Picking Winners DA

8/16/2019 Picking Winners DA

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Table of Contents


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The 1NC


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Picking Losers DA


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1NC Shell – Case Turn

Market interest is diversifying – innovation akes a variety of energies costco"etitive# $ade 1%&

$ade 1%# $ill $ade 'rene(able energy editor for )looberg Ne(s* +,tilitieThreatened by Co"etitive -ene(able .nergy /ro(th* -ene(able .nergy$orld0 %21%#

Technology is catching u" (ith Thoas .dison3s electricity industry0 eating a(ay at the utilitybusiness odel that hasn3t changed uch in a century# Clean energy installation (ill alori"le to 425 giga(atts in 45650 driven by a "lunge in the cost of (ind and solar "o(er0

)looberg Ne( .nergy 7inance forecast at its conference0 (hich 8nshes in Ne( 9ork toda.lectricity fro (ind and solar is no( co"etitive on "rice against coal and natural gas in"laces such as Chile and Te:as# That’s forcing utilities to rethink how they obtain power as the number of places multiplies where renewables holds theigainst fossil fuels. “It’s not going to be your grandfather’s energy industry,” Nancy Pfund, a managing partner at the an !rancisco"based #enture capital company $%& In#estors &&', he conference. “(e’re going to see a parallel e#olution in energy like we’#e seen in computing, phones and radio. There really hasn’t been an inno#ation cycle in energy in )** years.”

$ind "o(er in soe "arts of Te:as0 (ithout subsidies0 is no( about 6#; cents a kilo(att!hour# That3s about as chea" as anything fro fossil fuels0 said Michael Liebreich0 chairaof Ne( .nergy 7inance3s advisory board# + *"megawatt solar farm under construction in 'hile is e-pected to sell power on the spot market,ompeting head"to"head with electricity from other sources. These e-amples aren’t typical. (est Te-as is one of the windiest parts of the .., and northern 'hile’s +tacama desert is the

unniest place on /arth. Co"etitive 2. 3/, the biggest .

upplier of turbines, is working to dri#e down costs by impro#ing its wind designs, potentially e-panding those islands of competiti#eness. tilities aren’t likely to disappear e#en thoughenewable energy is transforming the industry, said +rno 0arris, '/4 of :ecurrent /nergy, the .. solar unit of the 6apanese electronics maker harp 'orp. “?ou can’t @ust take on the ut

nd destroy them,” 0arris said in an inter#iew at the conference. “=t3s inevitable that solar (ill becoe a bigger "art of theenergy i: and (e need the utilities to hel" anage the grid.” till, utilities need to go further in adapting to the new aid !irst olar Inc. '/4 6im 0ughes. 0e e-pects to see new systems de#eloped that will manage solar power as it’s produced and as it tra#els across the grid. “(e don’t think anyone in thusiness can sit on their hands. Things will continue to progress. Costs (ill continue to coe do(n.” 7inancing is also drivindo(n the cost of rene(ables0 said 6igar hah, the founder and former '/4 of un/dison &&'. 'apital costs are now often less than 1 percent to percent,tep with other industries, as in#estors become more comfortable with backing renewable energy pro@ects. “8ost people in this room belie#e that access to the lowest cost of capital isompleted,” said hah, who’s now a consultant. “The Auestion isB can de#elopers de#elop enough pro@ects to satiate the moneyC 'an this industry really deli#er the deals now that the mn’t an issueC 'an you feed the beastC (e are long money and short deals.”

The a@ arbitrarily "icks (inners0 ending innovation# Turns case# Loris 16&

Loris 16# Nicolas Loris 'A senior "olicy analyst in eritageBs -oe =nstitute fo.conoic Policy Studies* +S"urring =nvestent in Aerica3s Clean .nergyTechnology>0 7ro a Testiony of the ,#S# Senate Coittee on .nergy andNatural -esource0 The eritage 7oundation0 ;14516#All energy sources and technologies should have an o""ortunity to co"ete in thearket"lace# Those investent decisions are best left for the "rivate sector # The

governent3s intervention in ca"ital arkets arti8cially lo(ers the risk of a "roect0

decreases the incentive to innovate0 and increases the incentive to use the "olitical "roceo lobby for handouts# !ull or partial go#ernment in#estments reward special interests o#er market #iabilityD those technologies that aruly arketable should not need 8nancial su""ort fro the ta:"ayer# 'ongress should adopt free"market polind reduce unnecessary roadblocks to clean energy in#estments, but it is not the role of the federal go#ernment to play #enture capitalist. Pri#ate in#estors should take the risk and reap

ene;ts or su7er the losses from their in#estments. /overnent involveent i"edes that "rocess at the risk of th

ta:"ayer and to the detrient of the Aerican econoy . 3o#ernment 8eddling $istorts In#estment 4pportunity The numb

#estment opportunities is broad and e-pansi#e, but the capital to ;nance them is not. This reAuires that choices be made among the di7erent in#estments. Through anuber of echaniss 0 including grants0 loans0 loan guarantees0 andates0 and targeted

a: credits0 the federal governent clouds these decisions # 3o#ernment in#estments essentially pull capital out of those


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mited reser#es and dictate who should recei#e it. (hile established and “sure"bet” companies will likely still recei#e a loan, those that are more on the margin may lose an opportunity.

ecause capital is in limited supply, a dollar loaned to a go#ernment"backed pro@ect will not be a#ailable for some other pro@ect. This means that the higher"risk, higher!re(aco"anies that drive innovation and bring ne( services and technologies into thearket"lace ay not get su""ort, while companies with strong political connections or those that produce something that politicians ;nd appealing wet support. The market, not politicians in (ashington, is much better at determining how to allocate resources to meet consumer demand. (hen a ;rm minimi9es costs, the ;rm not on

ma-imi9es pro;t but also ma-imi9es #alue to the consumer. The go#ernment’s interference in capital markets signi;cantly distorts that process. )y atte"ting toorce governent!develo"ed tech nologies into the arket0 the governent diinishes th

role of the entre"reneur and cro(ds out "rivate !sector investent# This "ractice of the

governent "icking (inners and losers denies energy tech nologies the o""ortunity to

