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| ▲ | saidinesh5 3 hours ago | parent | next [-] | | I'm guessing: fewer people buying from the power companies/grid => the fixed costs of these companies are pushed onto the poorer customers, who already couldn't afford much. | | |
| ▲ | abdullahkhalids 3 hours ago | parent | next [-] | | This is correct. But there is a bit more. Almost all power plants in Pakistan are built with state-backed dollar-denominated loans (reason govt incompetence+corruption). This means if grid demand goes down, power plants don't go out of business like they would in a market based system. Instead, they keep collecting dollar-denominated interest paid by the state, even if they produce zero power. The state mitigates this by increasing electricity prices (in rupees). I have forgotten how this helps. | | |
| ▲ | elzbardico 2 hours ago | parent | next [-] | | The reason power plants in Pakistan probably require this kind of financing is because Pakistan doesn't have the industrial capability to make the equipment that you need to build a power plant, so, dollars are a requirement. Power companies in Pakistan also don't have easy access to international money markets, and thus, it makes sense for the government to back those strong currency loans as a subsidy on infrastructure. This is not exclusive to Pakistan, this is the routine of infrastructure financing on developing countries. J.P. Morgan is not really eager to lend money for PakiPower Incorporated, but it is willing to lend to the government. | |
| ▲ | toomuchtodo 2 hours ago | parent | prev | next [-] | | It is unfortunate that the government of Pakistan and their investors (China and the IMF) made poor investment decisions. They should feel free to go back to debt holders to renegotiate the debt, or default on it and hand the stranded assets back to creditors. The death spiral is of their own making, and will only accelerate as solar PV and battery cost declines continue. Electricity consumers will simply go off the grid. Such is the risk of unsophisticated investors not understanding the market in which they invest. Capital being at risk is an inherent component of investment. My condolences and sympathy to the people of Pakistan caught in the mess. The global energy transition will be volatile. Solar electricity every hour of every day is here and it changes everything - https://ember-energy.org/latest-insights/solar-electricity-e... - June 21st, 2025 Stranded fossil-fuel assets translate to major losses for investors in advanced economies - https://www.nature.com/articles/s41558-022-01356-y | https://doi.org/10.1038/s41558-022-01356-y - May 26th, 2022 Rethinking Energy -- 100% Solar, Wind and Batteries Is Just The Beginning - https://www.youtube.com/watch?v=PM2RxWtF4Ds - January 2021 Who owns the distressed fossil generation collateralized debt? China. Where is Pakistan importing cleantech from? China. There is some IMF debt in there as well, for accuracy. How Chinese loans trapped Pakistan's economy - https://www.dw.com/en/how-chinese-loans-trapped-pakistans-ec... - August 2nd, 2024 Emeber Energy: China Cleantech Exports Data Explorer - https://ember-energy.org/data/china-cleantech-exports-data-e... (updated monthly) | |
| ▲ | jstanley 2 hours ago | parent | prev [-] | | So the power plants lend dollars to the state so that they can pay to build the power plant? Or else I don't see how the power plants are collecting the interest? | | |
| ▲ | abdullahkhalids 2 hours ago | parent [-] | | Usually there are three parties in these agreements. 1. State of Pakistan 2. Someone with dollars (the investors) 3. Local businessman who are willing run the power plant. The three parties come to an agreement on what the minimum returns should be on the investment. Say 10% annual. Then the investors give money to the businessman, who then import the power plant equipment and start operating it. The state-run electricity distribution companies buys from the power plant as needed and pays them the unit price set by the State of Pakistan. Part of this is converted into dollars at some pre-agreed rate and transferred to the investors. In all this, if the total returns to the investor are above 10%, then all is good. However, if the grid demand has fallen, and the distribution company didn't buy a lot of units from the power plant, then the State of Pakistan has to step in and give the investors the difference to make up the 10% returns. Yes, it is an insane system. | | |
| ▲ | bofadeez 38 minutes ago | parent [-] | | State capitalism like you described totally undermines the price system by replacing profit-and-loss–guided entrepreneurial calculation with political allocation of resources, thereby rendering economic calculation increasingly impossible and eroding the coordinating function of the market process. | | |
| ▲ | kragen 32 minutes ago | parent [-] | | Yes, but nobody has found a more effective way to build infrastructure in poor countries. State capitalism as described is how infrastructure development happened in Indonesia, Malaysia, Taiwan, Hong Kong, Korea, Japan, Vietnam, Thailand, etc. | | |
| ▲ | bofadeez 26 minutes ago | parent [-] | | The fact that infrastructure was built under state capitalism does not demonstrate the superiority of central planning, only that capital accumulation occurred despite intervention, often financed by prior scarcity, foreign savings, or coerced transfers; absent market prices and entrepreneurial profit-and-loss, the state cannot know whether the infrastructure created was the most value-productive use of scarce resources, only that concrete and steel were poured. | | |
