jeromeaparis

Everybody seems to want to cut the link between gas and power prices these days. But this is not a good idea. lectricity is hard to store and physically needs to balance supply and demand at all times. This can be done (well) by a centralized administrative system, like we used to have until the 80s, but we've moved toward a market system that works on marginal pricing. The issue is that demand is very inelastic in the short term (to simplify: you don't check the price before switching on the light), so the balancing is mostly done on the supply side. But demand is not flat, and is actually very peaky (on a daily basis, and then with seasonal additional fluctuations). The marginal supply that can fulfill demand at the peak is only going to used a few times per year, and thus structurally needs to be expensive, so that it can be profitable. That's ok in normal times when such peaks are rare and localized.

The full report

while preserving market mechanisms

And why it matters

Following my previous post on EDF’s woes and their impact on the European market, here’s a list of topics, both practical and political, that the company needs to deal, and their domestic impact in France. Corrosion issues. 12 plants, mostly the more modern ones, have been stopped due to cracks in pipes.

Defining it is not so simple, protecting it even less so

France is looking at many dark years

It is a bit frustrating to write about energy when the complexity of the markets is so easily misunderstood. You’d expect papers like the Financial Times to have a better grasp of what they write about, but sadly this is not always the case… For instance, in today’s article,

This may seem a bit provocative given current energy prices, and expectations/worries of shortages this winter or next year, but some long term trends are worth considering, as they will shape not just the energy markets but a lot of other economic activity.

Note - this is a slightly updated version, edited for clarity following comments by early readers. The map for Blue Stream was added As I wrote my PhD about the independence of Ukraine (in 1995) and spent 6 months in Kiev in 1994, the current attack by Russia hits very personally. But I also put on my hat of energy specialist - with my career as an energy financier kickstarted by my knowledge of the Soviet oil&gas sector built at that time to write the below.

France is the weak link in European energy

As we grapple how to urgently do something about the EU’s dependency on Russian oil&gas, it is worth reminding everybody that this situation is a direct, obvious result of longstanding core elements of EU energy and competition policy and that as long as this is not acknowledged, it will be really hard to do something about it.

It's possible to have cheap power and negative bidding

An insider's view

Another troubling headline

Amazon and other 'big tech' firms benefit from CPPAs at the expense of the public

There are better options, today

When will we learn?

The first financings

Current market terms (equity and debt)

Nuclear is not a substitute for gas in power generation

What about floating?

Cheaper and more competitive are not the same

Co-written with Andrew Eckhardt Important decisions and policy designs should have clear, measurable targets – and be based on facts to fully comprehend the status quo. Europe’s energy policy is a crucial area of decision making at the moment as Europe’s future energy market design will play vital role in various dimensions. The geopolitical dimension of Europe’s energy policy has tragically been highlighted by Putin’s invasion of Ukraine. But in the medium and long term, aligning its economic and climate change dimensions will continue to be the key to a successful European energy policy.

Once upon a time...

Investing in projects - construction and operations, and investor profiles

Investing in projects - the development phase

Rik analysis - Construction and operation risks

This is the seventh part of what will be a 10–part series of blog posts, which will ultimately be published in full as a single report. Two parts are published each week for the coming weeks. Earlier instalments: Part 1 - once upon a time… Part 2 - offshore wind will always be complicated

This is part 2 of a multi–part series on the financing of offshore wind projects. It is best to read Part 1 first. This is also published on the WFO blog. Offshore wind will always be complicated Figure 1: Main components of an offshore wind project

They produce very little

A few other early precedents

I am crossposting a (hopefully self-explicit) text from the WFO blog, to which I will be actively contributing in the future. World Forum Offshore Wind (WFO) is the world’s only organization 100% focused on promoting offshore wind energy on a global scale. WFO is registered as a non-profit organization (e.V.) in Germany, with offices in Hamburg, Tokyo, Taipei and New York. WFO’s international members represent the complete offshore wind value chain including utility companies, manufacturers, service firms as well as other non-profit orga- nizations. WFO’s unique global profile facilitates access to governmental and international forums in order to open new offshore wind markets and to advocate for global offshore wind growth.