German utility giant EOn loses €67 million on 2012 renewables generation

[wtmusic]

"EOn continues to struggle under German energy policy, with gas generation made 'barely profitable' by pro-renewable market arrangements and nuclear generation slashed and taxed by government decree.

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One problem is that renewable generation is given priority access to the grid when it is available. This sometimes prevents gas-fired generation from operating during peak hours and has altered the economics of gas to such an extent that it is now 'barely profitable to operate,' said CEO Johannes Teyssen. 'In most European markets, the gross margin for gas-fired units is approaching zero or is indeed already negative.'

'Paradoxically, this benefits carbon-intensive lignite-fired assets which are more harmful to the earth's climate, whereas flexible, climate-friendlier assets are barely profitable,' said Teyssen."

http://www.world-nuclear-news.org/C_Coping_with_energy_transition_1411121.html

[intaglio]

1. So a massive multinational took a bet on gas generation and lost

Sorry, my violin for this one is on the nano scale and I can't find it

[FBaggins]

2. Not at all.

A massive multinational built exactly what the government wanted/needed them to build and then the government changed the rules so that it was no longer profitable.

It's a legitimate problem. We knew that we couldn't build out wind power anywhere near as rapidly as we have unless we incented the producers by guaranteeing that they could sell everything they produced - even when it wasn't worth anywhere close to that price (as is the case when demand is low and wind production is high). So we pay "too much" while simultaneously damaging a lower-cost provider. Ironically, it is that gas provider (rather than the lignite coal plant we hoped to close down) that is needed in order for more significant renewables penetration to work.