| ▲ | kragen 19 minutes ago | parent [-] | | I think it demonstrates the increased variance of central planning. The Congo Free State was also centrally planned, and so was the Holocaust, the Holodomor, the Armenian Genocide, Suharto's mass murder of suspected PKI sympathizers, etc. But the expected outcome for poor countries is that they stay poor and don't develop into industrialized export giants the way my laundry list of countries did. |
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| ▲ | gus_massa 3 hours ago | parent | prev | next [-] | | Don't they charge a minimum just for keeping the wires connected? | | |
| ▲ | abdullahkhalids 3 hours ago | parent | next [-] | | I heard that they are trying to restructure the billing in this way for next fiscal year (July 2026- ), but its really difficult to find a non-regressive scheme. Electricity per-unit prices in Pakistan are set by the government, they vary depending on how much you consume [1], and they play a pretty significant role in government popularity. [1] There is a price for the first 50 units you consume, then a higher price for the next 150 units, etc. Similar system to income taxes. | | |
| ▲ | namibj 3 hours ago | parent [-] | | Grids in Germany if you're not a "typical household/office" with therefore atypical grid usage bill for peak power and energy separately; the billing related peak power is measured by averaging power over 15 minute chunks, and taking the worst one of a year. Alternatively it's also practical for such solar situations to bill for market rate price of the energy in each 15 minute chunk separately; this doesn't correctly attribute transformer and other transmission equipment expenses between solar houses and non-solar houses, but it's still handling the grid tie solar load on the grid's power plants during periods of very little sun. | | |
| ▲ | andyferris an hour ago | parent [-] | | > averaging power over 15 minute chunks, and taking the worst one of a year. What an interesting metric. Wouldn't even a very cheap and small battery (definitely small enough to keep inside an appartment) provide enough smoothing to, like, halve this peak number? You could rig it to not even output energy until you are beyond the current year's peak usage... How much money would you save this way? I just feel this number is so prone to small mistakes (grandma plugs in the wrong things at the wrong times) and hacks (like the above) that the relationship between users' reward/punishment and the grid's health seems wildly disproportionate. > market rate price of the energy in each 15 minute chunk separately I am currently on a plan with 5 minute market rates, can buy and sell in (sell prices can go negative - as can buy, actually), all automated. At least I feel we am working with the grid, not against it, and we make a small net profit (before depreciation). | | |
| ▲ | Tuna-Fish 32 minutes ago | parent | next [-] | | > relationship between users' reward/punishment and the grid's health seems wildly disproportionate. It's still much closer to the real costs for the grid operator than $/kWh. The fundamental problem that rooftop solar has revealed is that people think they are paying for the electricity, but they are not. Electricity is dirt cheap. Most of what they are paying for is the maintenance of the grid, and simple usage based billing crushes the system because of freeloader problem once rooftop solar is added. Long term, the likely thing you pay for will be the size of the main fuse that connects you to the grid. Because that's the thing that scales with the costs you impose on the operator. | |
| ▲ | distances 43 minutes ago | parent | prev [-] | | > Wouldn't even a very cheap and small battery (definitely small enough to keep inside an appartment) Like namibj mentioned, this does not apply for residential contracts. |
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| ▲ | phkahler 3 hours ago | parent | prev | next [-] | | When they start charging that way, the rich will buy batteries and disconnect from the grid entirely. | |
| ▲ | bee_rider 3 hours ago | parent | prev | next [-] | | I think most places the service is priced under the assumption that usage is enough to pay for the grid… I’ve only ever rented though. Are connection fees something that homeworkers think about? Possibly we will have to see changes to account for this sort of stuff at a more granular level, as the grid becomes more dynamic. But, that’s a future we should be actively looking to design for, as the energy supply mix is going to change whatever anybody thinks about that. Can’t beat energy falling from the sky, on price… | | |
| ▲ | namibj 3 hours ago | parent [-] | | In a random German apartment usage tends to be on the order of 30-ish EUR per person, and the connection fee is typically around 10 EUR per month. | | |
| ▲ | apelapan 28 minutes ago | parent [-] | | Is the €30 usage fee going directly to the producer of electricity, or is part of it a variable transmission fee that goes to the network operator? My monthly electricity bill in Sweden, averaged over a year to 1600KWh/month, is approximately €90 production, €50 transmission fee, €25 fixed connection-size fee (25A, 400V), €70 national electricity tax and €50 VAT for a total of €285/month. We'll be moved to yearly-peak-based transmission tariff in 2027 (European law), but for now I don't need to worry about plugging in the car to chargeon cold days or taking shower when someone is cooking. |
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| ▲ | 3 hours ago | parent | prev | next [-] | | [deleted] | |
| ▲ | manmal 3 hours ago | parent | prev [-] | | Usually that’s included in per-kWh fee, so indeed usage dependent. |
