Please explain "virtual selling" to me

[Skybird]

http://www.bloomberg.com/news/2012-0...eet-goals.html

First, to make one thing clear: this is not meant as a thread to bash Greece. It just happens that Greece is the example that uses this model first, or plans to do so - I cannot help it. That it is Greece is not the reason why I post this. I know some will not believe me, but I cannot help these guys.

I am not sure if I understood this thing correctly - but if I do, then I cannot even laugh about thisreality-denial anymore.

So the EU permits a sales model they call "virtual selling", do I get this right? It means that the Greeks want to produce solar energy in Greece. This energy they want to sell for the better part to foreign nations. These arey nations with shortages in energy, or nations that will not meet their emission cap goals. The point is, the energy from Greece will be sold, but only virtually delivered. That means, it does not really get fed into the European powergrid, and thus it does not really get delivered to the nation having bought it. Instead it gets consumed in Greece. But the buying customer earns the right to raise his emission limits a little bit. The EU approves this plan, since it helps to meet emission cap plans, so they say. Actually these are not met by reducing emissions, but by increasing the total cap.

This is how I understand it, or am I wrong?

What would be the consequence from this? Greece produces power by solar panels, and consumes it in Greece. Another nation pays them money, but does not get power from them. Instead the EU, not being payed at all, gives that nation the right to slightly increase the emission caps it has. So the EU gets no payment, but Greece does, but it delivers nothing. - What is left at the end of the day: Greece gets money for nothing, and the general emission caps get raised, by that giving on paper the impression that they will be met. The "buying" nation gets nothing delivered for its payment, but produces as much emissions as before. Since thnat now is legal, the overall emissions increase within legalised limits.

In simplier words: Greece gets payed by nations for that EU statistics on emission goals get "beautified" by the EU.

Do I get this right so far?

And if it is right how I understand it, am I the only one shaking the head in despair?

I also do not understand the claims that this model would help Germany to meet its expected energy shortages since the nuclear powerplants get phased out over here. Germany does not produce more energy by this model, nor gets any energy delivered from the solar panels in Greece to Germany, not directly and not indirectly. It was also said that neighbours like Italy would benefit from this model - in how far?

It all sounds extremely idiotic to me, but as I said - I am not certain that I understood it correctly. Am I missing a point?

Reminds me on the emission trading scheme that the EU has established - and that meanwhile completely has collapsed and has proven to work even counterproductive to the intention.

P.S. Germany has already refused to pay subsidies for this model. Like it also has refused to pay green subsidies for atomic energy produced by other nations over their claims that nuclear energy is free of emissions. Atomic energy subsidised as "green" - Willkommen in der Irrenanstalt. Politicians' dementia knows no limits, it seems. Or their unscrupulousness.

[Skybird]

P.S. on the plan to invest into the powergrid in europe in the future and build powerlines from south the north, over the Alpes, I say this that already in Germany we struggle to come up for the investements needed to modernise the German powergrid so that the palnned windparks in the north can bring their eneergy to where it is needed most: in the south of Germany. What is being labelled - with a big mouth - as "Energiewende" over here, in principle has not survived the first 18 months. What does not work ins mall scaling, should suddenly work in big scaling, and by financing of non-real, virtual sales? What idiot would invest into such a "product"? What product? Or will we use virtual electricity in the near future? I wonder if our transfomers are compatible with that type of energy.

[Osmium Steele]

It is the "trade" part of Cap and Trade.

Instead of openly trading emissions credits, they subsidize Greece's power grid and raise their own emmisions caps legally.

[Skybird]

Originally Posted by Osmium Steele

It is the "trade" part of Cap and Trade.

Instead of openly trading emissions credits, they subsidize Greece's power grid and raise their own emmisions caps legally.

So I understand it right that in principle it is fraudulent labelling?

[gimpy117]

just another way for men in government to rationalize not investing more in renewable energy

[Skybird]

Well, the EU polit-bureau commissioner for energy - a fallen German who was chased away by Merkel - approved it on behalf of the EU, so what did I expect in reason...

[MH]

Trippy idea.....
So they sort of find ways to avoid their own rules.

