Solar focuses on nuts and bolts to cut costs

By Reuters


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Even as solar companies cook up high tech ways to cut costs, the next push to make the renewable energy source more economical could come from workers who bolt panels onto rooftops and mount them across empty fields.

So far, panels — a system's most expensive piece — account for the biggest drop in the total cost, falling more than 50 percent from about $4.20 a watt in 2008.

Most U.S. and European makers are now selling panels near $2 per watt, while some low-cost Chinese players sell panels at about $1.85, said J.P. Morgan research analyst Christopher Blansett, while thin film maker First Solar Inc is the cost leader at about $1.50 or $1.55 per watt.

That decline has put a spotlight on installation, which now makes up a greater share of the total cost, and has prompted installers, developers and even panel makers to look for low-tech tricks, like quick fasteners and predrilled holes.

"There's no rocket science. It's literally doing things better and more efficiently," Blansett said.

After the shiny blue and black solar panels leave the factory, technicians have to bolt the panels into steel or aluminum frames, mount them to rooftops or across fields, connect them to inverters and string the wiring to feed electricity to homes, businesses or a power grid.

The big challenge for installers is that "there is no single item that moves the needle," said Lyndon Rive, chief executive at SolarCity. The privately held company designs, installs and finances systems for homes and businesses in California, Arizona and Oregon.

"It's doing one thousand little things better," Rive said, such as managing inventory so crews don't make extra trips to a hardware store.

The U.S. solar market is on track to grow 35 to 45 percent in 2009 and reach about 460 to 500 megawatts, said Alfonso Velosa, a research director at Gartner.

Residential systems are expected to remain about a third of the total U.S. market this year, Velosa added.

While companies like SunPower Corp and Suntech Power Holdings Co Ltd are working on cutting-edge technology to make more efficient solar cells, Velosa said they are "starting to hit the limits of what the materials can do."

The solar sector leans on government incentives to compete with traditional power sources, but industry experts believe it will be economically viable in the near future.

Toward that goal, installation costs could drop 5 to 15 percent next year, executives from Suntech, Solon and other companies said at the Solar Power International conference in Anaheim, California.

Akeena Solar Inc sees even more promise, with its roadmap to cut installation costs by more than half in 2010.

Akeena's new Andalay branded panels have built-in micro-inverters to convert the direct current electricity produced by solar panels into alternating current rather than requiring a separate unit, as most systems do.

Heavyweight panel makers have also gone back to the drawing board to design products so more work that used to happen at the construction site is done in the factory.

Solon and Suntech both recently launched new systems for the U.S. utility market that the companies say shave time and money off the installation costs.

U.S. based SunPower Corp and Energy Conversion Devices have also introduced new products to make rooftop work easier.

"If you have to have to weld something or construct something (in the field), it's quite expensive," said Olaf Koester, chief executive at Solon's U.S. unit.

Koester cited Solon's new Velocity system, which uses built-in rails instead of a frame, as an example of a design that streamlines the installation work.

Companies that install solar systems are also moving to more standard systems instead of customizing each site, which takes time and money and can create new problems every time.

"We almost used to pride ourselves on all the custom work we did. But it's too expensive. We need to be able to compete with the retail price of electricity," said Mike Hall, chief executive at privately held Borrego Solar Systems Inc.

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Portland General Electric Program Will Transform Hundreds of Homes Into a Virtual Power Plant

PGE Residential Energy Storage Pilot aggregates 525 home batteries into a virtual power plant, enabling distributed energy resources, smart grid control, renewable energy optimization, demand response, and backup power across Portland General Electric's area.

 

Key Points

A PGE program aggregating 525 batteries into a utility-run virtual power plant for renewables support and backup power.

