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The future of energy generation and storage

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rederob said:
Not quite sure what "issue" you are referring to here.
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It all comes down to various ideologies attempting to overrule what would naturally occur.

Ownership was a debate in the past but that one's largely settled and rarely mentioned these days. The listed, private and government companies have in most cases ended up heavily involved with each other anyway.

Free market economics versus engineering and planning has been quite a battle and through to the end of 2015 it was undeniable that the economists held sway. The various incidents plus the reality that multiple industry participants, both privately owned and government, have been burned financially out of it all means that nobody's really arguing on that one. Engineering and technical stuff is back in vogue.

On the question of renewables there wouldn't be too many who aren't expecting that in practice we'll have somewhere between 60% and 90% renewables in the grid in 2050. Hence why there's an abundance of private sector interest in building wind, solar and gas which fits with that.

What is highly contentious is government interference trying to produce some other outcome that doesn't really make sense.

In that context I mean government as in politicians not the government owned companies who are ultimately just another participant in the market. Snowy or Hydro Tas building pumped storage and transmission isn't a huge problem for the private companies with the exception of those whose plans are entirely based around gas. For everyone else it changes their business but doesn't kill their business - just means they need to shift more toward energy and less toward capacity than they otherwise would.

What is a very real threat is governments constantly changing the rules.

When it comes to rules, it's not so important what they are but that they don't keep changing. If someone's making an investment that takes a decade to come to fruition and then operates for 25 - 50 years then the last thing they need is governments changing the rules.

So there's a very real need for policy certainty over things like gas exploration, end user policies, CO2 and so on to be settled in a manner that brings certainty. Until that happens nobody's going to invest in things beyond that which they're confident will be worthwhile regardless of the policy settings and that's nowhere near enough.

The industry can't really tell government to go away though and the combination of political needs and business necessity of various companies does demand solutions on the price issues faster than anything's going to be built physically so it's hard to see government not being involved there one way or another.

Note: To correct one of my previous comments there are actually 5 separate LNG import terminals now proposed. I overlooked the second one in NSW. So all up that's two each for NSW and Vic plus one for SA.

I haven't considered the implications but for investors in gas pipeline companies this is something to be mindful of since it potentially changes flows quite dramatically.

As an example of the issues with government, obviously the LNG import proponents would like to see the issues surrounding gas exploration and production in Vic and NSW firmly settled before they build their rather expensive facilities.
 
Smurf1976 said:
It all comes down to various ideologies attempting to overrule what would naturally occur.
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It's a regulated market, so ideologies are subservient to agreed principles.
Necessary decisions are not being made, so what are these "attempts"?
Smurf1976 said:
What is highly contentious is government interference trying to produce some other outcome that doesn't really make sense.
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I can see indecisiveness more than anything else, so what is this interference?
Smurf1976 said:
Snowy or Hydro Tas building pumped storage and transmission isn't a huge problem for the private companies with the exception of those whose plans are entirely based around gas.
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So you don't think a Snowy2.0 generating 2MW isn't going to have a massive displacement effect once in operation?
Smurf1976 said:
What is a very real threat is governments constantly changing the rules.
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When was government last responsible for a significant rule change? Or do you mean a government policy decision that requires rule changes?

Lots of mentions of politics throughout your post, but no clarification of exactly what it is that they are doing to affect the market. Are you able to drill into something specific?
 
rederob said:
I can see indecisiveness more than anything else, so what is this interference?
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Interference occurred by the Howard/ Costello government when they insisted that States adopt "asset recycling" under which they were forced to sell existing assets before they got money to buy new ones.

That policy disrupted the competition between States to reduce power prices in order to attract businesses and industries to the States, prompted a selloff of national assets and resulted in the mess we are now in.
 
Dragging up the past is relevant in what way?
I thought we were talking about the present situation.

Detailed posts about present capacity and utilisation are handy to know. But isn't it more important to try and distill the politics if there are constant references to it, but without saying exactly what the politicians are or are not doing?
 
SirRumpole said:
Lessons may be learned.
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The structure of the market is completely different.
The processes for changing the market are significantly different.

Given the event you referred to is old, what do you think we could apply if anything was learned?
 
rederob said:
Given the event you referred to is old, what do you think we could apply if anything was learned?
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Don't sell essential services off to private enterprise.

There is a place for government in the power industry just as there is in the health industry and education services.

The existence of government competition in all those areas moderate the private sector and prevent runaway prices for those services.
 