co"ete in the arket"lace0 (hich is the only "roven (ay to develo" arket!viable"roducts # $hen the governent atte"ts to drive technological coercialiEation0 itcircuvents this critical "rocess# !urthermore, when the go#ernment dictates how pri#ate"sector resources are spent, both industries that stand to bnd those that are harmed by those policy decisions will concentrate more e7ort into lobbying for go#ernment handouts to pre#ent competitors from recei#ing the handout. This"rocess0 (hich results in the "olitical "rocess continually "icking (inners and losers0 has bee

enti;ed by economist 3ordon Tullock and later de;ned by economist +nne Ereuger as rent"seeking.F)G :ather than engaging in a pro;t"seeking beha#ior, the producer is engaging in aeeking beha#ior. The more the go#ernment in#ol#es itself in decisions that should be made in pri#ate ;nancial markets, the more the +merican economy will e-perience misallocated nd capital. The result will be less economic growth, not more. 'apital 8arkets, 4pportunity, and the Halley of (ealth The barometer of whether a good or ser#ice should be in the

marketplace should be determined by the #alue of the output being greater than the input. (e see in#estments that pay o7, in both the short run and the long run, all the time withoutederal go#ernment arti;cially propping up the #alue by lowering the risk with ta-payer dollars. 'ontrary to popular assertion, pri#ate in#estors will ;nance pro@ects with longer"term payma9on.com was founded in )JJK and went public in )JJ with a business plan that did not e-pect a pro;t for four to ;#e years. The dot"com bust delayed +ma9on’s progress, and it mas ;rst full"year pro;t in 2**L.F2G 8ore recently, and in terms of energy de#elopment, the nited tates is witnessing a shift to a cleaner energy sourceB natural gas. The in#estments areouring in and the result has been lower energy prices, increased employment, and resurgence in the manufacturing industry. Proponents of go#ernment in#estments in energy are Auicespond that the federal go#ernment helped create the shale oil and shale gas boom. %ut go#ernment in#ol#ement came years after the pri#ate sector de#eloped the method. The rootsydraulic fracturing go back as far as the )>1*s and tanolind 4il and 3as 'orporation began studying and testing the method, with a patent issued in )JKJ and a license granted toalliburton to frack on two commercial wells. The $epartment of /nergy partially funded data accumulation, microseismic mapping, the ;rst hori9ontal well, and ta- credits to e-tractncon#entional gas. These acti#ities would likely ha#e occurred and should be dri#en by the oil and gas industry. Ne#ertheless, the real dri#er behind the re#olution was 3eorge 8itchell#ested millions of his own money in research and de#elopment for fracking and hori9ontal drilling. 0is company’s geologist, 6im 0enry, ;rst identi;ed %arnett shale as a possibility for mnergy. It took 2* years for their e-periments with fracking =uids and techniAues to ;nd one that was cost e7ecti#e and, as we know now, wildly successful. aying that without go#ernmpending we would not ha#e the natural gas production we ha#e today is like saying without the grocery store down the street from your house, you would star#e. ?ou ;nd another way

ood. The "roble (ith the federal governent3s investent in the clean energy econoy ishat it does not allo( technologies and co"anies to 8nd another (ay0 but instead inducehe to rely on the crutch of the ta:"ayer# =f the cost of rene(able energy technologies

decreases or i"roves and "rice of conventional energy increases0 (e ay see increasedgeneration#


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The 4NC


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,niFueness


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=nnovation No(

nnovation (ith in the rene(able industry no(#/ries


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.conoy -ecovering

,#S# econ# "oised to recover – ost recent evidence.Erati 1% senior economist and market strategist for &ord, +bbett, and 'o. M8ilton, +uthor of ThiTomorrowsB The Ne-t Three $ecades of 3lobali9ation, $emographics, and 0ow (e &i#e, The /conom'an 3et Its 8o@o back, 0u5ngton Post, ")Q")K, httpBwww.hu5ngtonpost.commilton"e9ratithe"economy"can"get"its"mSbSQQ>Q2LK.html, ")Q")KOt has disappointed from the start. This so"called economic reco#ery has de#eloped too slowly, bene;ted (all treet more than 8ain treend done precious little to help the still huge army of unemployed. The sorry e-perience has engendered a fear that the economyRs new

ormal can no longer deli#er the prosperity gains to which +mericans once accustomed themsel#es and thought their due. It is frighteninspecially for the young. %ut such a sad fate is far from assured. + return to higher"paced growth is entirely

possible, if, that is, two things happen B )O 'orporate +merica sheds the fears that ha#e gripped it sinhe 2**>"*J great recession. 2O The country as a whole and its business sector in particular can ;n

clarity in (ashington. The great recession created a lot of lasting harm. %ecause it brought many ;rms to the brink of bankruptcy,ecause many had trouble meeting payroll in 2**J and found no ;nancial support when they went to banks for help, managements to this

ay, ;#e years after the upturn began, remain e-tremely risk shy. This is a problem. Though it is ;ne to minimi9e risk, awillingness to take it is a crucial part of the gro(th eFuation. Timidity has made managements reluctant to hire,specially full"time sta7. Instead of payroll growth of K**,*** a month that past reco#eries e-hibited, this time the &abor $epartment repoayrolls ha#e increased at a pace closer to 2**,*** a month, so slim that a report of 2>>,*** new hires for 6une created e-citement when he past it would ha#e engendered concern. That same sti=ing caution has kept spending on new capital eAuipment and facilities similarlytunted. The fear shows, too, in corporate ;nances. +ccording to the !ederal :eser#e, non";nancial corporations presently hold a whoppin).Q trillion in cash and cash"like assets on their balance sheets. o afraid are they that they will accept piddling rates on deposits rather t

sk the monies on e-pansion. Time is the only remedy for this growth retardant . 4nly when the memories of

hese traumas fade will managements regain what the great economist 6ohn 8aynard Eeynes calledheir animal spirits su5ciently dri#e an economic acceleration with new hiring and spending on

upgrades as well as new capacity. 0ow much time this will take remains an open Auestion. There is,howe#er, a tentati#e sign that the turn may ha#e begun. pending on mergers and acAuisitions ha#eisen dramatically. ?ear to date, according to industry sources, close to ** billion has changed hands in such endea#ors. If

managements will risk funds in this way, perhaps in time they will increase rates of hiring and capitapending. In the meantime, the last ;#e years of timidity suggests that the change will come slowly at best. The other matter blocking eturn to more rapid growth is the comple- legislation passed by (ashington in 2*)*. It is not so much whether the +7ordable 'are +ct or

