Renewable Power = Cheap Power = Doom for Obsolete Power Technologies
Want to see why power companies are so afraid of solar and wind power on the electric grid?
Take a look at this story from Bloomberg titled Utilities Giving Away Power as Wind, Sun Flood European Grid.
With Europe’s wind and solar farms set to triple by 2020, utilities investing in new coal and gas-fired power stations no longer face stable returns. As more renewables come on line, a gas plant owned by RWE or EON that may cost $1 billion to build will be stopped more often from running at full capacity. It may only pay for itself on days like Jan. 31, when clouds and still weather pushed an hour of power on the same-day market above 162 ($220) euros a megawatt-hour after dusk, in peak demand time.
The story goes on to explain the impact of renewable power on obsolete “base load” power company technologies:
Northern Europe’s renewable-energy goals call for about 200 gigawatts of solar and wind capacity by 2020, or almost a third of the current installed base, compared with about 70 gigawatts today, according to the Finnish energy consultant Poyry. Even by 2014, gross profit from burning coal in Germany may skid by as much as 41 percent, according to Barclays Plc.
The gross margin at a coal power plant after deducting fuel and emission permit costs, the so-called clean dark spread, may “collapse” to as low at 3.50 euros a megawatt-hour, Barclays analysts including Peter Bisztyga said in a Sept. 1 report. The spread was at 6.15 euros today, Bloomberg data show.
Narrower margins mean it will take longer for companies to pay off building new gas- and coal-fired facilities. Those plants are needed. They can run around the clock, preventing blackouts when the sun sets or the wind dies as European power demand grows 5 percent through 2015 compared with 2010, according to Paris-based bank Societe Generale SA’s forecast.
Instead of adapting their technologies to the predictable behavior of sun and wind, the big European monopolies and the bankers who finance them continue to cling to the old model of continuous operation and centralized grid technologies. French companies, with their massive commitment to nuclear power, which must run continuously to justify the safety costs of such a dangerous technology, are particularly vulnerable.
These facts on the ground in Europe show clearly what lies behind the open hostility of WV’s power companies and PSC to real commitment to renewable power development in our state. Fear.