“Low electricity prices” because of the growth of “sustainable energy”?

In line with previous post, there is this article from a Dutch newspaper titled “Engie can not pay for major maintenance of gas-fired power plants anymore” (translated from Dutch). Philip Pouillie (CEO of Engie Benelux) explains that his company can’t afford to pay for the periodic maintenance of their gas-fired power plants anymore, delaying them as long as possible because they expect not to be able to earn back that money anymore. This is the reason that is given (translated from Dutch):

Engie has suffered from the low electricity price. That is a result of the growth of sustainable energy, the cheap power from coal, over-capacity and cheap import power from Germany. But the gas-fired power stations should, according to the energy companies, continue to run as ‘back up’ during the transition to wind and solar energy that will get shaped in the coming decade.

Another newspaper from the Netherlands explained it in a similar way:

The revenue of the [gas-fired] plants is too low to pay back the investment in major maintenance, the French energy giant expects. That is partly due to the low electricity price, overcapacity on the Dutch market and the production of renewable power. Electricity generated by gas turbines is relatively expensive compared to electricity from other sources, such as wind, sun and coal.

It is somehow suggested that alternative energy in combination with coal, overcapacity and import from Germany are causing these cheaper prices, therefor pushing gas-fired power plants out the market and now it are those gas-fired power plants that need to be supported. In the first article it also seems to be suggested that gas is only needed in a transition period, that in the future wind and solar can somehow do it on their own.

You could argue that decreasing prices are a good thing, whether it is due to sustainable energy, overcapacity, cheap import power from Germany or whatever. If these lead to low electricity prices, then let’s get more wind and solar… Unfortunately, as usual in alternative energy reporting, both articles only tell half of the story.

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Claim: contract prices for solar and wind power increasingly comparable or lower than generation cost of newly built gas and coal power plants

In the opening a new era for solar power news item discussed in previous post, there was this rather puzzling paragraph (my emphasis):

The deployment in solar PV and wind last year was accompanied by record-low auction prices, which fell as low as 3 cents per kwh (or kilowatt hour). Low announced prices for solar and wind were recorded in a variety of places, such as India, the United Arab Emirates, Mexico and Chile. These announced contract prices for solar PV and wind power purchase agreements are increasingly comparable or lower than generation cost of newly built gas and coal power plants.

There were many more questions than answers. What are those “announced auction prices”, what do they mean by “increasingly” and why aren’t there leading countries like European countries or USA on that list?

It seems to somehow suggest that the generation cost of solar PV and wind power is now “increasingly” cheaper than that of gas or coal. It is a bit odd that an energy source like wind, that in this region still depends on subsidies to survive, would be in such a position that it increasingly rivals gas and coal power. That doesn’t make much sense…

Photovoltaic additions surpassing the net growth in coal: the birth of a new era of solar?

When I read the Bloomberg news article about solar capacity growing 50%, I was pretty disturbed. I was even more disturbed when I read its source: the IEA news article Solar PV grew faster than any other fuel in 2016, opening a new era for solar power.

I could understand that the Bloomberg journalist might have no clue what he was copying and pasting, but I expected much more from an organization like IEA.

The first sentence of the IEA news article sounds familiar for those who read previous two posts:

New solar PV capacity grew by 50% last year, with China accounting for almost half of the global expansion, according to the International Energy Agency’s latest renewables market analysis and forecast.

This was the subject of the last two posts, in which it is shown that the growth of installed capacity of photovoltaic is a meaningless metric for the growth of solar energy consumption. That 50% growth (which is in fact a 33% growth) translates to a 0.13 percentage point growth in solar energy consumption when compared to the total energy consumption worldwide.

This focus on the growth of installed capacity allowed the IEA to overstate the impact of solar energy. They even went a step further in the next paragraph(s) (my emphasis):