Shutting off green and cheap renewable energy is a counterintuitive practice that has been widely discussed and usually criticized in the past. We will use this blog to shed light on the business logic of economic renewable curtailment in order to structure the logic behind a debate that has been the cause of torn out hairs in many companies including our own.
Confessions of an Energy Trader
"The story so far: In the beginning, the universe was created. This made a lot of people very angry and been widely regarded as a bad move." – Douglas Adams
About the confessor
CF Flex Power GmbH (“FLEXPOWER”) is a new trader entering the European electricity market. The Hamburg-based power trader focuses on the market integration of renewable energies and the potential of stationary battery storage to provide flexibility for the electricity market.
The German government plans to introduce a price cap (essentially a tax) for energy producers. This will likely lead to the curtailment of valuable green energy production at times of positive prices (worst case). Best case it will introduce a minimum price floor in markets exactly at the level of the marginal tax rate.
Direktvermarktung / Balancing Services: Why settling contracts against reference market prices is stupid…
Direct Marketing Contracts in Germany are traditionally settled against so-called Reference Market Values. We believe that this is an outdated approach which increases uncertainty and thereby lowers the income of Renewable producers.
The pending price caps for renewable assets is a reasonable idea, however, it creates extreme uncertainty and paralyzes the market. If executed badly, it could bankrupt hedged renewable asset owners.
The decarbonization of energy is the largest industrial endeavor of our time. Energy supplies are changing from large, centralized and dispatchable plants to small, decentralized and weather-dependent renewables: mostly wind and solar.
About the confessor
Masters of camouflage
This Blog is written by the FLEXPOWER collective. We are traders and engineers sharing our perspectives on the energy market. While we may show you some neat analysis and correct grammar here and there, we will treat this mainly as a quick&dirty view of the facts as we see them. We have no claim to final truths but want to throw you some interesting facts and opinions to start a discussion. Feel free to engage and be controversial. However, please: keep calm and civil. It's only words.