[Osmium Steele]

Originally Posted by gimpy117

just another way for men in government to rationalize not investing more in renewable energy

Since when solar generated electricity not renewable energy?

[Morts]

Originally Posted by Osmium Steele

Since when solar generated electricity not renewable energy?

Letting other countries raise their caps like that would allow them to NOT use renewable energy.

Short term win for the companies, long term fail for the country

[Diopos]

Originally Posted by Morts

...
Short term win for the companies, long term fail for the country

Don't say things like that. People might think you are greek or something ...

.

[Osmium Steele]

Originally Posted by Morts

Letting other countries raise their caps like that would allow them to NOT use renewable energy.

Short term win for the companies, long term fail for the country

But, isn't it incentive for Greece, and other countries, to build more solar plants? Isn't it a win for renewable energy investment?

Heck, if everybody paid them, eventually Greece could generate all power for the entire planet! No one would need to use gas, coal or oil to generate electricity. Atmospheric CO2 plummets. No more need for emissions caps. Utopia attained!

(Yes, the tongue is firmly planted in the cheek.)

[Skybird]

Originally Posted by Osmium Steele

Since when solar generated electricity not renewable energy?
(...)
But, isn't it incentive for Greece, and other countries, to build more solar plants? Isn't it a win for renewable energy investment?

Heck, if everybody paid them, eventually Greece could generate all power for the entire planet! No one would need to use gas, coal or oil to generate electricity. Atmospheric CO2 plummets. No more need for emissions caps. Utopia attained!

(Yes, the tongue is firmly planted in the cheek.)

You have not thought it through correctly, the plan they have, I mean. Greece DOES NOT deliver the electricty it produces by solar panels according to this plan, they only virtually sell it, but not in real. To be precise, it plans to deliver/export only 10% of the electricity it wants to produce with these panels. So electricty they produce - does not get distributed. It stays in Greece. The eneeds for enmergy elsewhere thus remain unaffected by this.

Now let'S have a simple, schemnatic example of what happens according to that plan.

There is let's say Holland. Holland produces electricity, and let'S assume by doing it it cannot cap the emissions it is allowed to reach. It exceeds the limits.

Now comes Greece and produces electricity with solar panels. Clean, green, nice. It sells an export of electicity to Holland. Holland pays for the electricity.

Money flows. But electricty flows NOT. The sale is virtual only. The electricity bought by Holland gets consumed in Greece.

That leaves Holland with some money less, and still with the need of electricity, becasue it gets jone from Greece which it has payed to virtually deliver, but not in the real world.

Hollanmd thus still prodcues electricty the way it did before it agreed to the deal with Greece. It still causes emissions by its own, and it still causes almost the same emissions it would have casued than before the deal. It vcasues these emissions, since it still must prioduce the electricty it needs - sine it does not get the electricity if has bought from Greece. Remember, the electricity stays in greece and gets consumed there.

But Holland is given by the EU permission to increase the total maximum limit on its emissions. So by giving the Greeks money for electricty Greece doe snot need to deliver and does not plan to deliver, Holland earns the right to cause the same emissions as before, but now legally, either overstepping the new limits by a smaller margin than before, of maybe it dfoes not overstep the limits at all anymore,s ince they have been in creased. But Holland still produces the same emissions than before!

So in what way is this business model, if one dares to call it this, a model for producing green energy? Notg less emissions get caused. There is no em ission rfeduction. There is no electricty delivered to Holland. There is no decline in demand.

And what does Greece do with the electricity it wants to additionally produce, but probably does not need? Where is the sudden increase in demand coming from? Do they suddenly run an additional TV in all households, all day long?

This is a faulty, even fraudulent business model from all beginning on. The Greeks get money, the Dutch get a rise in their emission limits, and the EU gets a formal exycuse to claim that their emission goals will be met (at the cost of having increased them), or missing them by just a smaller margin. environment-friendly electricity production has nothing to do with it.

Not to mention the technical problems and missing powergrid infrastructure to feed that electricity into the continental powergrid.

You see, there are no emissions being cut in this model anyhwere in Europe. That's why it is not any green at all. Emission caps even get increased through the backdoor!