That's not of any relevance to the present situation.
Moreover, the Snowy2.0 construction decision was the result of the government buying back all the shares of an entity so that it could push ahead with the project before showing it had a viable case.
So that's how clever government ownership can be!
 
A lot of recent comment here can be addressed by looking at current developments in Victoria and the actual situation today. I'll also comment on SA and other states to the extent they are relevant to Vic.

Firstly a look at large scale wind and solar generation, so that's not including rooftop solar, using AEMO data current as at 21 January 2019. Note these figures are for Victoria only and that forecasts are based only on committed projects which have land, funding etc in place (so not including anything that's simply a proposal).

Installed capacity of wind generation Summer 2018-19 = 1111.5 MW
Installed capacity of wind generation Summer 2019-20 = 2559.4 MW
Installed capacity of wind generation Summer 2020-21= 3085 MW

So we have a very rapid growth of wind generation in Victoria, almost tripling over about 2 years with most of that increase occurring this year indeed some of it already has to around 1500 MW.

Now for SA:

Summer 2018-19 = 1280.3 MW
Summer 2019-20 onward = 1525.7 MW

So combining the two we have:

2018-19 = 2391.8 MW
2019-20 = 4085.1 MW
2020-21 = 4610 MW

Now what about solar? How much is added to rooftops is a guess at best but we're talking about hundreds of MW over the next couple of years in Vic alone almost certainly. For large scale solar generation:

Victoria 2018-19 = 315.8 MW
Victoria 2019-20 = 724 MW

SA 2018-19 = 110 MW actually running
SA 2019-20 = 315 MW

Now if we combine large scale wind and solar for both states, which is appropriate given the relatively high capacity interconnection between the two and critically the very high weather correlation between both wind and solar in the two states:

2018-19 = 2817.6 MW wind and solar across both states
2019-20 = 5124.1 MW
2020-21 = 5649 MW

So almost exactly a 100% increase in two years. That's strong growth by any definition.

Now let's look at today and see how things went noting that it was rather windy although not consistently sunny (so a "mixed" day really - combined wind + solar could have been higher but it could also have been lower).

At 13:00 AEST (so that's Vic time):

Victoria wind generation = 1510 MW so basically flat out
Victoria large scale solar generation = 124 MW so just puttering along

SA wind generation = 1213 MW so close to full capacity
SA large scale solar generation = 153 MW so close to full capacity

OK, lots of numbers here Smurf and what on earth is the point of them all other than to tell me that it was windy today?

Spot price in Vic = $9.10
Spot price in SA = $7.93

So trading at more than a 90% discount to average spot prices in both states. Couldn't sent any more to NSW and Tas hence the focus on Vic and SA as effectively the one place that was jointly in the same situation.

Unfortunately it gets worse once we look at thermal and current hydro generation:

Vic hydro generation all off. During Summer there's commonly a "must run" situation in order to release water for irrigation and that can lead to around 250 MW of forced generation from Eildon (100 MW) and Dartmouth (150MW) but no such issue at present due to the seasons. Both of those stations are operated by AGL by the way.

Vic coal plant was running at 3463 MW or about 1350 MW above absolute minimum turndown for plant online at the time (that being all four units at Loy Yang A (AGL), three units at Yallourn (Energy Australia), one at Loy Yang B (Alinta)). Can't go below about 2100 MW from that lot without getting into nasty consequences both economic and environmental.

SA gas-fired plant online was one gas turbine and the steam turbine at Pelican Point (Engie / Origin Energy) plus two units at Torrens Island B (AGL), all of which was sitting on minimum output (and losing money) at a total of 255 MW. Can't turn those off due to the need to have synchronous plant online for system strength, indeed the limits there are already being pushed (couldn't really allow any more wind in SA without also putting more synchronous plant online).

So overall we had a day that was windy in both Vic and SA, wasn't particularly sunny in the places most people live but had some decent sun on the big solar farms. It was a working weekday but a Friday after a public holiday so let's say it was sort-of a working day (almost certainly there would be more people than average on leave at the moment but most businesses are open as such). Or in other words, you could say it was somewhere in the middle.

Against that backdrop there was about 1350 MW of room left to move technically and prices were below $10 in both states.

Now we're about to add another ~2800 MW of wind and large scale solar across the two states in the next two years with ~2300 MW of that being done this calendar year.

Plus there's new rooftop solar systems going up in both states literally every business day unless the weather's bad enough to stop work. That's not included in the figures I've shown.