✅ Up to 4 MW aggregated capacity from 525 residential batteries

✅ Monthly credits: $40 ($20 with solar) for grid services

✅ Enhances smart grid, DERs, resilience, and outage backup

 

Portland General Electric Company is set to launch a pilot program that will incentivize installation and connection of 525 residential energy storage batteries that PGE will dispatch, contributing up to four megawatts of energy to PGE's grid. The distributed assets will create a virtual power plant made up of small units that can be operated individually or combined to serve the grid, adding flexibility that supports PGE's transition to a clean energy future. When the program launches this fall, incentives will be available to residential customers across PGE's service area. Rebates will be available to customers within three neighborhoods participating in PGE's Smart Grid Test Bed, and income-qualified customers participating in Energy Trust of Oregon's Solar Within Reach offer.

PGE will study the full benefits of energy storage that these distributed energy assets can provide the grid while also increasing resiliency for each participating customer. PGE will operate and test the benefits of using homes' batteries, each capable of storing 12 to 16 kWh of energy, to optimize the use of renewable energy and grid capabilities. In the event of a power outage, participating customers can rely on them as a backup power resource.

"Our vision for clean energy relies on a smart, integrated grid. One of the ways that we'll achieve that is through creative partnerships and diversified energy resources, including those behind-the-meter," said Larry Bekkedahl, vice president of Grid Architecture, Integration and Systems Operation. "This pilot project will allow PGE to integrate even more intermittent renewable energy and enhance grid capabilities while also giving participating customers peace of mind in the event of an outage."

Energy storage maximizes renewables and the grid, improves power quality

Energy storage, including long-duration energy storage solutions, is vital to help capture and store energy from renewable power sources, such as wind and solar, that are more variable. As a virtual power plant, the residential battery storage pilot will create a single resource that can help the grid balance energy production with energy demand, freeing up the generation resources that are typically held on standby, ready to kick in when the wind doesn't blow or the sun doesn't shine. As a clean energy option that takes the place of standby resources, the virtual power plant also gives customers access to reliable energy, even in the event of system outages.

The test program will also allow PGE to test new smart-grid control devices across its distribution system that will more effectively allow a two-way exchange between PGE and pilot participants. The new controls will more actively manage the way that electricity is distributed across PGE's system to incorporate energy that customers generate, such as through solar panels, while also meeting power demand that is less predictable, such as for charging electric vehicles, supporting EVs for grid stability strategies. The controls will allow PGE to more actively manage power distribution to improve power quality for all customers.

Select rebates and incentives will be available to participants, aligned with electric vehicle programs that encourage transportation electrification

When it launches in fall 2020, participation in the program will be available to residential customers, including:

* Those across PGE's service area who already have or are installing a qualifying battery. Participation will require an application, and in exchange for allowing PGE to operate their battery for grid services, similar to programs where EV owners selling power back for compensation, participating customers will receive a monthly bill credit of $40, or $20 if the battery is charged with solar power.

* Customers across PGE's service area who are participating in the Solar Within Reach offering from Energy Trust of Oregon. Participants will be eligible for a $5,000 instant rebate in addition to the monthly bill credits.

* Those living within the PGE Smart Grid Test Bed who purchase a battery will be eligible for an instant rebate, in addition to the monthly bill credit of $40 or $20, which will allow PGE to test the localized grid impact of having a large concentration of battery storage devices available on one substation and explore interfaces with vehicle-to-grid pilots in the region.

PGE is working with Energy Trust to cost-effectively procure the residential battery storage systems, as utilities invest in advanced storage solutions across the region, by leveraging the existing Solar incentive program infrastructure and trade ally contractor network. Customers who participate in the program will own their battery systems, and rebates will only be available for systems installed by an Energy Trust solar trade ally. The program may also accept customers with a qualifying battery that is was previously installed, following a process to ensure safe operation.

More information about Portland General Electric's energy storage program is available at PortlandGeneral.com/energystorage and will be updated with details about the residential battery storage pilot program.

