The inability to scale alternative energy to meet demand makes it a poor investment

NY Times/Houston Chronicle:
Germany has spent $200 billion over the past two decades to promote cleaner sources of electricity. That enormous investment is now having an unexpected impact - consumers are now actually paid to use power on occasion, as was the case over the weekend.

Power prices plunged below zero for much of Sunday and the early hours of Christmas Day on the EPEX Spot, a large European power trading exchange, the result of low demand, unseasonably warm weather and strong breezes that provided an abundance of wind power on the grid.

Such "negative prices" are not the norm in Germany, but they are far from rare, thanks to the country's effort to encourage investment in greener forms of power generation. Prices for electricity in Germany have dipped below zero - meaning customers are being paid to consume power - more than 100 times this year alone, according to EPEX Spot.

On Sunday, factory owners and other major consumers were at times paid more than 50 euros, about $60, per megawatt-hour, a wholesale measure, to take power.

Here is a rundown of these negative power prices and the impact they have.

What's the cause?

Basically, when the supply of power outstrips demand for it.

Demand is particularly low on weekends and holidays, when factories are idle and offices empty. The energy supplies that Germany depends on, however, are less predictable than they used to be.

Wind power, in particular, is highly dependent on changes in weather patterns. Giant spinning turbines produce, on average, about 12 percent of Germany's power, but on windy days, they can generate several times that amount.

At the same time, other mainstays of the country's electricity supply, especially some coal and nuclear power plants, are unable to dial back quickly enough, leading to negative prices on electricity trading markets.

Several countries in Europe have experienced negative power prices, including Belgium, Britain, France, the Netherlands and Switzerland.

But Germany's forays into negative pricing are the most frequent. At times, Germany is able to export its surplus electricity to its neighbors, helping to balance the market. Still, its experiences of negative prices are often longer, and deeper, than they are in other countries.
California which has the highest electricity prices in the US has similar problems where it has to pay companies in other states to take its excess power generation from solar panels which were an expensive investment, to begin with.  With its inconsistent power generation, alternative energy can be too much or too little with little control over the outcome.  For it to be viable over the longterm producers are going to have to find to way to scale the supply to meet demand.

For now it is a poor investment for expensive electricity much of the time.


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