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Comment on Energy bills to tick lower this winter but will remain high

hellothere@sh.itjust.works ⁨1⁩ ⁨year⁩ ago

Context of the situation is important. You can’t use them interchangeably.

Capex does not matter when we are talking about choosing to generate using existing infrastructure, because capex amortisation is the same regardless of whether you’re generating or not. Choosing whether to generate at 1am on a random Tuesday has nothing to do with your previous capex, but everything to do with your next unit cost. If price is higher than cost, you’ll generate, it not you (probably) won’t.

Capex payback is important when businesses are evaluating building new generation. The spot price at 1am on a random Tuesday has nothing to do with whether you’re choosing to build new infrastructure. What does matter is average unit prices, over time, not one data point.

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bernieecclestoned@sh.itjust.works ⁨1⁩ ⁨year⁩ ago
But you said you wanted more renewables… That’s capex.

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- hellothere@sh.itjust.works ⁨1⁩ ⁨year⁩ ago
  I’m not the person you originally replied to when you falsely claimed that renewables are only economically viable because of last generator pricing.
  
  I have explained why that isn’t the case, how both generation and new capacity decisions are made, the different aspects those decisions consider, and how because their next unit cost is lower due to generation input being free they are able to operate profitability at lower spot prices than are achievable for fossil fuels.
  
  One last time - capex payback is a consideration when building new capacity, yes, but that is based on average prices over decades. It is not a consideration when choosing whether to power up or down on at a specific time on a specific day.
  
  Attempting to simplify this to just capex is wrong.
  
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  - bernieecclestoned@sh.itjust.works ⁨1⁩ ⁨year⁩ ago
    Economically viable means you can raise the capital to build it…higher returns attract more capital
    
    Spain has cut the last generator link so now renewables are not charged at the gas rate.
    
    Let’s see how it works out. It’s already helped reduce inflation there.
    
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    hellothere@sh.itjust.works ⁨1⁩ ⁨year⁩ ago
    
    Why are you linking to a definition of economic viability for buildings? The main cost of traditional fossil fuel based electricity generation is the fuel source, over lifetime, not initial construction
    
    Higher returns due to high average costs certainty attract investment - I said as much in my first comment
    
    I agree with disconnecting prices from last generator, and that it will reduce inflation, because it would reduce the average price, all else being equal
    
    A lower average price would extend payback periods which may discourage investment when compared to the current pricing model, again all else being equal. This is a difficult comparison because it would presume an ability to choose between the two payment methods, which you can’t.
    
    We are still talking about average prices, over time, which again is different to spot prices, and both above points are further proof that your original statement of renewables being economically inviable is incorrect.
    
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