 

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Affordable, safe' nuclear power is key to reaching Canada's climate goals: federal minister

Canada Nuclear Power Expansion highlights SMRs, clean energy, net-zero targets, and robust regulation to deliver safe, reliable baseload electricity, spur investment, and economically decarbonize remote communities, mines, and grids across provinces securely.

 

Key Points

Canada Nuclear Power Expansion grows SMRs and reactors to meet climate targets with safe, reliable baseload power.

✅ Deploys SMRs for remote communities, mines, and industrial sites

✅ Streamlines regulation to ensure safety, trust, and timely approvals

✅ Provides clean, reliable baseload to hit net-zero electricity goals

 

Canada must expand its nuclear power capacity if it is to reach its climate targets, according to Canadian Minister of Natural Resources Seamus Oregan.

Speaking to the Canadian Nuclear Association’s annual conference, Seamus O’Regan said the industry has to grow.

“As the world tackles a changing climate, nuclear power is poised to provide the next wave of clean, affordable, safe and reliable power,” he told a packed room.

The Ottawa conference was the largest the industry has run with dozens of companies and more than 900 people in attendance. Provincial cabinet ministers from Saskatchewan and Ontario were also there. Those two provinces, along with New Brunswick, signed a memorandum in December as part of a premiers' nuclear initiative to work together on small modular reactor technology.

People need to know that it’s safe

Small modular reactors are units that produce less power than large generating stations, but can be constructed easier and are expected to be safer to operate. Canadian firms have about a dozen of the proposed reactors working their way through the regulatory process, with New Brunswick's SMR plans drawing scrutiny.

The smaller reactors could be used in groups to replace large units, but the industry also hopes to use them in rural or isolated communities, mines or even oilsands projects, potentially replacing the diesel power generators some remote communities use.

The Canadian government issued a road map to support the industry in 2018 and O’Regan committed Thursday to putting some teeth on that proposal later this year, as provinces like Ontario explore new large-scale nuclear plants to meet demand, with specific steps the government will take.

“We have been working so hard to support this industry. We are placing nuclear energy front and centre, something that has never been done before.”

O’Regan said the government’s role is a clear, streamlined regulatory system that will promote the industry, but also help the Canadian public to trust the reactors will be safe.

“People need to know that it’s safe. They need to know that it’s regulated. They need to know that it’s safe for them,” he said.

The Liberals promised during the campaign that they would gradually reduce Canada’s carbon emissions even after hitting the targets in the Paris Agreement by 2030. By 2050, Prime Minister Justin Trudeau said he expects Canada to be carbon neutral, mindful of lessons from Europe's power crisis on reliability.

The government hasn’t outlined how it will achieve that goal. O’Regan said more detail is coming, but it’s clear that nuclear is going to have to play a major part, echoing the UK’s green industrial revolution approach to reactor deployment.

“I have not seen a credible plan for net zero without nuclear as part of the mix. I don’t think we are going to be relying on any one technology. I think it’s going to be a whole host of things.”

O’Regan said large investors are looking for countries that are on the path to net zero.

“Everybody has their shirt sleeves rolled up and we know we need to work on this, not only do we have to work on this for the urgency of the planet, but we have to work on it for Canadian jobs.”

He added, “We must focus on those areas where Canada can and should lead, like nuclear.”

Canadians are ready to take a fresh look at nuclear

John Gorman, president of the Canadian Nuclear Association, said he was thrilled with O’Regan’s comments.

“I took the minister’s remarks this morning as being perhaps the strongest language of support for the nuclear industry in a number of years.”

Gorman said the industry is in strong shape and is working with utility companies such as Ontario Power Generation and regulators to move projects forward.

“It’s this amazing collaboration and coordination that is enabling us to beat others to the roll out of these small modular reactors,” he said.

He said provinces that might not have looked at nuclear before now have an incentive to do it, because of climate change. A former solar industry executive, Gorman said solar and wind power are important, as Ontario plans to seek new wind and solar power to ease supply pressures, but they won’t be able to keep up with rising power demands.