$odd !rank ;nancial reform legislation are good or bad laws. /#en if they were brilliant pieces of legislation, and that is debatable, theirweeping nature and comple-ity ha#e generated enough uncertainty about future labor and credit costs to e-aggerate all the debilitatingautions created by the great recession. It is not @ust because the thousands of pages of either bill are di5cult to interpret, although that isactor, but (ashingtonRs regulators ha#e yet to write the hundreds of rules reAuired to implement the laws. +ccording to a recent study, e#ow almost four years after the $odd"!rank legislation passed into law, )J* of the LJ> rules outlined in its L,2** pages ha#e yet to be writhe +7ordable 'are +ct looks little di7erent. +nd it is the uncertainty that creates the damage. /#en if the ultimate impact is increased gre

osts, that certain knowledge would at least allow managers to make their plans on reasonable calculations. They might then do less than therwise would, but they would do more than presently, when huge unknowns prompt them to err on the side of caution to an e-treme. T

was some hope that the scheduled 2*)K implementation of the +7ordable 'are +ct would bring welcome clarity, but the postponement ofmany of its ma@or pro#isions has delayed that sense for at least another )2")> months, maybe more.

http://www.huffingtonpost.com/milton-ezrati/the-economy-can-get-its-m_b_5585234.htmlhttp://www.huffingtonpost.com/milton-ezrati/the-economy-can-get-its-m_b_5585234.htmlhttp://www.huffingtonpost.com/milton-ezrati/the-economy-can-get-its-m_b_5585234.htmlhttp://www.huffingtonpost.com/milton-ezrati/the-economy-can-get-its-m_b_5585234.html


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Links


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/eneric

Picking (inners colla"ses other rene(ables – s"ecial subsidies ake othero"tions unattractiveCohen ), signed by 3o#. 6erry %rown on 6une 2*, e-tends until 2*2Q an e-emption for solar powystems from state property ta-es. The e-isting e-emption was not scheduled to e-pire until 2*), but the legislature rushed the new-emption into law at the end of the session with almost no ad#ance notice or opportunity for debate. :enewable 3roups 'ritici9e olar $eThere is no reason for the tate &egislature and 3o#ernor %rown to e-tend a property ta- e-emption to large scale solar energy pro@ects a

his time, said Nancy :ader, e-ecuti#e director of the 'alifornia (ind /nergy +ssociation, in a press statement. (hat is disturbinghis ta- break for the solar industry comes at a time when e-isting biomass pro@ects are shutting dowulee 8alinowski"%all, e-ecuti#e director for the 'alifornia %iomass /nergy +lliance, said in the same press statement. (ind andgeothermal renewable energy producers are also facing challenges in getting utilities to recontract fheir e-isting resources. 'alifornia needs these resources to balance our energy portfolio and meetong"term greenhouse gas reduction goals. “The original intent of the property ta- e-emption was to help stimulate whatnce a =edgling industry. Today, solar PH is thri#ing and utility"scale solar is e-pected to increase more than ),2** percent between 2*)2 a*2*, according to 'alifornia Public tilities 'ommission M'P'O pro@ections,” the three renewable energy groups noted in the press statem

nnecessary :ush to ubsidi9e ection L of the 'alifornia :e#enue and Ta-ation 'ode allows a property ta- e-emption for certain types oolar energy systems installed between 6anuary ), )JJJ and $ecember L), 2*)1. +% )KQ) amended this section was amended in 2**> tonclude the construction of an acti#e solar energy system installed by the owner"builder in the initial construction of a new building the owuilder does not intend to occupy. /stablished in 2**2, and accelerated by the enactment of two additional laws in 2**1 and 2*)), 'alifor

:enewable Portfolio tandard M:PO reAuires in#estor"owned utilities, electric ser#ice pro#iders, and community"choice aggregators to incrrocurement from eligible renewable energy sources to LL percent of total procurement by 2*2*. Non"olar :enewables truggling“It isma9ing how the renewable energy industry is struggling in 'alifornia e#en with mind"boggling federal, state, and local subsidies,” said 6aehr, science director for the 0eartland Institute, which publishes Environment & Climate News. “The 'P' pro@ects geothermal and biomaower will decline by Q* percent in the state by 2*2* despite enormous subsidies.” (ind, too, is encountering turbulence in trying to secuontract renewals that would enable ),Q** megawatts of old wind turbines to be replaced by many fewer newer ones, according to thealifornia political news site !o- U 0ounds. “The bickering among competing renewable power industries illustrates how they care little abhe national and 'alifornia en#ironment and economy, but instead are merely looking to pad their pocketbooks at ta-payer e-pense,” &ehbser#ed. (elcome to the !oldToday’s sAuabbles among the already hea#ily subsidi9ed renewable energy producers may be a sign of thinome. 6ohn $ro9, a physicist and energy analyst, says it is “ludicrous” that subsidy"dependent renewable energy industries complain abouubsidies recei#ed by other renewable energy industries. “If this isn’t a case of the pot calling the kettle black, I don’t know what is,” said $(ind producers ha#e no leg to stand on when it comes to subsidies,” agreed $aniel immons, director of regulatory and state a7airs at th

nstitute for /nergy :esearch. “(ind and solar are both dependent on subsidies for the large increase in installations we ha#e seen o#er thast few years,” immons e-plained. “%ut if this means wind producers no longer want subsidies for any energy sources, then we welcomehem into the fold.” &ook in the 8irror“The wind power industry is taking hypocrisy to new le#els in their protests against solar power,” &ehbser#ed. “(ind power needs to look in the mirror. %ig (ind claims solar power subsidies were designed long ago merely to help a =edglin

ndustry get on its feet. That, howe#er, is the e-act same model the wind power industry has been ad#ocating for its own ta-payer subsidiow, decades later, the wind power industry continues to push for ne#er"ending subsidies to prop up an industry that will fall like a house ards without ne#er"ending subsidies and guaranteed market share.”

http://news.heartland.org/newspaper-article/2014/07/15/wind-industry-attacks-california-solar-subsidieshttp://news.heartland.org/newspaper-article/2014/07/15/wind-industry-attacks-california-solar-subsidieshttp://news.heartland.org/newspaper-article/2014/07/15/wind-industry-attacks-california-solar-subsidieshttp://news.heartland.org/newspaper-article/2014/07/15/wind-industry-attacks-california-solar-subsidies


