Why is green electricity so expensive now?

Why is green electricity so expensive now?
Why is green electricity so expensive now?

It must hurt for the green energy consumer. If you conclude a contract with suppliers such as Vandebron, Greenchoice or Pure Energie, who guarantee that you buy 100 percent wind or solar power, you will only see the rates rise and your energy bill will still double. That while you see reports in the media that so much wind and solar power is generated that the prices of electricity are sometimes negative.

Unexplainable

So it’s raining questions from customers. “This is inexplicable,” says spokesperson Hans Bellert of Pure Energie, which received a 10 for its sustainable power in the latest survey by WISE, Natuur & Milieu and the Consumers’ Association. But Pure Energie also has to buy some electricity for its consumers and small companies on the electricity exchange: EPEX (European Power Exchange). The daily prices for a megawatt hour of electricity have risen from 80 or 100 euros to sometimes 800 euros. This translates into high rates for small users. “But this is bizarre. These are prices that consumers can no longer afford. People now spend more money on energy than on housing. That’s very crooked. That is why we believe that Europe should intervene. For us, consumer protection is paramount,” says Bellert.

Gas price determines electricity price

Let’s try to explain why the electricity price is so high. Electricity comes from the socket. There is no distinction between green and gray electricity. The price is established by matching the total supply and demand on the electricity market via the EPEX exchange. Every hour it is determined how much power is needed and how much coal, gas and nuclear power plants and solar and wind parks can supply. This results in a price for which the suppliers supply electricity. Although the share of cheap wind and solar power in the Netherlands increased to 41 percent last year, the majority of our electricity is still generated with expensive fossil fuels. The market price is determined by the price for the last power needed to meet the demand. This is often generated with gas-fired power stations, because they are relatively expensive. But as a result, the high gas price also determines the electricity price, including that of cheaper sources such as wind and solar. Gas now costs more than ten times as much as a year ago.

Read here about the growing share of green energy in the total supply

Price not down due to a lot of sun and wind

Suppliers such as Vattenfall can buy electricity on the futures market at a fixed price, for example for three or six months. But prices are also rising there. As a result, Vattenfall must also increase the rates for its customers again as of 1 October. “You don’t see whether electricity from wind, sun or coal-fired power stations is coming from your socket. We simply buy electricity for the consumer on the futures market. The sometimes negative prices for solar and wind energy do not have much effect there,” says market expert Rick Marsman of Vattenfall. “These situations often occur on weekends, because the demand for electricity is low because companies are closed and the supply is high, for example because you cannot switch off coal and gas plants for one day. Then there is a surplus of electricity. Green energy is also not always generated when it is needed: in the morning when all companies open and in the evening when everyone comes home, charges the car and the lights go on. Because the wind is not always blowing and in the evening there is no sun. So you cannot say that because the wind is blowing hard or the sun is shining, the electricity price should be low.”

The article is in Dutch

Tags: green electricity expensive

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