Investors in all this are in for some rude shocks if they weren't expecting to find prices going negative and their nice new wind or solar farms in practice shut down on days when there's lots of wind. Technically no problem but I doubt that too many will have based their business case around that idea.

So why not do what seems obvious then? Shut down some of those coal-fired generators either altogether or at least temporarily if too much power's a problem. Makes sense surely?

First reason not to do that is system strength although I won't get into detail due to not having any firm figures for what the limits there would be for Victoria. For SA though the limit was the actual output from gas-fired generation at midday today.

Second is to see what happened to all that wind and solar later today.

SA + Vic combined wind and solar at 13:00 AEST = 3000 MW from large scale plant as above plus an estimated 305 MW from small solar (houses etc) in SA and 676 MW from small solar in Vic. So 3981 MW all up.

Now if we take a look 6 hours later at 19:00 we find 748 MW of wind in SA, 798 MW of wind in Vic and no solar in either so 1546 MW across both states.

The response to that?

All operating coal plant in Vic running at maximum available capacity.

Newport D (Energy Australia, gas), one unit at Mortlake (Origin, gas) and various hydro plants (AGL, Snowy Hydro) started up in Vic. What was export from Vic to NSW and Tas at maximum capacity is now import from both of those states.

Both units at Ladbroke Grove (Origin, gas), one unit at Quarantine (Origin, gas), the second unit at Pelican Point (Engie / Origin, gas) and one unit at Torrens Island A (AGL, gas) all brought online plus the first unit at Pelican Point and two operating units at Torrens Island B all ramped up to higher output in SA.

Price at this time?

$88.98 in SA and $92.07 in Victoria so a bit over 10 times the price during the middle of the same day just six hours earlier.

Now none of this should be taken as meaning I'm opposed to renewables. If that was the case then I wouldn't have a rather expensive battery on the wall at home and some similarly expensive panels on the roof.

I am however well aware of the technical issues and that getting from the present 48% (SA) and 19% (Vic) share of renewable electricity involves a lot more than simply building wind and solar farms indeed they're the easy bits.

Wind and solar are great sources of electrical energy but they are not a reliable source of electricity generating capacity and those are two very different things. Those basing decisions on simply adding up gross annual outputs are in for a shock that's for sure when they realise that approach relies upon the notion that a lot of other things are in place which aren't in practice.

At a financial level well a few wind and solar (but mostly wind) developers have had their hands bitten recently with all of this. Standby for some outright screams to come forth from a few more over the next year as the reality sinks in as to where it's all at.

Charts are zero scaled so no trickery.




 
rederob said:
I can see indecisiveness more than anything else, so what is this interference?
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There's an order of magnitude difference in the time scales of politics, finance and engineering in all this.

If the board of xyz signs off on whatever new development then most likely it'll survive 20 or so federal parliament terms, and several different governments, over its lifetime. In that context the idea that we've got one party waving lumps of coal around in parliament whilst threatening to break up listed companies, another wanting to go in the exact opposite direction and another one who seems to have a foot in each camp is just far too risky against all that.

If rules need to change due to scientific discovery then fair enough but to be basing decisions about assets with multi-decade lifespans on pure politics and 3 year election cycles is just crazy.

So you don't think a Snowy2.0 generating 2MW isn't going to have a massive displacement effect once in operation?
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It would have a massive effect certainly but I don't see that as a huge problem.

First because "free market" is a means to an end and is not rationally an end in itself.

Second because the free market isn't really that free anyway given that everyone of any significance is certain to win a prize of some sort.

Third because the affect compared to doing nothing is to tilt the market in favour of building intermittent renewables which whilst imperfect is not a bad outcome given the CO2 issue.

Fourth because if you look at Origin (for example) well a third of "their" generation is simply contracted from others anyway. I don't know the exact details of Origin's arrangements but you'll find the government owned entities on the other end of deals with most of the "private" generators and that's no secret.

That they do so comes down to two things really. One is risk management on everyone's part. The other is the listed companies generally aren't keen on owning things which produce highly intermittent cash flow. If they can get out of that they will, someone would need to point the proverbial gun to make them do it, but the same business model isn't such a problem for a government entity which can simply take a rolling 5 or 10 year average of the profits and has no share price to worry about.

An example is gas.

In Victoria it's almost impossible to build a new house in an area where natural gas is available without connecting it. The rules state thou shalt not use grid-supplied electricity for heating water, including as the booster for a solar system or to run a heat pump, and whilst that doesn't stipulate gas it pretty much does in practice.