Do you now understand why I was so irritated and did noit trust my eyes and askled whether I really undersxtood this correctly?

[Diopos]

Solar has an intrinsic problem. It goes down with the sun. Exactly when you need to turn the lights on. A viable solution for nearly all renewable energy must include as stabilization of output reagardless of the variation of the primary source (sun or wind). The Germans had actually proposed a very interesting solution almost a century ago. Use renewable energy to produce hydrogen by hydrolysis of water. Store hydrogen. Then burn it to produce electricity. The stored hydrogen "buffers" and secures the input (and output) of the generator and stabilizes the whole Grid. You can not talk about electric power distribution without a stable grid. Modern material science may provide other solutions than classical hydrolysis, but the basic thing is that your power source must be consistenly stable. At present we are capable of using renewable power sources because we still have a large capacity of "classical" power sources to compensate.

.

[Skybird]

Some years ago, Germany was world market leader in solar panel production. Then they messed up the healthy business. They wanted to push solar energy in Germany, and thus started to pump hilartious (and unneeded!) subsidies into the business, in order to increase it artifically. The market did not grow naturally, but was pumped up and accelerated by "doping" artifically. The demand for solar panels in Germany got stimulated by paying private owners of solar installations high fees for the power they produced.

This idiotic policy, that once again wanted to trick and cut short in order to not needing to wait for natural growth at healthy pace and within healthy limits, had two results.

First, solar energy became hilariously expensive for the consumer in Germany, due to the high fees payed to the private producer. The energy thus never reached economic competitiveness. It still is not, and I doubt it ever will be in the forseeable future.

Second, Asian companies saw that the idealistic Germans subsidised EVERY producer of solar panels, not just their own (which was once the idea behind subsidies, right? To boost your own economy!? But the Germans and their imperial idealism, you know...). They therefore bought shares of German producers to gain influence and know-how in German production, and they increased their own (far superior) production capacities, with estimated over 85% of the subsidies now going not to German companies, but Chinese and other Asian ones.

Now the German solar panel business is breaking down, and collapsing, or better, it alöready has, with he former big names already having gone K.O. Former market giants have collapsed and were extincted by the Asien competitors. Jobs get lost, production capacity is turning into a free fall. The former world market leader in quantity and quality - now is being belittled, and has no competitive solar panel industry anymore. The remaing companies there are, all are in misery, fighting against the chances. And still subsidies get payed - to Chinese companies.

And the private builders of solar panels on their homes' roofs? They agreed to build these panels because it was promised that by the high fees they would be able to refinance the initial investements, and after short time make profit. Now the fees got reduced for the second time, I think, and I forsee that there will be more cuts, because the German powergrid cannot handle the additionally fed electricty from such installations and new wind parks as well. Plus there is no money to upgrade the powergrid. Private home owners have started to make losses or being threatened by loosing money due to the changed conditions and reduced fees. So, the price for this dilettantic policy is being based by the private people again. The tax payer loses the subsidies, and the general public pays the higher energy prices.

Nothing compares to naturally grown structures. That is true for economies as well. Solid business models, solid plans instead of surreal expectations and intentional shortcuts and cheats, are of utmost importance.

Problem is that not many understand this anymore today. They want more than just it all, and they want it not now, but wanted it already yesterday.

That is the economic pendant to an amok run. Sooner or later, the losses always exceed the short-term gains. Always.

This is why I am shocked by business models like they are common in the finance world (selling finance "products" that in principle are nothing else but cleverly relabelled debts), or the virtual selling of electricity. Politicians seriously thinking that such models can work, show a lack of sense for reality that is terrifying. The same is true for this insane idea of that there can be something like "unlimited growth". In a limited world, that simply is impossible. Just a sane mind's healthy reason should tell one that.

[the_tyrant]

You know Skybird, its your pursuit of truth that will drive you mad

I just accept politics and economics as "magic" and move on with my life.

This is no longer the age of imperialism (when money made sense), no longer does it come from the barrel of a gun. Nowadays financial "wizards" do a bit of "magic" and money appears out of thin air.

Just accept it as witchcraft, and move on with your life