by latentsea | 2025-11-06 16:54:18+00:00
Electricity isn't priced only one way.

In the Japanese market in summer during the day the spot price nose dives to almost nothing because of an oversupply of solar. Yet most installed solar is operating under the FIT system where all generation is guaranteed to be bought by the regional generation company for a fixed price, regardless of what the spot price is. This worked to incentivise bringing lots of solar online, but its paid for by adding a levy as a line item to everyone's electricity bill. To lower the financial burden the government is ending the FIT system and transitioning to FIP where from memory solar operators still make similar money as they did under FIT but it's sold on the spot market and then the government pays a premium on top.

The TSOs have to manage the supply-demand balance and there's things like the balancing market to help with this. However the government is also changing the regulations to put more of the burden of managing the supply-demand onto the solar operators themselves and not lump it all on the TSOs. Lots of people invested in solar under the FIT system because operation and expected revenue was straightforward. Now with shifting to FIP it's less straightforward. Additionally when the burden finally falls to the solar operators to proactively manage the supply-demand balance, there aren't good systems they can readily leverage to do so, and the average Joe with solar panels on their roof isn't necessarily going to want to be submitting 30 minute generation plans to their regional TSO, hence they'll eventually have to wind up going through aggregators and such becoming part of a virtual power plant where you may have things occur like negawatt transactions to incentivising reducing demand to help manage the supply-demand balance etc.

PPAs are also an increasingly popular option for purchasing/selling solar power. They're usually fixed price contracts, but depending on how it's setup money either changes hands directly between the generator and consumer (via a retailer) or sometimes the generator sells it all on the spot market and then settlement of the difference between the contract price occurs afterwards between the parties. Even with fixed price contacts the revenue isn't completely guaranteed because the TSO might need to issue curtailment orders to the generator in order to manage supply-demand balance when there is oversupply or grid congestion.

It's not all sold on the spot market.

Anyway, my comment was less about how it's priced more about hidden operational complexity of renewables non-industry folks aren't aware of. In particular turbines have inertia and so if you stop generating power they will still run for a while, and this helps keep the frequency on the grid stable, but solar doesn't have inertia since it isn't turbine based, so large swings in generation can have an instantaneous impact on grid frequency, which can be destabilizing, unless you do stuff with batteries and inverters to produce pseudo-inertia. TSOs need to manage fluctuations with frequency containment reserve, frequency restoration reserve, and replacement reserve. These costs all wind up as part of the wheeling charges which affect the bills in the end.

There's also things like capacity payments/capacity market which impacts solar operators, but I don't know specifics on how that stuff works.