Germany’s new 2030 goal of 65% renewables make power prices more volatile
"The provision in Germany’s coalition agreementthat the country will source 65 percent of its power consumption from renewables by 2030is likely to make power prices “more volatile and lower” than previously thought, Aurora Energy Research says in an analysis of the treaty agreed by the conservative CDU/CSUalliance and the Social Democrats (SPD).
Huge opportunity for behind the meter storage if arbitrage model takes off
"Ben Irons, Executive Director of Aurora Energy Research, speaking at the Energy Storage and Connected Systems event, in partnership with the Renewable Energy Association (REA), agreed that arbitrage will offer considerable opportunities for BTM (Behind the Meter) storage once it is more established as a revenue source.
“We all recognise FFR is falling like a stone, the big value driver here for this investment class to work is if the arbitrage trading model comes up. A project majoring in arbitrage and minoring in capacity and frequency and whatever else is probably going to generate an IRR of 5-10%; no one's going to touch it with those types of returns.
“So the question becomes how long do we have to wait for that arbitrage and trading revenue to improve, and certainly it is going to improve as more renewables that come on to the system, the more volatility [which] we see as one driver.”"
"Every capacity market auction so far has seen new combined-cycle gas turbines undercut by rival technologies. In the T-4 auction, it was interconnectors that stepped in. All of the interconnectors to enter the auction won contracts. They included three new-build projects – Eleclink, Nemo Link and IFA2 – with a combined capacity of 2.2GW.
According to Stephanie Zhang, project manager at Aurora Energy Research, the committed participation of these interconnectors helps to explain the record-low clearing price for a T-4 auction of only £8.40/kW. She says interconnectors are price takers not only under the rules of the auction – meaning they cannot drop out at above £25/kW – but also in terms of their economics.
"“In the short term, Germany’s coalition agreement proposes more of the same medicine that failed in the past while delaying the single most effective emissions saving measure: rather than making concrete proposals to reduce coal power generation, 4 GW each of new wind and solar capacity are to be auctioned by 2020,” Aurora Energy Research analyst Hanns Koenig said.
“Also, the commitment to work with the French government to implement an effective carbon price was watered down on the home stretch, now calling for action solely within the G20, which is unlikely to find meaningful traction,” the analyst in the Berlin office of the Oxford-based consultancy said Tuesday in a report by Platts European Power Daily (February 8, 2018)"