: what is happening in Europe now is directly related to what is happening on the other side of the globe:

We have a globalized economy, where development has been faster than politics has been able to keep up. Now there are prices applied all over the world, you have flows of goods spreading all over the world – and you have epidemics spreading all over the world. A lot of that’s good, but we haven’t really taken into account that there’s a lot of uncertainty and risk involved, says Ole Gunnar Ostvik, professor of political economy and petroleum economics at the Inlandit School of Business.