The European Tribune is a forum for thoughtful dialogue of European and international issues. You are invited to post comments and your own articles.
Please REGISTER to post.
So while they are both price takers, hydro can choose when and where it takes the going price. Indeed, in a pure market setting, it ought to take the prospective future prices that it may be able to take into account when it decides whether to generate and if so how much to generate.
In an small country open economy context, where there is a broad export market that can take up surplus production, that means that on the same gross annual energy production, this ability to cherry pick strong price periods means that hydro is financially viable at a higher average price than wind is financially viable, and so that despite its high fixed cost component, it can survive on a higher cost basis than a volatile power source such as wind can.
The same logic applies, of course, its just that hte ability to cherry pick the prices to take means that the logic applies at a larger hydro capacity, and in many instances a country will run out of high quality dammed hydro sites to exploit before they run out of ability of the power grid to absorb hydro capacity without prices dropping below the rates that will refund the capital cost.
Note that run-of-river hydro, unlike conventional dammed hydro, is a volatile rather than dispatchable power source, so it is in general in the exact same boat as wind. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
"this ability to cherry pick strong price periods means that hydro is financially viable at a higher average price than wind is financially viable, and so that despite its high fixed cost component, it can survive on a higher cost basis than a volatile power source such as wind can."
... this ability to cherry pick strong price periods means that hydro is financially viable at a higher average cost than wind is financially viable, and so that despite its high fixed cost component, it can survive on a higher cost basis than a volatile power source such as wind can. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by gmoke - Nov 28
by gmoke - Nov 12 7 comments
by Oui - Dec 18 comments
by Oui - Dec 1
by gmoke - Nov 302 comments
by Oui - Nov 3012 comments
by Oui - Nov 2837 comments
by Oui - Nov 278 comments
by Oui - Nov 2511 comments
by Oui - Nov 24
by Oui - Nov 221 comment
by Oui - Nov 22
by Oui - Nov 2119 comments
by Oui - Nov 1615 comments
by Oui - Nov 154 comments
by Oui - Nov 1319 comments
by Oui - Nov 1224 comments
by gmoke - Nov 127 comments
by Oui - Nov 1114 comments
by Oui - Nov 10
by Oui - Nov 928 comments