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Subsidies

Subsidies are hurting rene(able energy3s cost co"etitivenessenevein .K billion on these cash grants. %ut under the seAuester, ncle am is cutting the cash"gran

rogram by >.V between 8arch ) and ept. L*. +d#ocates of clean energy should welcome this haircut and urgee#en more fundamental policy change . 3o#ernment subsidies to new wind farms ha#e only made thndustry less focused on reducing costs. In turn, the industry produces a product that isnRt as e5ciencheap as it might be if we focused less on working the political system and more on W:U$X researchand de#elopment. +fter the 2**J subsidy became a#ailable, wind farms were increasingly built in less"windy locations, according to the $epartment of /nergyRs 2*)) (ind Technologies 8arket :eport. Ta#erage wind"power pro@ect built in 2*)) was located in an area with wind conditions )1V worse thahose of the a#erage pro@ect in )JJ>"JJ. The $epartment of /nergy admits that this trend is due ateast in part to the 2**J federal subsidyB %ecause the grants that companies recei#e arenRt based onhow much power they produce, it is possible that de#elopers ha#e sei9ed this limited opportunity tobuild out the less"energetic sites. 8eanwhile, wind"power prices ha#e increased to an a#erage QK megawatt"hour, compared with L in 2**Q. If our communities canRt reasonably a7ord to purchase aely on the wind power we sell , it is di5cult to make the moral case for our businesses, let alone an

economic one. ?et as long as these subsidies and ta- credits e-ist, clean"energy e-ecuti#es will likelypend most of their time pursuing ad#anced legal and accounting methods rather than in#esting intudies, inno#ation , new transmission technology and turbine de#elopment. + Auick glance at the +merican (nergy +ssociationRs website illustrates this. In 6uly, the association is planning a 'apitol 0ill e#ent aimed at educating legislators on the

mportance of industry ta- credits. Ne#er mind impro#ing the underlying fundamentals of the wind business. 8y own company began byeli#ering clean energy Min the form of natural gasO to rural 'hina, where families still used animal dung for cooking fuel. (e entered the wusiness in the late )JJ*s, when a wind"turbine company asked us to pro#ide electricity from its site when the wind wasnRt blowing. ?ears

ater, we o#ersaw a similar pro@ect but in re#erseB In 2**>, without a go#ernment subsidy, we built a wind farm in &ubbock, Te-as, toupplement at lower costs the deli#ery of electricity to a cottonseed"oil company. uch pro@ects are likely the industryRs future. (ind energ

will make marginalYnot re#olutionaryYcontributions. The industryRs success in Te-as Mwhere my company is based, and which is the natioargest and cheapest producer of wind powerO suggests that wind farms do make sense in relati#ely windy areas where electricity shortageccur. %ut policy matters. 'alifornia, which isnRt located in the wind belt, is +mericaRs second"largest wind"energy producer but also itsostliest. The stateRs high costs are partly due to aggressi#e renewable energy policies . . . that gi#e de#elopers a strong negotiatingosition, according to the $epartment of /nergy report. The wind industry has largely been out"competed by natural gas, which has pro#e a clean, reliable and cheap power source for the future without subsidies or e#en #enture"capital funding. +s such, my company isnRtlanning any new in#estments in the wind business, e#en though we would lo#e to still be worth the 2 billion we were se#eral years ago. ourse, we could yet be pro#en wrong by technological inno#ation. (ithout subsidies, the wind industry would be forced to take a hard freook at its product. !ewer wind farms would be built, eliminating the market"distorting glut. +nd if there is truly a need for wind energy,ntrepreneurs who impro#e the businessRs fundamentals will ;nd a way to compete.

-ene(ables subsidies have e"irically (orsened the industryMorris and Nava


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orms of cronyism. !or instance, during his tenure as go#ernor of 8aine, now .. enator +ngus Eing signed into law a bill reAuiring utilitieenerate at least L* percent of their electricity from “green” sources such as wind. +fter lea#ing the go#ernor’s o5ce, he founded a wind"nergy company, Independence (ind, whose ;rst pro@ect, :ecord 0ill (ind, recei#ed a )*2 million loan guarantee from the $epartment onergy Y and Eing recei#ed a K*,*** “success” fee. The loan guarantee almost looks like a pat on the back from the $4/ for Eing’s e7o

n promoting their agenda while he was go#ernor of 8aine. The worst part is that these crony subsidies and loanguarantees aren’t e#en going to particularly sound companies or inno#ati#e forms of technology.Twenty"two out of the 21 pro@ects funded through the ection )*Q program were rated “@unk” le#eln#estments. ?et, they were gi#en millions in ta-payer dollars. To date, only four of the pro@ects ha#ebeen completed and three of the companies recei#ing ection )*Q loan guarantees ha#e already gbankrupt. e#eral other recipients, including oloPower and the panish company +bengoa olar, are in the process of laying o7 workeelling o7 eAuipment, and are not paying contractors for ser#ices pro#ided. The $4/’s lack of skin in the game means tha

hey ha#e less incenti#e to ensure that the money they spend is wisely in#ested in the bestechnologies , and in the best companies. It’s much easier to lobby or hoodwink the go#ernment into in#esting in a badompany because unlike a #enture capital ;rm, the money they’re playing with isn’t their ownY it’s yours. ince )JL, ..

go#ernment agencies ha#e spent )QK . billion on “renewable energy” with #ery little to show for it .Proponents of solar technology claim that their fa#ored technology is on the #erge of being competitwith traditional forms of energy, but they ha#e made the same claim since at least the mid")JJ*s.%illions of dollars in subsidies later, solar still only comprises at most *.2 percent of .. electricityproduction according to the /nergy Information +dministration. “3reen” energy subsidies bene;t thepolitically connected while harming future generations as hundreds of millions of dollars are added the country’s debt burden with each green failure. It’s time to end all subsidiesYfor all energy

companies, not @ust green onesYand let the best technologies win.

