Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Saturday, April 20, 2019 05:12:27 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Lowering electricity prices

By
06th-Sep-2018       
Comments
Share your thought
Post a comment »
Read all () »

Christian Chuboda :
Discussions on how to design the energy transition often boil down to the cost aspects. The management consultancy McKinsey released a study estimating the costs for a system change in Europe to a green and decarbonized power sector at €6,600 billion.
Europe's cumulative GDP between 2020 and 2050 is calculated to be €510,000 billion - the system change would therefore amount to 1.3% of the overall GDP.
Still, these are abstract numbers for most citizens. They reach too far into the future and are hard to comprehend, given that implications for the individual level remain unclear.
That is why the price for electricity has become such a conspicuous indicator. Everybody knows more or less what he or she is paying for electricity, and any increase is felt in the individual budget. Electricity prices are now closely connected to the overall energy transition - increasing prices symbolise the failure of the energy transition.
What few consumers are aware of: electricity prices for household consumers in Europe differ a lot. Based on the average of the EU-28 states, the price for one kWh was slightly more than 20 Cents in 2016. However, Danish, German, and Belgian customers payed up to 10 Ct more for each kWh.
The reasons behind the price spread are numerous. First of all, local differences in purchasing power and exchange rates contribute to the fact that Denmark and Germany are leading the ranking compared to Bulgaria having the cheapest prices.
Another explanation frequently offered by politicians, energy-intensive companies or consumers are the varying costs of energy generation in the respective countries. Advocates of this narrative postulate that countries with a higher share of renewables in their energy mix have established a higher price level due to the long-standing subsidies for renewables.
However, the statistics do not support this theory. Sweden, a country that produces half its electricity from nuclear resources and half with hydro power, has a similar basic price, i.e. the price for the production of electricity before VAT as well as other taxes and levies. Moreover, the Netherlands still produce 80% of their electricity using fossil fuels, mostly natural gas. Their basic price is comparable to that in Germany.
Thus, the big leverage to lower electricity prices is not the production side of the equation, but the taxes and levies. Generally, the electricity price for consumers is made up of three major components: costs for production, grid-use and other levies and taxes. The latter two are more or less politically determined.
In Germany, more than half of the power price for household consumers consists of those politically determined components. German citizens find a number of different factors on their electricity bill: 25% of the overall price goes to the power grid providers, the tax for financing investments into renewable energy makes up almost another quarter.
The profit margin and supplier's cost of purchasing wholesale power on the market amount to one fifth of the overall price, other levies total up to 30% of the price. Germany's grid fees are amongst the highest in Europe. Other countries may have higher network fees, but profit from lower costs for the production or lower taxes and levies. Europe's largest country is the testing ground for a complex energy infrastructure trying to optimise the transition from fossil fuels to renewable energy sources while keeping the energy prices at a stable level.
Germany's electricity generation is largely decentralised. Around 40% stem from renewable sources, mostly wind and solar. During the first half of 2018, renewable energy sources satisfied more of Germany's power demands than coal. Renewables will soon be or sometimes already are producing energy at grid parity - meaning they have the same production cost as conventional sources. Again, the production side of the equation will be negligible.
EU champions 'people power' but devil lies in the detail
The European Commission's Winter Package of energy proposals, unveiled yesterday (30 November), is set to boost household and local power generation, but obstacles remain.
One important key to lowering electricity prices in the short-term are the grid utility fees. In a complex energy system with many traditional structures, digital solutions are the most important leverage to bring down prices. By connecting and intelligently controlling power plants, grid-use can be optimised leading to lower grid fees paid by both consumers and industry.
The approach for the grid fees is twofold: With a temporal flexibility, electricity can be intelligently used and stored when renewables produce energy in abundance. A spatial flexibility underlines the importance of sharing energy within a community. The closer to the actual production site the energy is consumed, the better for the whole system.
Thus, grid fees can be cut and hence electricity costs reduced. Suddenly, the perception of the energy transition changes from being a failure to being successful.
The recent deal between European Parliament and Council on the Renewable Energy Directive II (RED II) supports the development of renewables and shows the importance of local generation. RED II strongly backs energy communities and prosumers by including a strong definition of self-consumption. Furthermore, the deal includes a promise to remove all charges on electricity produced by households that is consumed on premise.
By strengthening local structures and excluding the direct use of electricity from taxes and levies, the EU supports the decentralised energy transition and lowers the prices for customers all around Europe.
At the same time, digital solutions help to increase the possible use cases for renewables. As digital solutions make our day-to-day lives easier, why not also make the energy transition successful and affordable? Using digital solutions to bring down grid fees would be a first step.
(Christian Chudoba is CEO of Lumenaza, a German company providing software for decentralised and digitised energy).