“Globally we are seeing increased recognition that climate change is real and that it’s a crisis, we are also seeing recognition that we are not making as much progress on decarbonizing our electricity system as we thought,” he said. “Canadians are ready to take a fresh look at nuclear and see the real facts.”

 

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Canada's Electricity Exports at Risk Amid Growing U.S.-Canada Trade Tensions

US-Canada Electricity Tariff Dispute intensifies as proposed tariffs spur Canadian threats to restrict hydroelectric exports, risking cross-border energy supply, grid reliability, higher electricity prices, and clean energy goals in the Northeast and Midwest.

 

Key Points

Trade clash over tariffs and hydroelectric exports that threatens power supply, prices, and grid reliability.

✅ Potential export curbs on Canadian hydro to US markets

✅ Risks: higher prices, strained grids, reduced clean energy

✅ Diplomacy urged to avoid retaliatory trade measures

 

In early February 2025, escalating trade tensions between the United States and Canada have raised concerns about the future of electricity exports from Canada to the U.S. The potential imposition of tariffs by the U.S. has prompted Canadian officials to consider retaliatory measures, including restricting electricity exports and pursuing high-level talks such as Ford's Washington meeting with federal counterparts.

Background of the Trade Dispute

In late November 2024, President-elect Donald Trump announced plans to impose a 25% tariff on all Canadian products, citing issues related to illegal immigration and drug trafficking. This proposal has been met with strong opposition from Canadian leaders, who view such tariffs as unjustified and detrimental to both economies, even as tariff threats boost support for Canadian energy projects among some stakeholders.

Canada's Response and Potential Retaliatory Measures

In response to the proposed tariffs, Canadian officials have discussed various countermeasures. Ontario Premier Doug Ford has threatened to cut electricity supplies to 1.5 million Americans and ban imports of U.S.-made beer and liquor. Other provinces, such as Quebec and Alberta, are also considering similar actions, though experts advise against cutting Quebec's energy exports due to reliability concerns.

Impact on U.S. Energy Supply

Canada is a significant supplier of electricity to the United States, particularly in regions like the Northeast and Midwest. A reduction or cessation of these exports could lead to energy shortages and increased electricity prices in affected U.S. states, with New York especially vulnerable according to regional assessments. For instance, Ontario exports substantial amounts of electricity to neighboring U.S. states, and any disruption could strain local energy grids.

Economic Implications

The imposition of tariffs and subsequent retaliatory measures could have far-reaching economic consequences. In Canada, industries such as agriculture, manufacturing, and energy could face significant challenges due to reduced access to the U.S. market, even as many Canadians support energy and mineral tariffs as leverage. Conversely, U.S. consumers might experience higher prices for goods and services that rely on Canadian imports, including energy products.

Environmental Considerations

Beyond economic factors, the trade dispute could impact environmental initiatives. Canada's hydroelectric power exports are a clean energy source that helps reduce carbon emissions in the U.S., where policymakers look to Canada for green power to meet targets. A reduction in these exports could lead to increased reliance on fossil fuels, potentially hindering environmental goals.

The escalating trade tensions between the United States and Canada, particularly concerning electricity exports, underscore the complex interdependence of the two nations. While the situation remains fluid, it highlights the need for diplomatic engagement to resolve disputes and maintain the stability of cross-border energy trade.

 

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Melting Glass Experiment Surprises Scientists by Defying a Law of Electricity

Electric Field-Induced Glass Softening reveals a Joule heating anomaly in silicate glass, where anode-side nanoscale alkali depletion drives ionic conduction, localized thermal runaway, melting, and evaporation, challenging homogeneity assumptions and refining materials processing models.

 

Key Points

An effect where electric fields lower glass softening temperature via nanoscale ionic migration and structural change.