-ene(able Subsidies 7la(ed – urt innovation and shi" investents abroadChabers 1% M8adeline 'hambers, :euters @ournalist, :euters, 221)K,httpBuk.reuters.comarticle2*)K*221germany"energy"idE&1N*&HL)I2*)K*221, accessed 2))

eb 21 M:eutersO " + commission of e-perts appointed by the 3erman parliament has recommended'hancellor +ngela 8erkelRs go#ernment to abolish all subsidies for green energy, highlighting mountopposition to plans to reform instead of scrap the system. /conomy and /nergy 8inister igmar 3abriel is ;nalisimuch"disputed changes to the :enewable /nergy &aw M//3O which includes reductions in subsidies for green energy before he presents it

abinet in early +pril. hifting /uropeRs biggest economy to energy from the sun and wind and away from nuclear and fossil fuels is a toriority of 8erkelRs new right"left coalition go#ernment. %ut the pro@ect, which o7ers some 2* billion euros in greenubsidies a year and is paid for by electricity users, has been dogged by the competing interests of

ndustry, a booming green sector and the countryRs )1 federal states . The 'ommission for :esearch and Inno#at/!IO handed its report to 8erkel on (ednesday. It concluded that the system of feed"in"tari7s, under which greenpower producers are paid guaranteed, abo#e"market prices to put electricity on the grid, isundamentally =awed. It is not a cost"e5cient instrument for climate protection and is not producing

measurable e7ect on inno#ation, said the report, basing its #iew on patent ;lings. !or both these reasons, there is no @usti;caor a continuation of the //3, the report said. The report is unlikely to ha#e much impact on policy. + spokeswoman for the economy minie@ected the criticism, saying the law had been a useful instrument to introduce renewable energy to the market place. 3reen energy accoor about 2Q percent of 3erman power generation, up from about percent in 2***. The go#ernment is aiming for a le#el of K*"KQ percent*2Q. The :enewable /nergy &aw is and remains a core instrument for 3erman climate and energy policy, said the ministry spokeswomaupporters of renewable energy also dismissed the report, saying patent numbers are of limited use as a measure of inno#ation and that t/3 cannot be blamed for failings in tackling climate change. 3abriel plans to scale back subsidies for renewable energy by up to about a #er time. 0e also aims to reduce e-emptions en@oyed by energy"intensi#e 3erman ;rms from a surcharge, which pays for the subsidies +

wants to make ;rms that generate their own power pay charges to support green power. 3erman industry, howe#er, sei9ed on the report tupport its opposition to incenti#es for renewable energy. I support the conclusions of the 'ommission in terms of the need to reform the

/3, said 8arkus Eerber, managing director of the %$I industry association.

+ll support for renewable technologies musbe designed in a way to help incenti#es Mfor companies to beO competiti#e and inno#ati#e , he said./-port"oriented companies ha#e warned that a sharp rise in the price they pay for power, buoyed byhe cost of green incenti#es, are making them uncompetiti#e and some ha#e threatened to shiftn#estments and production abroad. (ith industry accounting for around a Auarter of 3ermanyRs economy, its #oice matters erlin. The %$I has said the go#ernmentRs plans put about J**,*** @obs in 3ermany at risk.

http://uk.reuters.com/article/2014/02/26/germany-energy-idUKL6N0LV31I20140226http://uk.reuters.com/finance/economy?lc=int_mb_1001http://uk.reuters.com/finance/economy?lc=int_mb_1001http://uk.reuters.com/finance/economy?lc=int_mb_1001http://uk.reuters.com/finance/economy?lc=int_mb_1001http://uk.reuters.com/places/germany?lc=int_mb_1001http://uk.reuters.com/places/germany?lc=int_mb_1001http://uk.reuters.com/article/2014/02/26/germany-energy-idUKL6N0LV31I20140226http://uk.reuters.com/finance/economy?lc=int_mb_1001http://uk.reuters.com/finance/economy?lc=int_mb_1001http://uk.reuters.com/places/germany?lc=int_mb_1001


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/overnent =nvestent

/overnent investent kills innovation in rene(able innovation – best "aths one free of governent involveentSavitE Q billion in federal subsidies between )JK and )JJJ.O 'ertainly, subsidies are

seful tool to help establish an emerging industry. %ut where there is no pro@ected end to funding, subsidies stopbeing a catalyst, and start becoming a crutch . This is especially true when companies supported byubsidies become powerful enough to in=uence go#ernments to perpetuate their support. 0ealthy compepend upon sound business models in a competiti#e en#ironment. &ousy companies that are limping along on subsidi

will slow the growth of the industry . If a product is well designed and meets the needs of the consumt will ;nd success in a market economy. In that same market, the real costs of the product are

accounted for in a company’s pro;t margin . That is not true of traditional energy companies. 'ompleand arcane ta- laws are used to subsidi9e these corporations and obscure the true cost of energy.3o#ernment subsidies e7ecti#ely transfer a portion of the costs to ta-payers, enabling arti;cially lowprices and in=ated pro;ts. /Aually dangerous is the go#ernment’s direct in#estment in pri#ate companies. 8uch has been made he current administration’s in#estments in certain renewable energy companies, some of which failed. The politically moti#ated headlinesoncerning these in#estments may ser#e as a rallying cry for critics, but they fail to identify the fundamental mistake. If the administrationrying to culti#ate a new industry by le#eling a playing ;eld, it needs to focus on demand creation and not try to manage supply. In doing s

will unleash talented entrepreneurs as well as the in#estors willing to back them. ome companies will sur#i#e, others will not. %ut thoseo will ha#e the essential ingredients for sustained success. There is absolutely a role for go#ernment in technology de#elopment. 8ostompanies, especially young ones, cannot a7ord to in#est in basic research. The time frames are long, and only a small portion of the reseesults in commercially #iable products. ?et, this research is the foundation of future industries. In#estment in basic research, through ourni#ersities and research institutions, that yields licensable technologies, is a more prudent path for the allocation of public resources. Theonfusion behind energy subsidies coupled with slanted media co#erage has resulted in a myth that solar power is not cost competiti#e anependent on go#ernment subsidies. This is simply false. In many parts of the country today, solar energy is less e-pensi#e than con#entiorms of energy, creating consumer demand for solar to reduce monthly energy bills. +nd the solar industry is both an a7ordable andustainable source of clean energy, and a signi;cant @ob creator. The .. solar workforce today is around )2*,*** strong and growing. Thacts are clear. The costs of de#elopment and production of fossil fuel energy ha#e been underwritten with our ta- dollars to the bene;t of ew traditional energy companies. If we build the true costs into the price of all energy, solar power is not only competiti#e, it’s cheaper.