(Note that I've been told there's a workaround which involves paying quite a bit of money for someone to deem that an alternative is acceptable off but I'm also told that less than 1% of people do so, so it's gas or nothing in practice).

Now despite this government enthusiasm for gas there are also a lot of restrictions, and some outright bans, on drilling for the stuff. That's a problem given that the currently producing Gippsland, Otway and Bass Basin fields are all heavily depleted with production set to fall off the proverbial cliff around 2024 or 5 years from now. Given the lead time for anything new is several years in practice that's an extremely urgent situation.

So there are proposals from AGL and BHP / Esso Joint Venture to develop separate LNG import terminals as a means of continuing gas supply in Victoria. These are separate to the proposals of other companies to build such terminals in NSW and SA.

The problem though is that the Victorian government keeps dropping hints that maybe they might someday say gas drilling is OK.

Needless to say if AGL or BHP / Esso are going to each spend $ hundreds of millions of shareholders funds on a gas import facility as well as contracting ships and a supply of LNG then they're going to be downright furious if government changes the rules after they've done so, thus allowing someone else to drill for gas and easily undercut the LNG imports thus making the terminals pointless.

The argument there isn't about saying AGL or BHP / Esso should be protected, just that government should make its mind up. Whatever the rules are, make a decision based on firm reasoning and stick to it unless there's a genuine scientific reason to change it (not just politics). Same problem as the feds and climate change - make a decision and stop waving lumps of coal around etc.

For reference SA has a milder version of the same policy. Don't have to use gas but there's a few obstacles placed in the way of not doing so and there's a few obstacles in the way of drilling for it. It's of less consequence than in Vic but it's still the sort of policy that investors lack confidence in not being changed the day after they've committed serious $ to something.

I could condense all this as:

*Either we have a free market or we don't.

*If we're having a free market then government needs to get right out of the way at the political level. That doesn't outright preclude government owning assets in the market but there should be no political involvement in their operation as a business.

*If we're not having a free market then it's time to stop pretending we are and get on with a different way forward be that a regulated market, dividing it up with lines drawn on a map, nationalisation or whatever.

My own main concerns, and I could be fairly accused of not having stated this previously so that would be a fair point hence I'll say it now:

*At the technical level the electricity system has fallen into a rather poor state particularly in Victoria but it's not great in NSW or SA either.

*Vulnerability to a major plant failure is high and given the age of much plant in service, the probability of it occurring is also higher than it ought to be.

*Time is rapidly running out to build firm dispatchable generation to replace end of life plant and that is true regardless of the CO2 issue (eg new coal isn't an easy option either due to the time it takes).

*That is not to dismiss the CO2 issue which, whilst I claim no expertise on the subject, does appear to be requiring a prompt and effective solution.

*Price is a problem in terms of being internationally competitive. A very big problem given quite a few major contracts come up for renewal over the next 3 or so years.

*Gas supply in the same states is heading the same way. This precludes "quick fix" options of building gas turbines unless we also obtain gas to run them.

*That hydro storages have been heavily drawn down particularly in NSW precludes any further major draw down in an emergency due to failure of something else (gas or coal). That does not affect peak power generation but it does remove an option for dealing with fuel shortages, infrastructure failure and so on. Such operation is not unprecedented so not having that ability is a further weakness at the preset time.

*One other issue I can't and won't mention but it's a plant failure risk. No comment as to where or who owns it beyond saying that all my comments here relate to NSW, ACT, Vic, SA as a combined place.

*I also consider that the whole issue has chewed up far too much time and effort. At the political level it wouldn't be untrue to say that we've now had a number of Prime Ministers come to an end for reasons at least partly related to the question of how to keep the lights on. A concept that would have seemed quite bizarre had it been suggested a decade or so ago that this would ultimately occur.

At the corporate level there's no shortage of companies for whom energy is their third largest (typically) cost which have expended great effort at the management level pondering what to do about the whole situation. Effort that could otherwise be expended running and growing the business.

That there's any point in me posting this here is further evidence that the issue has become more dominant than it ought to be. The NEM wasn't intended to be the ~$2 billion a month market it has ended up being.
 
