Great Britain had also this problem. Much wind in Scotland so prices went down and France imported. But the Brits were npt able to get the energy to the south and had to use peaker plants. See You tube Cleaning up episode 175. So both in Norway and Great Britain the grid wasn’t ready for transporting such quantities of energy.
Great read Meredith! That don't lean on your neighbors thing has another side. Utilities in WECC are pretty fed up with CAISO dumping excess renewable energy with negative energy prices. It's I cooked too much soup again, let me dump it in your yard
It is very much like a heat balance we used in nuclear to figure out reactor power. Resembles so many other physics models I have encountered, even with comets. basically 'goes ins' versus 'goes outs' across a boundary. I could abstract an electrical grid into a mathematical construct of a graph of nodes and edges or a physics system of sources and sinks and make a system of differential equations like Laplace's equation or divergence of vector fields. Thanks for your article. It triggered memories of theoretical and practical things from my past and inspired my imagination. Good morning.
Can't agree more that tensions around energy policies could really tear the EU apart.
With respect to Norway, as I understand it, the wholesale prices don't get passed directly on to consumers - with the government paying up to 90% - so the pain has been socialized. That said, (1) people in southern Norway are reporting (complaining about) much higher bills - despite this state aid, and (2) government subsidies are just money out of one pocket into another... ultimatley tax payers pay for everything. For Norway that generalization is a little different as the government has income from oil and gas exports. I don't know how the electricity exports work - do private companies capture all the profits or does the government get a royalty on exports, or both...? and then there was the usual problem of irregular rainfall patterns that didn't help.... oh what a tangled web.
I visited Norway this summer in 2024 and half of the cars there are electric at 17 cents a kWh and $8.50 A Gallon for gas and other brakes for electric that is why. My cousin had a plug-in hybrid but my other cousin doesn't like Electric and feels it's unfair the advantages they get no tolls but that is going away I guess from what she said.
I have noticed that areas that have LOTS of hydro (like Norway and Quebec) usually put systems in place to lower electricity bills for the people who live there. They also set up ways to encourage electricity use. Both Norway and Quebec use far more electricity per capita than nearby places.
I think some of the issue is Norway by being part of the EU light European economic area has to adopt many of the EU's policies and rules on electricity deregulation such as NOT having fully bundled service and vertical integration whereas Switzerland which is not part of the EU or EEA but is very much part of the European wide electricity grid is somewhat unaffected because CH doesn't have deregulation and mostly operates on a fully bundled vertically integrated type basis.
Switzerland and Quebec are actually more alike in that there might be very high marginal prices in the wholesale market based on what is happening with there neighbors but the average consumer in Quebec or Switzerland really isn't affected by them. This is something I was pushing pack on Robert Bryce on after his recent speech in London where he suggested the UK needs to drill for more gas to reduce energy prices. I responded that in the context of a fully deregulated market in the UK for both gas and electricity(with gas being the marginal fuel for the electric grid) I think at best new gas production will only help marginally pardon the pun. In fact the last time the UK had a boom in gas production it only helped encourage the govt to move more towards a fatal trifecta system of energy management and away from investing in long lived generation assets like coal, nuclear, and hydro in favor of spot market gas.
Interesting. I don't usually look at Switzerland. Thank you.
The wealthy countries like Norway can play games by subsidizing the electricity....which they have made expensive! That pushes the costs from the ratepayers to the taxpayers. Who are, of course, the same people.
Following the fatal trifecta is a good way to lose your prosperity, even if you have the money for subsidies.
It depends. There are some in Quebec on the far libertarian right who think Hydro Quebec should sell its electricity locally at the marginal market prices of it's main export markets i.e. New England and the government of Quebec should use these profits to reduce other types of taxes like sales and income tax. I know there are some in New England ironically on the left that hope the likes of the libertarian Montreal Economic Institute get there way and a huge increase in rates in Quebec would reduce consumption and allow for a big increase in power exported to the US. As a practical matter from my knowledge of Quebec politics this is very unlikely to ever happen although rates will go up in Quebec in coming years for different reasons including system re-investment and maintenance.
More specifically there is actually a decent case to be made that electricity isn't subsidized in Quebec. Hydro-Quebec does pay corporate income tax even though it is 100% govt owned and investors in HQ's bonds have to pay income tax on them(unlike with US muni bonds). Additionally, rates at HQ are controlled by a somewhat arms length PSC like body called the Regie de Energy(that also regulates the investor owned gas utilities as well) which forces HQ to use traditional private utility accounting mechanisms. So it isn't so much that HQ's electricity is cheap because it is govt owned but because the cost base(even with a 10% return on equity to the provinical govt as shareholders) is so low compared to other utility systems. The closest thing to a direct subsidy is the fact that HQ's bond have an implicit govt guarantee(which Hydro Quebec has to pay the govt of Quebec a fee for).
Thank you for the restack!
Great Britain had also this problem. Much wind in Scotland so prices went down and France imported. But the Brits were npt able to get the energy to the south and had to use peaker plants. See You tube Cleaning up episode 175. So both in Norway and Great Britain the grid wasn’t ready for transporting such quantities of energy.