0owe#er we will only see that truth if we remo#e direct and indirect energy subsidies. (e ha#e a strong market for solar power today. (e willing market, the necessary technology, and an undisputable imperati#e to create a cleaner, safer planet. I’m committed to leading a

ompany that deli#ers the best technology and ser#ice. (e will continue to re#olutioni9e power generation on a global scale, one kilowatt

t a time. %ut a robust, renewable energy market will remain hampered if the energy industry continuechase the ne-t subsidy. !or the good of our energy future , subsidies for all energy must e#entually e

http://www.forbes.com/sites/ciocentral/2013/02/14/government-subsidies-silent-killer-of-renewable-energy/http://www.forbes.com/sites/ciocentral/2013/02/14/government-subsidies-silent-killer-of-renewable-energy/http://www.forbes.com/sites/ciocentral/2013/02/14/government-subsidies-silent-killer-of-renewable-energy/http://www.forbes.com/sites/ciocentral/2013/02/14/government-subsidies-silent-killer-of-renewable-energy/


15/33

Ta: )reaks

/overnent ta: breaks deter ne( tech and innovation in rene(ables sector)anks 2J)L, httpBcsis.orgpublicationmarket"distorting"policies"will"lead"us"nucleeactor"shutdowns, )Q2*)KGn most cases, the structure of those subsidies and mandates for renewables deters substantial pri#aector in#estment in storage technology, because operators will continue to be paid for power

generated, regardless of market demand or associated system costs. 'onseAuently, we are bearish ohe prospects for renewables transitioning from their current status as intermittent generation to

baseload. 8ost power produced from renewables in the nited tates will therefore remain dependeon subsidies and mandates, maintaining an arti;cial market that is at substantial risk of failure if andwhen go#ernment policies shift. In our e#ol#ing analysis, we are also watching e#ents unfold in /urowhere arti;cial markets for renewables are collapsing Me.g., painO and ma@or utilities are shutting dobaseload generation because of subsidies and preferences for wind and solar power . 8ost of the threatene

eneration is natural gas;red because the price of that feedstock is not competiti#e in today’s market, but 3erman industry sources ha#ewarned that nuclear reactors could face early retirement as well. /.4N’s '/4 6ohannes Teyssen recently warned that shutting down baselo

ower plants was “una#oidable” if go#ernment renewable policies and regulation persist. 'hancellor +ngela 8erkel of 3ermany hascknowledged that the growth in renewables has resulted in “huge problems for the system” and has pledged a scale"back in related subsshe is reelected. +cross the /uropean continent, nonetheless, we belie#e that subsidies and preferences for renewables will remain as los budgets permit the preser#ation of those arti;cial markets. 'onseAuently, /uropean regulators will increasingly reAuire “uneconomic”

aseload to remain on the grid. In the case of 3ermany, regulators ha#e )2 months to re#iew an announcement by a utility to decommissiower plant before it is shut downD if a power plant is deemed “systemically important,” the utility is reAuired to continue operations for upwo years and will recei#e “fair compensation” from the network operator. Ta-payers, therefore, would pay to maintain the arti;cial marketenewables and for the “uneconomic” baseload power generation that would otherwise be “economic” in the absence of market distortion

+ddressing this challenge is not @ust a problem in the nited tates and /urope. 4/'$ has warned that security of electricity supply is

hreatened across member economies because of increased renewable penetration. 4/'$ recommends that go#ernments aegulators need to ensure the transparency of power generation costs when making policy decisionsmpacting electricity markets. In the nited tates, we ha#e certainly failed to take these steps, whicnot addressed in the near term will lead to long"run cost increases for power, thus undermining ..economic competiti#eness. Though domestic utilities in merchant markets are being sAuee9ed signi;cantly by market distortionhe nited tates has yet to feel the full negati#e impact of these policies because of weak economic

growth , e-cess power capacity, and su5cient backup generation. +s economic growth picks up and state renewabnd e5ciency targets increase substantially between now and 2*2Q, we e-pect greater fallout and increased costs to the grid. %ecause of ap between policymaking in (ashington and the states, howe#er, we remain pessimistic that any federal initiati#e in the near term will

ddress the looming threat to a large percentage of the ci#il nuclear feet and the security of electricity supply. (e suggest increased dialoetween federal and state go#ernments on the impact of energy mandates and subsidies on the grid and a transparent approach to analy

he true costs of increased renewable penetration. +s part of that con#ersation, we belie#e that policymakers needdiscuss how the arti;cial market for wind and solar can e#ol#e into a real market where thosegeneration sources can operate competiti#ely without go#ernment support. In our opinion, renewabla- credits , targets, and other market"distorting mandates should end, which would increase incenti#or pri#ate"sector in#estment in storage technologyYthe breakthrough of which is necessary to sol#ehe wind and solar intermittency problem. 3i#en President 4bama’s plan to regulate greenhouse gas emissions across theation’s power sector, utilities are better positioned than state and federal legislators to choose the best compliance option for meeting thir Auality standards.

http://csis.org/publication/market-distorting-policies-will-lead-us-nuclear-reactor-shutdownshttp://csis.org/publication/market-distorting-policies-will-lead-us-nuclear-reactor-shutdownshttp://csis.org/publication/market-distorting-policies-will-lead-us-nuclear-reactor-shutdownshttp://csis.org/publication/market-distorting-policies-will-lead-us-nuclear-reactor-shutdowns