First, I appreciate the huge effort you put in to your posts above.
But you know I remain picky:
Smurf1976 said:
There's an order of magnitude difference in the time scales of politics, finance and engineering in all this
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This was not addressing your point about "political interference" but, instead, proved my point point about not doing anything - except perhaps grandstanding.
Smurf1976 said:
It would have a massive effect certainly but I don't see that as a huge problem.
First because "free market" is a means to an end and is not rationally an end in itself.
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I agree with much of your commentary.
The problems of displacement relate to demand shifts, therefore pricing (a skewing of the present to a 2GW paradigm when Snowy2.0 operates for the limited time it would,- daily), and countering shutdowns, therefore prices (ie. the mechanisms available to recover lost income over the longer term). I do not see Snowy2.0 as a means to lower consumer prices overall, if at all.

I did like this:
It plays entirely into the hands of poor policy direction.
On one hand we put in place a NEM to lower prices by improving market efficiency and having the whole industry play by largely one rule book. And now we have the backhand, where governments bankroll an expensive project because they failed to put in place the policies needed to do what they set out to do.
Smurf1976 said:
An example is gas.
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I thought we were discussing the NEM?
Smurf1976 said:
I could condense all this as:
*Either we have a free market or we don't.
Click to expand...
Your points are excellent - and you are right - we do not have one.

My observations:
Firming is only an issue because of poor policy, combined with failure to prepare for a renewable world. At a policy level we should not be approving renewables capacity unless it can guarantee a stabilised supply for a specified minimum period say, 4 hours. This is not difficult with scalable modular storage.
Europe has integrated renewables across national borders, so the intermittency and technical issues are only insurmountable to the point that we in Australia have failed to look for extant solutions.
The price discount on renewables in the present market is due to a failure to put a price on carbon. As a result, we have a situation where consumers are continuing to prop up are prices for FF energy while the inevitable transition to renewables remains in a policy void.
 
rederob said:
Firming is only an issue because of poor policy, combined with failure to prepare for a renewable world.
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Just to put some flesh on my comment, here's where America is presently at.
Funnily enough US States run pretty much their own race on energy policy, albeit within the FERC framework. That has seen 6 US States legislate 100% renewables by either 2045 or 2050.
Meanwhile Europe continues massive solar investment through to at least 2024. Equally remarkable is that if we transfer the $/Wdc metric to Australia we get an equal grid scale capacity to Snowy2.0 installed for under AUD$3b (admittedly without battery backup).
Except we do not need a 2GW displacement of daily demand some time around 2025 when it will be too late anyways, because incremental capacity with storage is going to be so much cheaper to build in the interim.
Snowy2.0 is the sledgehammer solution to a problem best solved by lots of people with staplers. It's like driving a huge spike into the system when the framework solution is met by neatly pinning the energy fabric across a larger body.
 
Europe runs a lot of hydro I thought, NZ was high for renewables and lots of hydro (80% ?).
Is there anywhere running a similar model to what you are suggesting?
I'm not up to speed on who is doing what atm.
 
moXJO said:
Europe runs a lot of hydro I thought, NZ was high for renewables and lots of hydro (80% ?).
Is there anywhere running a similar model to what you are suggesting?
I'm not up to speed on who is doing what atm.
Click to expand...
Germany is getting there.
 
rederob said:
I thought we were discussing the NEM?
Click to expand...
Basically yes but gas has very similar problems in terms of the investment climate etc and is intertwined with electricity due to multiple factors:

1. Gas is the second largest source of electricity in Australia and is a major source in SA, WA, NT plus the Mt Isa separate system in Qld. Elsewhere it's significant but not major.

2. Broadly similar regulatory, political etc background and mostly the same companies involved. There are some differences, eg BHP / Esso or Santos produce gas but aren't overly involved in electricity, but AGL, Origin, Energy Australia, Alinta, Engie etc all have a major presence when it comes to the gas industry at the retail end (and in some cases production) and for that matter Snowy Hydro and Hydro Tas do have various contracts and so on in place regarding gas too.

3. To the extent that homes and businesses use gas directly, virtually all of that is in place of using some other fuel or, in the case of industry, relocation to some other place where gas is available.

In the context of residential, gas is extremely dominant in Victoria for example whereas the opposite is true in Tasmania. 83% of Victorian homes, 93% of those in Melbourne, are connected to gas whereas only 4% in Tasmania are connected to mains gas.

The largest residential energy use in both states is space heating. 67% of Tasmanian homes are heated with electricity and 27% with firewood, the remaining 6% being split between mains natural gas, LPG, wood pellets and liquid fuels. In contrast in Victoria the figure is 68% using natural gas and 19% using electricity with most of the rest using firewood and the remainder using LPG or other means.