Gerben, that's far from the only problem we have in GB.
https://open.substack.com/pub/chrisbond/p/great-britain-reality?r=om40y&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true
Nice article Meredith! Great depth on the whole Norway situation. I learned a lot.
Great read Meredith! That don't lean on your neighbors thing has another side. Utilities in WECC are pretty fed up with CAISO dumping excess renewable energy with negative energy prices. It's I cooked too much soup again, let me dump it in your yard
As always great article.
Great article. Thank you.
It is very much like a heat balance we used in nuclear to figure out reactor power. Resembles so many other physics models I have encountered, even with comets. basically 'goes ins' versus 'goes outs' across a boundary. I could abstract an electrical grid into a mathematical construct of a graph of nodes and edges or a physics system of sources and sinks and make a system of differential equations like Laplace's equation or divergence of vector fields. Thanks for your article. It triggered memories of theoretical and practical things from my past and inspired my imagination. Good morning.
Excellent summation of the underlying issues. Thank you, Meredith. I hadn't realized this situation had gotten so bad.
Perhaps this is a bit pedantic, but your 2nd Conclusion might include the term "reliable replacement" - certainly not just anything.
I agree!
Can't agree more that tensions around energy policies could really tear the EU apart.
With respect to Norway, as I understand it, the wholesale prices don't get passed directly on to consumers - with the government paying up to 90% - so the pain has been socialized. That said, (1) people in southern Norway are reporting (complaining about) much higher bills - despite this state aid, and (2) government subsidies are just money out of one pocket into another... ultimatley tax payers pay for everything. For Norway that generalization is a little different as the government has income from oil and gas exports. I don't know how the electricity exports work - do private companies capture all the profits or does the government get a royalty on exports, or both...? and then there was the usual problem of irregular rainfall patterns that didn't help.... oh what a tangled web.
Good post, Meredith!
Thank you!
It seems there are many pressures in Europe and the EU all coming to a head at once. thanks for the excellent description
Thank you!
I visited Norway this summer in 2024 and half of the cars there are electric at 17 cents a kWh and $8.50 A Gallon for gas and other brakes for electric that is why. My cousin had a plug-in hybrid but my other cousin doesn't like Electric and feels it's unfair the advantages they get no tolls but that is going away I guess from what she said.
I have noticed that areas that have LOTS of hydro (like Norway and Quebec) usually put systems in place to lower electricity bills for the people who live there. They also set up ways to encourage electricity use. Both Norway and Quebec use far more electricity per capita than nearby places.
I think some of the issue is Norway by being part of the EU light European economic area has to adopt many of the EU's policies and rules on electricity deregulation such as NOT having fully bundled service and vertical integration whereas Switzerland which is not part of the EU or EEA but is very much part of the European wide electricity grid is somewhat unaffected because CH doesn't have deregulation and mostly operates on a fully bundled vertically integrated type basis.
Switzerland and Quebec are actually more alike in that there might be very high marginal prices in the wholesale market based on what is happening with there neighbors but the average consumer in Quebec or Switzerland really isn't affected by them. This is something I was pushing pack on Robert Bryce on after his recent speech in London where he suggested the UK needs to drill for more gas to reduce energy prices. I responded that in the context of a fully deregulated market in the UK for both gas and electricity(with gas being the marginal fuel for the electric grid) I think at best new gas production will only help marginally pardon the pun. In fact the last time the UK had a boom in gas production it only helped encourage the govt to move more towards a fatal trifecta system of energy management and away from investing in long lived generation assets like coal, nuclear, and hydro in favor of spot market gas.
https://robertbryce.substack.com/p/britain-is-committing-national-economic
Interesting. I don't usually look at Switzerland. Thank you.
The wealthy countries like Norway can play games by subsidizing the electricity....which they have made expensive! That pushes the costs from the ratepayers to the taxpayers. Who are, of course, the same people.
Following the fatal trifecta is a good way to lose your prosperity, even if you have the money for subsidies.
It depends. There are some in Quebec on the far libertarian right who think Hydro Quebec should sell its electricity locally at the marginal market prices of it's main export markets i.e. New England and the government of Quebec should use these profits to reduce other types of taxes like sales and income tax. I know there are some in New England ironically on the left that hope the likes of the libertarian Montreal Economic Institute get there way and a huge increase in rates in Quebec would reduce consumption and allow for a big increase in power exported to the US. As a practical matter from my knowledge of Quebec politics this is very unlikely to ever happen although rates will go up in Quebec in coming years for different reasons including system re-investment and maintenance.
More specifically there is actually a decent case to be made that electricity isn't subsidized in Quebec. Hydro-Quebec does pay corporate income tax even though it is 100% govt owned and investors in HQ's bonds have to pay income tax on them(unlike with US muni bonds). Additionally, rates at HQ are controlled by a somewhat arms length PSC like body called the Regie de Energy(that also regulates the investor owned gas utilities as well) which forces HQ to use traditional private utility accounting mechanisms. So it isn't so much that HQ's electricity is cheap because it is govt owned but because the cost base(even with a 10% return on equity to the provinical govt as shareholders) is so low compared to other utility systems. The closest thing to a direct subsidy is the fact that HQ's bond have an implicit govt guarantee(which Hydro Quebec has to pay the govt of Quebec a fee for).
I will have to do more research on Norway