Good News Network recently explained how traditional consumer-driven supply and demand market forces are pushing coal further and further to the edge of the bed (and economic ruin), like a sprawling spouse kicking the blankets toward the cold tile floor.
A recent string of cloudless days in Germany saw the country’s solar energy production climb above 32,000 megawatts in a single day last week—smashing the previous record set on March 23rd, according to a report from Bloomberg News.
The sunny days are slated to continue, according to the German weather service DWD.
These sunny days mean that solar power is generating around 40% of the total baseline in Germany, with all their renewables together accounted for 78%, while coal and nuclear power trailed behind with only 22%.
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By 2038, renewables are predicted by the German government to make up 80% of total grid production. And owners of coal plants understand that it could become completely unsustainable to continue financing operations many years before that milestone is achieved.
A Death Rattle for Coal
In Europe, it’s already 100% more expensive to finance, supply, staff, and operate a coal-fired power plant compared to a renewable facility, while in historically coal-glutted nations like the U.S., India, and China, it’s already 50-60% more costly.
The recent lockdown orders for COVID-19 in Germany could have had a measurable effect on the sunny days as well, as the reduction in air pollution from things like car exhaust has already been recorded as significant in countries like India, where residents have been able able to see the Himalayas on the horizon for the first time in 30 years.
File photo by Nathan Dumlao, CC
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Not only are the shutdowns rewarding the solar market with clearer skies, but the already lagging coal market is taking further body blows as demand plummets from the shutdown of stores and office buildings. In Germany, renewable sources are the first to enter grid circulation, and since the decrease in energy demand, consumers are actually using less power than is available, meaning the electricity generated from a coal plant might be not only unutilized—but unpaid for.
The services desired by consumers are simply being fulfilled by those most readily capable of fulfilling them.
This not only applies to Jane and John Smith turning on the lights in their house, but buyers and sellers in the energy sector. The simple explanation is as follows. Johan runs an energy investment firm, and when looking to buy shares of a power producer, his maximum price for carbon-based power is 5,000 euro per share, and for renewable power, 8,000 euro per share. He can afford to pay more for renewables because he stands to make more money from those shares.
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Jurgen, who runs a carbon-based power source, can only afford to sell at 10,000 euro per share, because of current market demands for renewables. This difference of valuation of 5,000 euro between Jurgen and Johan prevent a sale from being made, and so Jurgen must either find a willing buyer, a way to reduce operating costs, or another energy project.
Whether catalyzed from climate activism, science, or whichever technology costs the least to operate, these simple supply and demand forces are causing people to put their money in renewables—and money-talks.
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