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| ▲ | riku_iki 3 hours ago | parent | prev [-] | | its easily fixable, utility company can charge fee for fixed cost those who connected to the grid, and if all rich decided to disconnect, then they disconnect neighborhood eliminating fixed cost. |
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| ▲ | kieranmaine 3 hours ago | parent | prev | next [-] | | The following isn't a grid problem (more of a demand issue), but maybe they're referring to this: > But 45 percent of Pakistanis live below the poverty line, according to the World Bank, putting solar panel systems well beyond their reach. The pool of customers for the national grid has gotten smaller and poorer, and the costs of financing old coal-powered plants have increasingly been passed on to those who can least afford it. [1] 1. https://www.msn.com/en-us/news/world/how-pakistan-s-solar-en... | |
| ▲ | ZeroConcerns 3 hours ago | parent | prev | next [-] | | Previously, pretty much everyone (not just 'rich people', although, well, 'rich' is relative here, of course...) had diesel generators, which were not connected to the grid, since that would be seriously expensive, plus syncing would be pretty much impossible anyway. With solar, you can feed back into the grid much more easily, to the point that this is the default. This sort-of doubles the load on the grid (not exactly, but you get the idea), since both 'consumption' and 'production' need to cross the same wires. This is a problem even in, like, Germany, where the grid operator can send a "kill signal" to local solar inverters to shut down. In Pakistan, I can't even imagine... | |
| ▲ | elzbardico 2 hours ago | parent | prev [-] | | Because storage is incredibly expensive and thus, for every GW of installed solar capacity you need and an exact another GW reserve capacity from other sources for the rare times when the sun doesn't shine (like, for example, during the night or during large spells of bad weather). Besides being intermittent, solar and wind are not really dispatchable, that is, the grid operator doesn't have many levers to control the power output of a plan, and thus this imposes more stress on the other dispatchable power sources. Some of those backup sources are not very flexible and take a long time to turn on and off, like coal based, and a lot of nuclear plants. Others, can be brought up online, ramped up and down faster, like gas turbines and hydro. But other than gas turbine, most other firm sources economics are based on a predictable demand and a minimum duty cycle. A nuclear plant is very capital expensive, have an excellent capacity factor, but, it can't pay itself and its investor if it is not going to be run most of the time. Base load is cheaper, because you dilute fixed costs, peak load is more expensive, because you sell less units to dilute your fixed costs. Despite whatever the renewable lobby says, experience has shown over and over, that after a certain proportion of intermittent generation in a grid, large frequency excursions, deteriorated economics and frequent load shedding events are rather the norm than the exception. AC grids are stupidly complex beasts. Most politicians, journalists and investors that drive our current discourse on the grid don't have even the most basic pre-requirements to understand it. | | |
| ▲ | gpm 2 hours ago | parent | next [-] | | This is all true except for the fact that storage is not incredibly expensive anymore, which invalidates every single conclusion you reach. Storage is now reasonably affordable, and the trend suggests it will soon be incredibly cheap. | | |
| ▲ | spwa4 an hour ago | parent [-] | | Which will make the problems of the rich disappear and the problems of the poor and the state ... worse. (because the costs of the state are paying off loans for expensive generation, costs which they recover from the poor) | | |
| ▲ | triceratops an hour ago | parent [-] | | The state can default on the loans too. It sucks and it will make future financing more difficult. But it remains an option. No such thing as risk-free lending. |
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| ▲ | londons_explore 2 hours ago | parent | prev | next [-] | | All these problems become solved if you have realtime market pricing. Nobody would bother to install rooftop solar if daytime power was super cheap on every sunny day, yet expensive at night when their solar isn't working. | | |
| ▲ | kryogen1c 2 hours ago | parent [-] | | Wouldn't this model price out poor people? Doesn't that mean the most vulnerable people cant afford the services when they need them most, ie max hot/cold? Changing the utility to a market sort of defeats the point of trying to optimize the utility. | | |
| ▲ | londons_explore an hour ago | parent [-] | | A typical user still pays the same on average in a market. Just they might pay more in some hours and less in others. Some market systems have gotten bad press over huge bills (eg. Texas), but that only happens when only a small chunk of users participate in the market, whilst others are on fixed pricing and therefore don't care about usage. When everyone participates, supply and demand make sure the price never goes super high, simply because there are enough people who will turn off stuff to save money. |
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| ▲ | k1musab1 2 hours ago | parent | prev [-] | | This exact issue lead me to follow the grid orchestration research out of the Oak Ridge Laboratory. The building blocks already exist to enable this. An interconnected smart network of renewables can become a stabilizing force in the overall grid. Off-peak storage would still be required, but would no longer need to be "stabilizing" (turbine or other similar generator), and can be simple batteries. |
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