Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
The German gas plants are price makers whether Sweden is buying from or selling into that market, so as long as the Germans continue to need the German gas plants.

One thing to be noted in Jerome's "wind killed by volatile gas prices" is that if a substantial share of windfall gains by wind turbines in a are channeled into more construction of wind turbines, then those new wind turbines will have even bigger windfall gains during upswing periods, financing more construction.

This would be a construction boom and bust with gas prices, but one could envision the windfall-financed turbines as paying a revenue share back to the windfall providing turbines, rather than financing forward, when the price drops below the long term finance cost of the windfall providing turbines.

So the financed turbines "save", eg, 50% of their windfall gains in more wind turbine capacity. If they have "seeded" an additional 10% capacity when the downswing hits, they are now selling from 110% of the capacity on the same fixed cost, so the effective fixed cost is 9% lower. If they have "seeded" an additional 20% capacity, they are now selling from 120% of the capacity on the same fixed cost, so the effective fixed cost is 17% lower.

Indeed, a region or major municipality that was in a position to publicly fund a "seed farm" on a revenue share rather than fixed annual obligation basis could have an even firmer footing, since the "seed farm" could be set to be bankruptcy proof with 100% net revenue share at or below the target capital cost level and 50% net revenue share to the public owner and 50% net revenue share to seeding new capacity on the increment above the target capital cost level.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Mar 30th, 2011 at 01:07:44 AM EST
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