Blog: Free Electricity ? Possible

Thursday 28 December 2017

Free Electricity ? Possible

Oh ! To be in Fatherland !

Germans call their country, “ Fatherland “

Germans are also known for their very high standard of Discipline / Efficiency / Productivity – and , in recent past , have bailed out , some “ about to go bankrupt “ European countries

But it is also a very cold country and I would avoid going there ( - fortunately , I have no reason to go there ! )

But the reason behind the title of this blog , is the following news :

Now, Germans get paid to use power

· The Times of India (Mumbai edition)

· 28 Dec 2017

Germany has spent $200 billion over the past two decades to promote cleaner sources of electricity.

That enormous investment is now having an unexpected impact — consumers are now actually paid to use power on occasion, as was the case over the weekend.

Power prices plunged below zero for much of Sunday and the early hours of Christmas Day on the EPEX Spot, a large European power trading exchange, the result of low demand, unseasonably warm weather and strong breezes that provided an abundance of wind power on the grid.

Such “negative prices” are not the norm in Germany, but they are far from rare, thanks to the country’s effort to encourage investment in greener forms of power generation.

Prices for electricity in Germany have dipped below zero — meaning customers are being paid to consume power — more than 100 times this year alone, according to EPEX Spot.

What causes negative prices ?

Basically, when the supply of power outstrips demand for it.

The energy supplies that Germany depends on, are less predict- able than they used to be. Wind power, in particular, is highly dependent on changes in weather patterns.

Giant spinning turbines produce, on average, about 12% of Germany’s power, but on windy days, they can generate several times that amount.

At the same time, other mainstays of the electricity supply, especially some coal and nuclear power plants, are unable to dial back quickly enough, leading to negative prices on electricity trading markets.

I believe this EXTREMELY LOW price of electricity is , one more reason ( apart from discipline / efficiency / productivity , cited above ) , why Germany is a very prosperous country

What do this “ Near ZERO “ electricity prices mean to the German Economy ?

· Costs of manufacture of “ products ” and delivery of “ services “ , go down

· Industrial robots consume a lot of electricity. These become cheaper to operate

· Cheaper “ operating cost “ of robots encourage companies to replace “ high wage “ workers with more robots – further reducing manufacturing costs

· Rapidly increasing demand for robots leads to more manufacture of robots , which generates jobs for more skilled workers

· Ave annual work-hours in Germany has dropped from 1371 ( 2014 ) to 1363 ( 2016 )

· “ Electricity cost as a percentage of total manufacturing cost “ for Steel , comes to around 30 %. This percentage is much higher for Aluminum / Copper etc

What happens if this Electricity cost drops drastically ?

Raw material costs drop

And when Raw Material Costs drop, costs of ALL products drop !

When Product Costs drop , it becomes a LOW COST ECONOMY – enabling greater exports !

Even in some distant future , can we expect such a scenario in India ?

It is possible if our Policy Makers , implement :