✅ Anode-side alkali depletion creates extreme, localized heating

✅ Thermal runaway melts glass near the anode despite uniform bulk

✅ Findings refine Joule heating models and enable new glass processing

 

A team of scientists working with electrical currents and silicate glass have been left gobsmacked after the glass appeared to defy a basic physical law, in a field that also explores electricity-from-air devices for novel energy harvesting.

If you pass an electrical current through a material, the way that current generates heat can be described by Joule's first law. It's been observed time and time again, with the temperature always evenly distributed when the material is homogeneous (or uniform).

But not in this recent experiment. A section - and only a section - of silicate glass became so hot that it melted, and even evaporated. Moreover, it did so at a much lower temperature than the boiling point of the material.

The boiling point of pure silicate glass is 2,230 degrees Celsius (4,046 degrees Fahrenheit). The hottest temperature the researchers recorded in a homogeneous piece of silicate glass during the experiment was 1,868.7 degrees Celsius.

Say whaaaat.

"The calculations did not add up to explain what we were seeing as simply standard Joule heating," said engineer and materials scientist Himanshu Jain of Lehigh University.

"Even under very moderate conditions, we observed fumes of glass that would require thousands of degrees higher temperature than Joule's law could predict!"

Jain and his colleagues from materials science company Corning Incorporated were investigating a phenomenon they had described in a previous paper. In 2015, they reported that an electric field could reduce the temperature at which glass softens, by as much as a few hundred degrees, a line of inquiry that parallels work on low-cost heat-to-electricity materials in energy research. They called this "electric field-induced softening."

 

It was certainly a peculiar phenomenon, so they set up another experiment. They put pieces of glass in a furnace, and applied 100 to 200 volts in the form of both alternating and direct currents.

Next, a thin wisp of vapour emanated from the spot where the anode conveying the current contacted the glass.

"In our experiments, the glass became more than a thousand degrees Celsius hotter near the positive side than in the rest of the glass, which was very surprising considering that the glass was totally homogeneous to begin with," Jain said.

This seems to fly in the face of Joule's first law, so the team investigated more closely - and found that the glass wasn't remaining as homogeneous as it started out. The electric field changed the chemistry and the structure of the glass on nanoscale, in just a small section close to the anode.

This region heats faster than the rest of the glass, to the point of becoming a thermal runaway - where an increase in temperature further increases temperature in a blistering feedback loop.

As it turned out, that spot of structural change and dramatic heat resulted in a small area of glass reaching melting point while the rest of the material remained solid.

"Unlike electronically conducting metals and semiconductors, with time the heating of ionically conducting glass becomes extremely inhomogeneous with the formation of a nanoscale alkali-depletion region, such that the glass melts near the anode, even evaporates, while remaining solid elsewhere," the researchers wrote in their paper.

In other words, the material wasn't homogeneous any more, which means the glass heating experiment doesn't exactly change how we apply Joule's first law.

But it's an exciting result, since until now we didn't know a material could actually lose its homogeneity with the application of an electrical current, with possible implications for thin-film heat harvesters in electronics. (The thing is, no one had tried electrically heating glass to these extreme temperatures before.)

So the physical laws of the Universe are still okay, as a piece of glass hasn't broken them. But Joule's first law may need a bit of tweaking to take this effect into account, a reminder that unconventional energy concepts like nighttime solar cells also challenge our intuitions.

And, of course, it's another piece of understanding that could help us in other ways too, including advances in thermoelectric materials that turn waste heat into electricity.

"Besides demonstrating the need to qualify Joule's law," Jain said, "the results are critical to developing new technology for the fabrication and manufacturing of glass and ceramic materials."

The research has been published in Scientific Reports.

 

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Africa's Electricity Unlikely To Go Green This Decade

Africa 2030 Energy Mix Forecast finds electricity generation doubling, with fossil fuels dominant, non-hydro renewables under 10%, hydro vulnerable to droughts, and machine-learning analysis of planned power plants shaping climate and investment decisions.

