Alternative energy drive major drop in electricity pricesApril 16, 2012
Proving a win, win for alternative power.
Alternative energy is often considered an issue of the environment and sustainability. As such, it is often surrounded by controversy because it is regularly connected to climate change. Though this controversy has proven to be a hindrance to the progress of alternative energy, many countries have shown tenacity in incorporating renewable fuels into their energy plans. As alternative energy grows in popularity throughout the world, many are beginning to see it as an economic issue because of its ability to significantly cut energy costs.
According to the European Electricity Index (ELIX) the cost of electricity on April 1, 2012, dropped to $-0.01, meaning that, for approximately two hours, electricity was free. This was a product of the German alternative energy system that has become more mature in recent months. This system is comprised of solar, wind and hydrogen fuel systems that provide electricity to homes and businesses throughout the country. The country’s solar and wind industries were noted as being major contributors to the drop in the price of electricity seen this month.
Germany’s solar energy industry has become more robust due to government support. Though much of this support has been withdrawn recently, the industry has maintained a great deal of its momentum. The industry is now capable of competing with conventional German electricity companies that run that company’s baseload power plants. Because alternative energy is more flexible than fossil-fuels it is able to respond more quickly to changes in the demand for electricity in the country. Baseload power plants can take hours to respond to these changes and not all of them are required to adapt in order to meet demand. As such, many of these plants are shut down to conserve energy. When these plants are shut down, alternative energy systems pick up the slack.
Alternative energy costs nothing to produce, thus providing consumers with electricity at no cost. This has an effect on the market share of energy companies operating baseload power plants, calling into question their viability when they may not be able to compete with the alternative energy systems of the future.