16/33

Loan /uarantees

nnovative rene(able tech being crushed – loan guarantees based on cronyobbyistsMorris and Nava 16 M6ulian 8orris and Hictor Na#a, HP of research and policy analyst at :eason!oundation, %reitbart, )2Q)L, httpBwww.breitbart.com%ig"3o#ernment2*)L)2*Q/nergy"subsidare"going"to"@unk"in#estments"and"failing"companies, accessed on )Q)KO

n 4ctober, the $epartment of /nergy

announced 1* million in subsidies for solar energy research and de#elopment programs as par

he unhot Initiati#e. The primary goals of the program are to reduce the cost of photo#oltaic solar energy systems by Q percent anouble the generation of clean energy in the .. o#er the ne-t 2Q yearsYgoals that are probably unachie#able. These announcemenome on the heels of the recent bankruptcy of the go#ernment"subsidi9ed electric #ehicle technology company /'4tality, whichecei#ed ))Q million in federal stimulus grants. 4f course, that followed the multimillion dollar failures of solar energy companies olynQ2J millionO and +bound olar M* millionO. (ith last week’s bankruptcy ;ling by go#ernment"backed hybrid car

manufacturer !isker +utomoti#e, a failure which will cost ta-payers )LJ million, the Auestion must be askedB (hy is the federal go#ernmeunneling good ta-payer money to bad companies and failing technologiesC The answer may be that cronyism and in=uence often decide

where these loans and subsidies go. In a new study published this week by :eason !oundation, we e-amined toan guarantees made by the $epartment of /nergy M$4/ O under its “ection )*Q” program from 2o 2*)), which were part of the +merica :eco#ery and :ein#estment +ct. (e looked at lobbying

e-penditures by recipient companies and correlated them with the si9e of loan guarantees recei#ed.ound a correlation suggesting that the $4/ made choices on the basis of the information that was

most cogniti#ely a#ailable information pro#ided by lobbyists rather than on the basis of the #iabilof the technology and the soundness of the company applying for the subsidies. In some cases we found#idence of e#en more direct forms of cronyism. !or instance, during his tenure as go#ernor of 8aine, now .. enator +ngus Eing signed

aw a bill reAuiring utilities to generate at least L* percent of their electricity from “green” sources such as wind. +fter lea#ing the go#erno5ce, he founded a wind"energy company, Independence (ind, whose ;rst pro@ect, :ecord 0ill (ind, recei#ed a )*2 million loan guarantrom the $epartment of /nergy Y and Eing recei#ed a K*,*** “success” fee. The loan guarantee almost looks like a pat on the back fro

he $4/ for Eing’s e7orts in promoting their agenda while he was go#ernor of 8aine. The worst part is that these cronyubsidies and loan guarantees aren’t e#en going to particularly sound companies or inno#ati#e formechnology . Twenty"two out of the 21 pro@ects funded through the ection )*Q program were rated “@unk” le#el in#estments. ?et, the

were gi#en millions in ta-payer dollars. To date, only four of the pro@ects ha#e been completed and three of the companies recei#ing ectio*Q loan guarantees ha#e already gone bankrupt. e#eral other recipients, including oloPower and the panish company +bengoa ola

n the process of laying o7 workers, selling o7 eAuipment, and are not paying contractors for ser#ices pro#ided. The $4/’s lack of skin in tame means that they ha#e less incenti#e to ensure that the money they spend is wisely in#ested in the best technologies, and in the besompanies. It’s much easier to lobby or hoodwink the go#ernment into in#esting in a bad company because unlike a #enture capital ;rm, t

money they’re playing with isn’t their ownY it’s yours. ince )JL, .. go#ernment agencies ha#e spent )QK. billionon “renewable energy” with #ery little to show for it. Proponents of solar technology claim that their fa#ored technology is on therge of being competiti#e with traditional forms of energy, but they ha#e made the same claim since at least the mid")JJ*s.illions of dollars in subsidies later, solar still only comprises at most *.2 percent of .. electricity production according to the /nergynformation +dministration. “3reen” energy subsidies bene;t the politically connected while harming future generations as hundf millions of dollars are added to the country’s debt burden with each green failure. It’s time to end all subsidiesYfor all

energy companies, not @ust green onesYand let the best technologies win .

Loan /uarantees 7ail – /ood investents (ould have gotten "rivate fundingNelson 14 M6im Nelson, '/4 of olarLd a solar cell tech company, go#ernment should trust theree market for green energy in#estment, :enewable /nergy (orld, Q2J)2,

httpBwww.renewableenergyworld.comreanewsarticle2*)2*Qus"go#ernment"should"trust"the"fremarket"for"green"energy"in#estment, accessed )J)KO

The loan guarantee program should be retired permanently . The path to commerciali9ation reAuiresbrains, discipline and grit. It is rarely aided, and often impeded, by go#ernment in#ol#ement . 4ur

o#ernment should trust the free market forces that ha#e made +merica great. The go#ernment’s green energy policy includes two partsB upporting basic research, with the aim of de#eloping new green energy technologiesD and M2O making loan guarantees that promote the

doption of green energy technologies. upporting basic research is an important role of go#ernment, but the loguarantee program is a wasteful mistake because it doesn’t work. The $epartment of /nergy’s loanguarantee to olyndra was an embarrassing e-ample of the malfunction of the current system. Then#estment was undoubtedly scrutini9ed and re@ected by the ilicon Halley"based #enture capital ;rmY organi9ations abundantly more Auali;ed to identify good in#estments than go#ernment committehere was no urgent strategic need for the .. to ha#e olyndra rush its product to market. The decision to fund olyndra’s attempt to

ommerciali9e did not stand up to reason. 0owe#er, politics ultimately trumped reason. The bureaucrats awarding the ;nancial aid were

