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Comment by mk89 | Hacker News Reader

Some more context here that helped me understand better the Reuters article: https://www.cleanenergywire.org/news/lower-electricity-price...

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> She stressed that the difficulties in funding did not alter the fact that power generation costs for renewables are cheaper than fossil or nuclear energy. “Many projects nevertheless need financial safeguards for the banks to make investments available,” Peter argued

Well that's a fun little quote. If renewables are already a cheaper alternative to power generation, why would you need government funding and safeguards to convince banks to invest in a project?

If the numbers work and a bank can see a clear psth to being paid back they will invest. There's clearly information being glossed over here that would explain why banks aren't willing to invest without government safeguards.

Banks don't care if it's "cheaper than" some other form of power generation, they care that profitability is safe over a very long time span. If power prices crash 5 or 10 years from now because of renewables overcapacity (which is already happening regionally on sunny days with solar), profitability is gone.

If its not a sustainable, profitable business why should a bank invest in it? Banks aren't meant to promote the moral or ethical good. They exist to take money from depositors, replace it with IOUs, and invest the money in ways that are the most likely to be paid back with interest.

That's obviously not to say we can only have industries that work as an open market, but I'd argue that if they don't then the government might as well run the industry rather than fund these half-in half-out companies that appear to be private corporations but only actually exist because the government blessed them.

I'm not sure the two articles are about the exact same thing, or that either actually explains the upside and downsides of the proposed changes.

Moving away from per kWh production subsidies/guaranteed minimum prices/contract for difference is considered good by energy wonks because it means the renewables developer needs to think about how to sell into a market with lots of renewables. A solar project that only producing during the day at will at some point earn very little in midsummer due to price competition from all the other solar, so guaranteeing them a minimum price is sub optimal. Though already contracts usually have clauses about not paying out if there are hours of zero prices.

The second article is about a mis-estimate of how much money they needed to put aside from government budgets this year because they assumed the Ukraine situation would keep gas prices higher for longer.

So good news for everyone that it's lower, except the government that had to top up renewables developers not getting the agreed rate on electricity sales. If they pay out an extra 9 Billion then the German economy has saved a multiple of that in lower electricity prices, and probably a larger multiple again on gas for non electrical needs.

They are really about the exact same thing from different angles. The second article explains the why: they underestimated how much it would cost them. What they planned for was already used in the H1 of 2024. If you expect the same energy production (which apparently is a record of 58%) then you'll have to get another $9B from somewhere and they won't be able to do 1) additional debts, 2) use emergency covid money like they tried to do last year.

This means the budget has to be good this time, before they have holes left and right.

PS: The reuters article comes late. Apparently this was already in the news about 10 days ago. E.g., https://www.rechargenews.com/energy-transition/germanys-9bn-...

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