The trend of energy prices

The trend of energy prices

The demand for electricity is increasing each year and the electricity network continues to expand. In addition to the increase in the market, the prices of energy is affected by many other direct and indirect factors. When we talk about the price of energy, we are talking about the price of 1 kWh of electricity produced

The demand for electricity is increasing each year and the electricity network continues to expand. In addition to the increase in the market, the prices of energy is affected by many other direct and indirect factors.

When we talk about the price of energy, we are talking about the price of 1 kWh of electricity produced by some plants, including plant construction costs and the costs of maintenance and operation of power plants. The competitive price of energy is made up of many components, and can be divided into direct and indirect costs.

Under the direct costs we consider capital costs, the so-called CAPEX and operational costs the so-called OPEX. Capital costs related to plant construction including payment of interest rates, while operating expenses are maintenance, storage of waste (if applicable), fuel costs, costs of issuing the necessary permits, etc.

Indirect costs are many, and usually are divided into social costs (a result of occupational injuries or health problems due to emissions) and environmental costs. Precisely because of their unpredictable and difficulty to calculate, but experience shows that exceed the direct costs, sometimes even several times over.

We conclude that energy prices are not a fixed value for a particular energy source, but it depends on many factors including local political and legal conditions, macroeconomic factors, the available options of financing, and market structure and the power grid.

Price comparison of costs for different conditions and different sources of energy generates adequate basis for determining long-term energy decisions. However, because of the large number of factors that influence the price, any estimation should be viewed with caution, and when comparing different sources need to consider the same
factors.

In the lower graph, the data collected by the OECD and BRICS countries, shows the cost of electricity from different energy sources in 2009. These are only direct costs.

Graph of direct and indirect costs of producing electricity from fossil fuels, wind energy and nuclear energy shows large differences in the three most commonly used sources, but we can conclude that the indirect costs play a key role for fossil fuels, and can greatly determine the price of energy from nuclear sources.

The differences reflect the direct costs of different technologies to be applied, or the cost of construction required for the exploitation of resources. The biggest difference in the price of energy is found in sources that further use of fossil fuels, increasing fuel prices of 50% can increase the production cost of electricity for more than a third. Because of this, sources such as wind or solar energy, which does not use fossil fuels, are becoming increasingly attractive and widely used. The same thing applies when it comes to taxes on emissions, with respect to these two sources are not created.

The next graph shows the chronological oil prices since 1974 to date. As you can easily see that the oil prices do not fall, but are almost constantly growing, we can conclude that the sources used by the oil are difficult to expect a reduction of costs of energy production.

Reducing the cost of electricity production can be achieved by the development of technology and development of materials, but represent an important factor in policy and legislation, and incentives that are set aside for specific energy sources.

Renewable energy, especially wind energy and solar energy have an increasing role in electricity production, and the need for them is growing. Their big advantage, when we talk about the costs of energy production, is the fact that their work does not use fossil fuels, do not use water, and do not generate greenhouse gases.

A webinar held on 24 October, organized by Elsevier and Renewable Energy Focus’s, Steve Sawyer, Secretary General of GWEC, and Martin Bilhardt CEO of PNE covered exactly this topic. Emphasis of the webinar was exactly how the development of technology, greater efficiency in production and improved materials can significantly reduce the production cost and increase the market, greater competition and better legislation can further assist in the implementation of renewable energy sources, but also long-term reduction and stabilization of energy prices in general. They emphasized the importance of focusing on national or regional markets and legislation.

When we talk about market developments, it is important to note a major shift in South America, particularly Brazil, where as many as 9 leading wind farms opened. Progress in Asia, particularly Japan, which after the tragedy in Fukushima developed the exploitation of offshore wind energy. Acceptance of wind energy and solar energy as an increasingly common source of electrical energy, and the transformation of the power system can be seen in Denmark, Spain, Norway, and even China, and this could further affect positive change in the market that would increase competition and reduce costs in general electricity production, concluded Sawyer.

Renewable Energy Projects in Bosnia and Herzegovina

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