The price of a stable power grid is very steep, one could say it is like a “hockey stick”

Story submitted by Eric Worrall  (h/t John Droz)

Coal and gas electricity companies are being paid up to 400x times the wholesale price of power, in return for helping to stabilize the German electricity grid.

According to Bloomberg, “Germany’s push toward renewable energy is causing so many drops and surges from wind and solar power that the government is paying more utilities than ever to help stabilize the country’s electricity grid.”

“At the beginning, this market counted for only a small portion of our earnings,” said Hartmuth Fenn, the head of intraday, market access and dispatch at Vattenfall AB, Sweden’s biggest utility. “Today, we earn 10 percent of our plant profits in the balancing market”.

Full story http://www.bloomberg.com/news/2014-07-24/german-utilities-bail-out-electric-grid-at-wind-s-mercy.html

Given that lignite coal plants are also playing this game, according to Bloomberg, and lignite plants are famously inflexible, you have to wonder exactly how fossil fuel plants are providing the required flexibility.

One interesting possibility is that the CO2 belching fossil fuel utility companies are spinning their generators up to full power, and are simply discarding vast amounts of excess energy, until solar or wind output drops – so they can be ready to dump extra capacity onto the grid at a moment’s notice.

At 400x wholesale rate, they could afford to burn away gigawatts of power as waste heat, and still make a handsome profit from the “balancing” fee for whatever energy they actually supply to the grid.