PSO levy goes negative

the_amazing_raisin

Saw this article today in RTE

http://www.rte.ie/news/ireland/2022/0807/1314455-wind-farms/

One interesting bit is that wind farms will be paying back the PSO levy from October because the wholesale price of electricity is so high

I actually thought the government was paying the refund out of tax revenue

I'm not gonna say no to free money, especially these days, but let's stop and think about this for a second. Wind companies are essentially paying tax on high electricity prices, while fossil fuel companies are posting record profits

Am I missing something, do fossil generators also have to pay the PSO refund?

I know that someone is going to respond by saying that renewables are government subsidised whereas fossil generators aren't. But there's also a long history of Irish governments supporting fossil fuel industries at the taxpayers expense, so I think the PSO levy could just be considered an extension of that

So what, Ireland as a nation is going to penalise renewables and make fossil fuels more profitable?

Maybe it should be flipped around, fossil generators should have to pay the PSO levy refund since they're driving the high prices, and renewables don't have to pay it

Jonathan

https://www.boards.ie/discussion/2058257932/pso-levy-goes-negative

The way the electricity market operates is that marginal price is paid to all generators (regardless of generation type), so in reality supernormal profits are currently being earned by renewable generators in comparison to the fossil generators. I'm not saying the refund of the PSO is correct, but that is how the market is currently structured.

3d4life

Some heavyweight lobbying many years ago saw the EU adopt a very perverse energy pricing arrangement

https://www.energymonitor.ai/policy/market-design/opinion-eu-leaders-need-to-be-ready-to-rethink-electricity-market-design

hints at some of the cr@p that has been foisted on individual states and their citizens.

the_amazing_raisin

https://www.boards.ie/discussion/comment/119444684#Comment_119444684

Yeah true but I feel like I prefer wind energy companies to make a profit than gas companies. Mostly just down to green energy feel goods, especially since it's oten the same company that owns the gas power plant and the wind turbines

However there is an upshot to wind energy being more profitable, which is that sites that were marginal before or required very large upfront investment are suddenly a lot more viable*

*The same can be said for gas fields, especially fracking, which usually depend on high gas prices to break even, so swings and roundabouts...

I definitely agree with the article that the whole application process for new turbines needs to be streamlined. That can be done quite easily while still ensuring good transparancy and allowing time for debate.

For example, why isn't there a single planning application which includes the connection application to the ESB, with all the supporting documentation and reports, so the whole thing can be considered and decided in one go? Still plenty of scope there for ensuring the impact is properly considered, but the process isn't dragged out for years because 2 or 3 different groups aren't speaking to one another

feelings

Amazing that the price for electricity goes up the same whether you're burning fossil fuels or are 100% renewable. Load of bs really.

the_amazing_raisin

https://www.boards.ie/discussion/comment/119444821#Comment_119444821

Ah yes, once again the "free" market fails to deliver value 😒

I'm actually very curious as to how Spain & Portugal will manage their energy markets with their newfound (albeit limited) freedom. I feel that's the one thing the article was missing

slave1

https://www.boards.ie/discussion/comment/119445145#Comment_119445145

Id imagine the price is based on a blended cost input

markpb

https://www.boards.ie/discussion/comment/119445191#Comment_119445191

The energy market in the EU isn’t a free market. It’s a regulated market with specific market rules.