Same for the other big household energy use where fuel substitution is possible, water heating. Gas has just under 70% market share in Victoria whereas in Tasmania electric systems have an 88% market share. Both of those figures exclude boosting of solar, noting that this is almost always electric in Tasmania whereas solar boost is commonly gas in Victoria - add that in and the true market share of gas in Victoria and electricity in Tasmania is even higher.

The point being that the different fuels ultimately do compete, even if consumers don't consider that to be so on a day to day basis. Every house with gas hot water is a house that doesn't use electricity to heat water. Or someone in the gas industry would probably see that as every house with electric hot water is a house that's not using gas to heat water. Same thing, different perspective.

That becomes particularly significant when it's realised that the volume of energy sold to end users in the form of natural gas in Victoria substantially exceeds the volume of energy supplied in the form of electricity. In contrast, no prizes for guessing that in Tasmania electricity is a very much larger industry than gas.

So if there were to be an significant change in the % of households using natural gas (or any other non-electrical energy source eg wood or LPG) for heating and/or hot water then to considerable extent that change will bring about an increase or decrease in electricity consumption. It would take time, but it would happen.

So gas and electricity are different things but my argument is that they're intertwined in much the same way as public transport and cars are intertwined in a city. For every 10 people who catch a train it's a fair assumption that at least 9 would be using traveling in some some sort of road vehicle (car, bus) if there were no trains. Same logic as gas versus electricity basically.
 
Smurf1976 said:
Basically yes but gas has very similar problems in terms of the investment climate etc and is intertwined with electricity due to multiple factors:
Click to expand...
But we were talking about your response to this question: "When was government last responsible for a significant rule change? Or do you mean a government policy decision that requires rule changes?"
You explained the operational aspects which are affected. However, the "rules" pertaining to gas under our national energy policy are different.
In July 2017 the Australian Domestic Gas Security Mechanism commenced as a temporary measure to ensure that the domestic market did not experience gas shortages due to export commitments.
The mechanism supports what we have in place already rather than what might be proposed in future. What it does not do is foster the gas industry as a beneficiary of energy generation reform over the burning of coal. Nor does it lower prices of generation. Some relief came last year through a new Heads of Agreement, but that's just another stopgap as a result of an inept government when it comes to energy policy.
The takeaway, however, is that Australia dropped the ball on the use of gas for electricity generation because of abundant coal supplies. And to transition from coal to gas is not supported by the NEM as a result of policy retardation.
 
The opportunities of using pumped hydro to store renewable energy and replace gas powered power stations are already being planned.

AGL plans 250MW pumped hydro plant in South Australia as replacement for gas
Giles Parkinson 16 April 2019 0 Comments
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AGL Energy, the owner of the biggest gas generation fleet in South Australia, has announced plans to build a massive 250MW/2000MWh pumped hydro energy storage project in an old copper mine about 55km south-east of Adelaide.

The company said on Tuesday that it has agreed to pay $31 million for the rights to develop the pumped hydro project at the old Kanmantoo mine from Hillgrove Resources, using the existing open mine pit, with a new upper pond to be built on nearby land.
https://reneweconomy.com.au/agl-pla...south-australia-as-replacement-for-gas-17008/
 
This chart shows volume (main chart) for large scale solar generation (only) in SA for the past week. So that's the output of big solar farms and nothing else.

I draw your attention to the past two days in particular.




The reason for the reduced production wasn't lack of sun but rather, lack of transmission capacity out of the state combined with high wind generation and modest consumer demand for electricity at the time. That sent spot prices below zero and forced a reduction in output from some sources including large scale solar.

Focusing purely on the investment aspects, well it sure doesn't help the economics of a facility if you have to cut production thus wasting the completely free sunlight whilst you've still got all your expenses to pay in full.

Hedging arrangements might cover the owners on a day to day basis, but ultimately any such arrangement will just be a reflection of average market conditions tilted slightly in favour of whoever's taking the risk.

This is not the only situation of this nature, it's just one that has actually occurred in a very obvious manner recently so is a good example, but it's something to be aware of in evaluating any company investing in this field. It's all well and good to generate electricity, but you also need to be able to get it to consumers and the existing grid does not have unlimited capacity as a few wind and solar developers seem to be learning the hard way.

My point here being an investment one not an argument against solar energy. For any wind or solar developer, location is critical not just in terms of sunlight or wind but also wherever they're connecting to the transmission network.
 
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