Tariff
Add Rate

News Archive

Inside The New Nation

Football »

FIFA backs English players' social media boycott over racism


AP, England :FIFA is backing a 24-hour social media boycott by professional players in England in a protest against racial abuse and revealed plans for a new global campaign to eradicate discrimination in soccer.Following a series of high-profile cases in recent weeks, the Professional Footballers' Association has gathered support from ...

International »

US President Trump declares victory on Mueller report D-Day


President Donald Trump, backed by his attorney general, declared himself fully vindicated on Thursday in the investigation into Russian election meddling and alleged collusion with his campaign - even before the American people and lawmakers see the full probe report."Game Over," Trump tweeted, using a "Game of Thrones" style montage ...

Entertainment »

Shanta Jahan in Australia for hosting


Sheikh Arif Bulbon :Shanta Jahan is a popular host of present time. Though she acts sometimes but always feels comfortable to present herself as a host to all. For the first time Shanta went to Australia to host a show. She left Dhaka at night on April 18. Today is ...

Editorial »

One is punished for another's sin!


LOCAL media reported that a day labourer was allegedly sent to jail on Wednesday for not paying electricity bill of Tk 4007, even though his house at Mochagora village in Muradnagar upazila in Cumilla district had no electrical line. On Thursday evening, Chief Judicial Magistrate granted him bail after hearing ...

Cricket »

Sri Lanka dump Chandimal, bring back Thirimanne for World Cup


AFP, Colombo :Sri Lanka Thursday dumped established stars including former captain Dinesh Chandimal to hand batsman Lahiru Thirimanne and leg-spinner Jeffrey Vandersay a place in their World Cup squad.Chandimal, who was one-day captain until last October, wicketkeeper-batsman Niroshan Dickwella, off-spinner Akila Dananjaya, openers Danushka Gunathilaka and Upul Tharanga were all ...

Cricket »

Senior players need to take the responsibility: Faruk Ahmed


Former chief selector Faruk Ahmed insisted on the performance of the senior players, stating that they need to take the onus if Bangladesh want to do well in the upcoming ICC Cricket World Cup.According to Faruk, the condition should give Bangladesh a confidence, given that they stormed into the semifinal ...

Entertainment »

Mehazabien’s Boishakhi works create viewers’ attention


Sheikh Arif Bulbon :For the last few years, Mehazabien Chowdhury established her strong position in media by virtue of her acting quality and skill. She is now getting positive response for acting in two Boishakhi plays. Afran Nisho was her co-actor in these two plays - Tom & Jerry and ...

International »

Turkish opposition takes control of Istanbul, re-run appeal still pending


Reuters, Istanbul :Turkey's main opposition candidate took office as Istanbul mayor on Wednesday after a stunning victory over President Tayyip Erdogan's AK Party, but the new head of the country's largest city still faces an appeal for the vote to be re-run.The final result of the March 31 local elections ...

Editorial »

Power politics in Egypt


A HUGE majority of Egypt's MPs on April 16 approved constitutional amendments to allow President Abdel-Fattah al-Sisi in power until 2030. The amendments were initially introduced in February, however after lengthy debates and discussions favouring the Egyptian society it was updated earlier this week. "The president's current term shall expire ...

Football »

Iniesta's J-League club Kobe part ways with coach Lillo


AFP, Tokyo :Barcelona legend Andres Iniesta's Vissel Kobe have terminated the contract of manager Juan Manuel Lillo following a poor run of results, the Japanese club said on Wednesday.The 53-year-old former Real Sociedad and Zaragoza boss won just two of six games since taking charge last October as star-studded Vissel ...

International »

US waging 'financial war' against Palestinians


AP, Ramallah, West Bank :The new Palestinian prime minister on Tuesday accused the United States of declaring "financial war" on his people and said an American peace plan purported to be in the works will be "born dead."In his first interview with international media since taking office over the weekend, ...

City »

Various organisations formed a human chain in front of Jatiya Press Club on Wednesday marking the International Krishok Sangram Dibash-2019.


Entertainment »

Priya Bapat to take up a web series


Web Series are surely the in thing nowadays and so many actors, irrespective of their stardom, are being seen in them. Marathi superstar Priya Bapat has also bagged a web series called City Of Dreams. Sharing her experience of being part of the series, she says, “Web series are now ...

Editorial »

Urgent steps needed to check outbreak of diarrhoea


AT the advent of summer this year, the number of diarrhoea patients has already crossed the recent records. International Centre for Diarrhoeal Disease Research, Bangladesh, and the other city hospitals are struggling to tackle the surge in diarrhoea patients. The diarrhoea patients admitted to the ICDDR,B has crossed the number ...

Cricket »

Tearful Taskin vows to make a strong comeback


Fast bowler Taskin Ahmed vowed to make a strong comeback after being snubbed from the 15-member World Cup squad, announced by the Bangladesh Cricket Board (BCB) on Tuesday.Chocked with emotions as tears were rolling down from his cheek Taskin shared his disappointments with media."Its' ok just pray for me," Taskin ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news