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[โ€“] 1 point 2 days ago (2 children)

It's not really a subsidy to have long term contracts. It's just a manner to have predictability, and make it easier to plan things in the future. Some of it is a risk shift on quantity or prices, on who bears the risk if production or demand don't match up, and whose responsibility it is to make those two number match, by cutting power to customers or paying people to disconnect their powerplants from the grid.

But the long term contracts are often there for price and volume stability. Spot prices will still fluctuate, though, especially if it's unpredictable how much energy different renewable sources will generate at specific times in the future, or how much different customers will want to consume at specific times in the future.

Either way, it costs a lot of resources to match up supply and demand, and you'll either use prices to help push the numbers together or you consume a lot of resources trying to mandate those numbers come together. Trying to fight price swings will cost resources in some other way.

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  • [โ€“] 1 point 1 day ago (1 child)

    It's a subsidy when the state ends up paying the difference between the guaranteed price and the average market price.

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  • [โ€“] 1 point 21 hours ago

    The contracts I'm describing are just long term contracts. Buyer and seller negotiate a long term price, and that's the market price on that timeframe, no government involvement. Sometimes the spot price moves up or down, but the contract price is stable. It's like buying a futures contract and just taking delivery regardless of how much the price moves: you paid a single price a long time ago, and all the fluctuation in the meantime doesn't affect the price you actually paid for the right to take delivery.

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