 

Key Points

An analysis predicting Africa's 2030 power mix, with fossil fuels dominant, limited renewables growth, and hydro risks.

✅ ML model assesses 2,500 planned plants' commissioning odds

✅ Fossil fuels ~66% of generation; non-hydro RE <10% by 2030

✅ Policy shifts and finance reallocation to scale solar and wind

 

New research today from the University of Oxford predicts that total electricity generation across the African continent will double by 2030, with fossil fuels continuing to dominate the energy mix posing potential risk to global climate change commitments.

The study, published in Nature Energy, uses a state-of-the art machine-learning technique to analyse the pipeline of more than 2,500 currently-planned power plants and their chances of being successfully commissioned. It shows the share of non-hydro renewables in African electricity generation is likely to remain below 10% in 2030, although this varies by region.

'Africa's electricity demand is set to increase significantly as the continent strives to industrialise and improve the wellbeing of its people, which offers an opportunity to power this economic development and expand universal electricity access through renewables' says Galina Alova, study lead author and researcher at the Oxford Smith School of Enterprise and the Environment.

'There is a prominent narrative in the energy planning community that the continent will be able to take advantage of its vast renewable energy resources and rapidly decreasing clean technology prices to leapfrog to renewables by 2030 but our analysis shows that overall it is not currently positioned to do so.'

The study predicts that in 2030, fossil fuels will account for two-thirds of all generated electricity across Africa. While an additional 18% of generation is set to come from hydro-energy projects across Africa. These have their own challenges, such as being vulnerable to an increasing number of droughts caused by climate change.

The research also highlights regional differences in the pace of the transition to renewables across Sub-Saharan Africa, with southern Africa leading the way. South Africa alone is forecast to add almost 40% of Africa's total predicted new solar capacity by 2030.

'Namibia is committed to generate 70% of its electricity needs from renewable sources, including all the major alternative sources such as hydropower, wind and solar generation, by 2030, as specified in the National Energy Policy and in Intended Nationally Determined Contributions under Paris Climate Change Accord,' says Calle Schlettwein, Namibia Minister of Water (former Minister of Finance and Minister of Industrialisation). 'We welcome this study and believe that it will support the refinement of strategies for increasing generation capacity from renewable sources in Africa and facilitate both successful and more effective public and private sector investments in the renewable energy sector.'

Minister Schlettwein adds: 'The more data-driven and advanced analytics-based research is available for understanding the risks associated with power generation projects, the better. Some of the risks that could be useful to explore in the future are the uncertainties in hydrological conditions and wind regimes linked to climate change, and economic downturns such as that caused by the COVID-19 pandemic.'

The study further suggests that a decisive move towards renewable energy in Africa would require a significant shock to the current system. This includes large-scale cancellation of fossil fuel plants currently being planned. In addition, the study identifies ways in which planned renewable energy projects can be designed to improve their success chances for example, smaller size, fitting ownership structure, and availability of development finance for projects.

'The development community and African decision makers need to act quickly if the continent wants to avoid being locked into a carbon-intense energy future' says Philipp Trotter, study author and researcher at the Smith School. 'Immediate re-directions of development finance from fossil fuels to renewables are an important lever to increase experience with solar and wind energy projects across the continent in the short term, creating critical learning curve effects.'

 

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How Electricity Gets Priced in Europe and How That May Change

EU Power Market Overhaul targets soaring electricity prices by decoupling gas from power, boosting renewables, refining price caps, and stabilizing grids amid inflation, supply shocks, droughts, nuclear outages, and intermittent wind and solar.

 

Key Points

EU plan to redesign electricity pricing, curb gas-driven costs, boost renewables, and protect consumers from volatility.

