How German Solar Has Made all Electricity Cheaper

March 1, 2012

Clean Technica:

A study finds solar lowered the price of peak electricity in Germany by up to 40 percent.

Solar produced about 3% of industrious Germany’s total electricity, but when it produced it matters more than how much, because of a utility ranking system for putting the most cost-effective power on the grid, called the Merit Order ranking, used in Germany and many EU nations to keep prices low.

The Fraunhofer Institute found that – as a result of the Merit Order ranking system – solar power had reduced the price of electricity on the EPEX exchange by 10 percent on the average, with reductions peaking at up to 40 percent in the early afternoon when the most solar power is generated.

Here’s how the Merit Order works.

All available sources of electrical generation are ranked by their marginal costs, from cheapest to most expensive, with the lowest having the most merit.

The marginal cost is the cost of producing one additional unit of electricity. Electricity sources with a higher fuel cost have a higher marginal cost. If one unit of fuel costs $X, 2 units will cost $X times 2. This ranking is called the order of merit of each source, or the Merit Order.

Using Merit Order to decide means the source with the lowest marginal cost must be used first when there is a need to add more power to the grid – like during sunny afternoon peak hours.

Using the lowest marginal costs first was designed so that cheaper fuels were used first to save consumers money. In the German market, this was nuclear, then coal, then natural gas.

But 2 hours of sunshine cost no more than 1 of sunshine: therefor it has a lower marginal cost than coal – or any source with any fuel cost whatsoever.

So, under the Merit Order ranking of relative marginal costs, devised before there was this much fuel-free energy available on the grid, solar always has the lowest marginal cost during these peaks because two units of solar is no more expensive than one.

(Wind is similarly fuel free, but solar has more impact on the price than wind, because its afternoon production peak mirrors peak utility loads on the grid, while wind’s peak is often at night.) Solar production peaks during the same time as afternoon peak power needs.

The price was reduced by 7.8 Euros (about $10.50) per megawatt-hour, or over 10 cents a kilowatt-hour. Now prices during mid- afternoon peaks on sunny afternoons are actually lower than off-peak power prices in the wee hours of of the morning.


One Response to “How German Solar Has Made all Electricity Cheaper”

  1. Bruce Miller Says:

    Real Ass-holes write nonsense like this! Americans largest deficit: The clean up costs behind Uranium fissioning – still being stock-piled by a country of people fully mesmerized by the Great Corporate American Propaganda Whore’s incantations, innuendos, skewing of truths, sloping of reality, slanting on the issues, spin doctoring realities, even her suggestions sweeter than the truth abound, distortions a mainstay of the American psyche, all to mislead the American sheeple, all for corporate profits all for the shareholders benefit.
    Reality: America, $14 Trillions in debt, cannot afford to clean up even the waste from Uranium fissioning even as it mounts daily. 80% U.S. population live within 40 miles of a Uranium fissioning reactor. U.S. reactors storing up to four times design capacities for this humanocidal waste. Every day of operation adds to the waste pile. There is no solution in sight, or in operation, in the U.S. today. Americans are promised: “There will be no accidents in the U.S. of A”. 9/11 then? Even JFK?
    Coal, costing fortunes in health problems – no remedy in sight, peon Americans pay with their lungs.
    What gasoline “additives”, “emissions” are kept from U.S. populations? How hazardous are they? Under what conditions? Are gasoline engined cars really safer than diesels? Are either safer than Electrics?
    Electric bullet trains 400% more efficient than rubber-wheel gasoline burners. What of jet engined air travel? What does it do to the very air we breath? Where do the fine carbon particles (nano-particles?), same as from diesels but in very much greater quantities go when a plane passes over a city?
    What are the real costs of sticking stubbornly to Oil in the U.S.A.? Sticking to Uranium fissioning nuclear power?
    Now: How does all this add up against the German decision to eliminate nuclear, limit and reduce oil, and seek Solar, Wind, Wave, Hydro, Tidal, Geothermal, Bio-mass, Anaerobic digestion for Methane and fertilizer slurries ?
    What did the astute and world famously accurate German Scientists tell their government to provoke such a radical, all sweeping group of energy decisions, that we in America are not privileged to? Why hasn’t out corporately controlled media told us this truth? Whom, What, are they shielding and why?

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