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There is a real need:
  • to pay for capacity which needs to be available for when wind is not blowing, but which is going to produce much less electricity than before, and
  • to help the utilities adapt to what is a major shift in the system (and given that we still need them, and pushed them in the past 20 years to make 40-year investments on the basis of a different model, it is not unfair that society bear some of the cost of the transition)

Problem is that these issues are never discussed as such; renewables are presented as expensive and uncompetitive when what they are really is incompatible with the business model of the utilities; regulation is made needlessly complex to hide the fact that the goal is not only to support renewables but also to help utilities deal with the situation (ie transfer money to them discreetly).

And the ignorance of regulators is sometimes stunning.

  • At a recent French-German meeting on renewables, I asked a senior official at the French ministry of energy what he thought of that fact that large industrial users were not paying for the gross cost of the support regime for renewables (which means that (1) retail consumers see their prices increase more than needed while industrial users see their prices go down thanks to the merit order effect, and (2) this creates a competitive advantage for German-based firms vs French-based ones) and he had not the slightest idea what I was talking about.
  • At another recent conference, where both the senior economist of one of the large utilities, and a senior energy EU official, I asked if we shouldn't be more open about how renewables hurt the incumbents, so that regulation focuses on transparent correctives rather than tricks that are noxious (renewables are bad-mouthed, it's costly, and the underlying problems are not solved); again, no reaction beyond the usual "renewables cost money, we need more perfect markets, EU-wide market, blabla"

The more I see these "debates", the more I am impressed by the German regulatory framework, and the more I am nonplussed by the lack of action in France (which is still dominated by the "nothing but more nukes" mindset).

Wind power
by Jerome a Paris (etg@eurotrib.com) on Wed Dec 26th, 2012 at 10:48:27 AM EST
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