✅ Decouples power prices from marginal gas generation

✅ Caps non-gas revenues to fund consumer relief

✅ Supports grid stability with storage, demand response, LNG

 

While energy prices are soaring around the world, Europe is in a particularly tight spot. Its heavy dependence on Russian gas -- on top of droughts, heat waves, an unreliable fleet of French nuclear reactors and a continent-wide shift to greener but more intermittent sources like solar and wind -- has been driving electricity bills up and feeding the highest inflation in decades. As Europe stands on the brink of a recession, and with the winter heating season approaching, officials are considering a major overhaul of the region’s power market to reflect the ongoing shift from fossil fuels to renewables.

1. How is electricity priced? 
Unlike oil or natural gas, there’s no efficient way to save lots of electricity to use in the future, though projects to store electricity in gas pipes are emerging. Commercial use of large-scale batteries is still years away. So power prices have been set by the availability at any given moment. When it’s really windy or sunny, for example, then more is produced relatively cheaply and prices are lower. If that supply shrinks, then prices rise because more generators are brought online to help meet demand -- fueled by more expensive sources. The way the market has long worked is that it is that final technology, or type of plant, needed to meet the last unit of consumption that sets the price for everyone. In Europe this year, that has usually meant natural gas. 

2. What is the relationship between power and gas? 
Very close. Across western Europe, gas plants have been a vital part of the energy infrastructure for decades, with Irish price spikes highlighting dispatchable power risks, fed in large part by supplies piped in from Siberia. Gas-fired plants were relatively quick to build and the technology straightforward, at least compared with nuclear plants and burns cleaner than coal. About 18% of Europe’s electricity was generated at gas plants last year; in 2020 about 43% of the imported gas came from Russia. Even during the depths of the Cold War, there’d never been a serious supply problem -- until the relationship with Russia deteriorated this year after it invaded Ukraine. Diversifying away from Russia, such as by increasing imports of liquefied natural gas, requires new infrastructure that takes a lot of time and money.

3. Why does it work this way? 
In theory, the relationship isn’t different from that with coal, for example. But production hiccups and heatwave curbs on plants from nuclear in France to hydro in Spain and Norway significantly changed the generation picture this year, and power hit records as plants buckled in the heat. Since coal-fired and nuclear plants are generally running all the time anyway, gas plants were being called upon more often -- at times just to keep the lights on as summer temperatures hit records. And with the war in Ukraine resulting in record gas prices, that pushed up overall production costs. It’s that relationship that has made the surging gas price the driver for electricity prices. And since the continent is all connected, it has pushed up prices across the region. The value of the European power market jumped threefold last year, to a record 836 billion euros ($827 billion today).

4. What’s being considered? 
With large parts of European industry on its knees and households facing jumps in energy bills of several hundred percent, as record electricity prices ripple through markets, the pressure on governments and the European Union to intervene has never been higher. One major proposal is to impose a price cap on electricity from non-gas producers, with the difference between that and the market price channeled to relief for consumers. While it sounds simple, any such changes would rip up a market design that’s worked for decades and could threaten future investments because of unintended consequences.


5. How did this market evolve?
The Nordic region and the British market were front-runners in the 1990s, then Germany followed and is now the largest by far. A trader can buy and sell electricity delivered later on same day in blocks of an hour or even down to 15-minute periods, to meet sudden demand or take advantage of price differentials. The price for these contracts is decided entirely by the supply and demand, how much the wind is blowing or which coal plants are operating, for example. Demand tends to surge early in the morning and late afternoon. This system was designed when fossil fuels provided the bulk of power. Now there are more renewables, which are less predictable, with wind and solar surpassing gas in EU generation last year, and the proposed changes reflect that shift. 

6. What else have governments done?
There are also traders who focus on longer-dated contracts covering periods several years ahead, where broader factors such as expected economic output and the extent to which renewables are crowding out gas help drive prices. This year’s wild price swings have prompted countries including Germany, Sweden and Finland to earmark billions of euros in emergency liquidity loans to backstop utilities hit with sudden margin calls on their trading.

 

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