http://www.breitbart.com/Big-Government/2013/12/05/Energy-subsidies-are-going-to-junk-investments-and-failing-companieshttp://www.breitbart.com/Big-Government/2013/12/05/Energy-subsidies-are-going-to-junk-investments-and-failing-companieshttp://www1.eere.energy.gov/solar/sunshot/news_detail.html?news_id=20963http://www1.eere.energy.gov/solar/sunshot/news_detail.html?news_id=20963http://www1.eere.energy.gov/solar/sunshot/news_detail.html?news_id=16701http://www.renewableenergyworld.com/rea/news/article/2013/09/rescuing-sunshots-1w-goals-with-new-solar-technologieshttp://www.renewableenergyworld.com/rea/news/article/2013/09/rescuing-sunshots-1w-goals-with-new-solar-technologieshttp://www.huffingtonpost.com/2013/10/13/electric-car-charger_n_4086326.htmlhttp://www.huffingtonpost.com/2013/10/13/electric-car-charger_n_4086326.htmlhttp://www.huffingtonpost.com/2013/10/13/electric-car-charger_n_4086326.htmlhttp://washingtonexaminer.com/report-taxpayer-loss-due-to-solyndra-may-be-as-high-as-849-million/article/2511398http://www.denverpost.com/ci_20962742/colorado-solar-panel-maker-abound-solar-file-bankruptcyhttp://jalopnik.com/fisker-has-filed-for-bankruptcy-1470617147http://jalopnik.com/fisker-has-filed-for-bankruptcy-1470617147http://reason.org/files/green_electric_dreams.pdfhttps://lpo.energy.gov/programs/1705-2/http://environmentblog.ncpa.org/new-report-green-energy-technology-not-ready-for-prime-time/http://environmentblog.ncpa.org/new-report-green-energy-technology-not-ready-for-prime-time/http://cleantechnica.com/2013/02/04/ercot-report-wind-solar-competitive-with-natural-gas-in-the-lone-star-state/http://object.cato.org/sites/cato.org/files/pubs/pdf/pa280.pdfhttp://www.breitbart.com/Big-Government/2013/12/05/EIA.govhttp://www.breitbart.com/Big-Government/2013/12/05/EIA.govhttp://www.renewableenergyworld.com/rea/news/article/2012/05/us-government-should-trust-the-free-market-for-green-energy-investmenthttp://www.renewableenergyworld.com/rea/news/article/2012/05/us-government-should-trust-the-free-market-for-green-energy-investmenthttp://www.renewableenergyworld.com/rea/news/article/2011/08/solyndra-to-file-for-bankruptcy-1100-lose-jobshttp://www.breitbart.com/Big-Government/2013/12/05/Energy-subsidies-are-going-to-junk-investments-and-failing-companieshttp://www.breitbart.com/Big-Government/2013/12/05/Energy-subsidies-are-going-to-junk-investments-and-failing-companieshttp://www1.eere.energy.gov/solar/sunshot/news_detail.html?news_id=20963http://www1.eere.energy.gov/solar/sunshot/news_detail.html?news_id=16701http://www.renewableenergyworld.com/rea/news/article/2013/09/rescuing-sunshots-1w-goals-with-new-solar-technologieshttp://www.huffingtonpost.com/2013/10/13/electric-car-charger_n_4086326.htmlhttp://washingtonexaminer.com/report-taxpayer-loss-due-to-solyndra-may-be-as-high-as-849-million/article/2511398http://www.denverpost.com/ci_20962742/colorado-solar-panel-maker-abound-solar-file-bankruptcyhttp://jalopnik.com/fisker-has-filed-for-bankruptcy-1470617147http://reason.org/files/green_electric_dreams.pdfhttps://lpo.energy.gov/programs/1705-2/http://environmentblog.ncpa.org/new-report-green-energy-technology-not-ready-for-prime-time/http://environmentblog.ncpa.org/new-report-green-energy-technology-not-ready-for-prime-time/http://cleantechnica.com/2013/02/04/ercot-report-wind-solar-competitive-with-natural-gas-in-the-lone-star-state/http://object.cato.org/sites/cato.org/files/pubs/pdf/pa280.pdfhttp://www.breitbart.com/Big-Government/2013/12/05/EIA.govhttp://www.breitbart.com/Big-Government/2013/12/05/EIA.govhttp://www.renewableenergyworld.com/rea/news/article/2012/05/us-government-should-trust-the-free-market-for-green-energy-investmenthttp://www.renewableenergyworld.com/rea/news/article/2012/05/us-government-should-trust-the-free-market-for-green-energy-investmenthttp://www.renewableenergyworld.com/rea/news/article/2011/08/solyndra-to-file-for-bankruptcy-1100-lose-jobs


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eholden to political masters, who had promised +mericans that they were going to ;- the .. economy by creating green @obs Y somethhat could not possibly happen in any timeframe worthy of consideration. The price of the olyndra failure was borne by the +merican peot would be interesting, but probably undisco#erable at this point, to know how many pro@ects that are currently funded with loan guarante

would be funded pri#ately if loan guarantees did not e-ist. +fter technology is pro#en, good in#estments should be ao get pri#ate funding and negate the need for go#ernment support. %ad in#estments shouldn’t beunded at all . 3o#ernment has a legitimate role in supporting basic research. +:P+"e, the program that awards smallranches of money for basic research and de#elopment in alternati#e energy, will recei#e 2Q* million in federal funding in 2half the amount lost at olyndra aloneO. This program can and should be e-panded. Its ob@ecti#e is to fund inno#ati#e technologies that wmpro#e the economics of alternati#e energy Y which is ultimately the only path to widespread adoption of renewable power. imply statehere are three stages to introducing new technology into the marketB =nnovation# ni#ersities, go#ernment labs and some companies

willingly and energetically take the technology risk of e-ploring new ways of doing things, and work on pro#ing a concept. In this speci;cituation, we are talking about creating energy. /o To Market# (hen a speci;c technology has been de#eloped and its concept pro#en, th

ocus mo#es to ;guring out the best way to de#elop a prototype that can be manufactured and sold in the marketplace. +ngel in#estors anenture capitalists typically fund this stage. .:"ansion# 4nce a speci;c technology has reached the market, it needs to be de#eloped intoeal, growing product that is both used and useful, thus crossing o#er into adoption by the public. Henture capitalists and pri#ate eAuityro#ide in#estment for growth in these stages. 4ne of the greatest strengths in +merica is inno#ation. It is a long and rich tradition for the o lead the world in inno#ation. 3o#ernment currently plays a key role in pro#iding funds to many companies in the proof"of"concept stage

well as to national labs and uni#ersities de#eloping new technologies. teps two and three should be left to pri#ate in#estors. It is time tomake a change, and to restructure the go#ernment’s broken system that currently funds agenda"dri#en enterprises that ha#e little or nohance of a successful early de#elopment stage. The intent of such agenda"dri#en grants is to create @obs. %ut when ta-payer money isn#ested, spent and lost, the company fails and the @obs are lost. 3o#ernment dabbling in in#estments beyond technology de#elopment isompetiti#e with pri#ate funding or it in#ol#es making in#estments that pri#ate in#estors wouldn’t make Y both are bad ideas. I suggest tollowingB 3o#ernment immediately get out of the loan guarantee program and stop in#esting in companies at stages beyond technologye#elopment. 8aking the decisions to guarantee loans is essentially making an in#estment decision that go#ernment bureaucracies are noAuipped to make. %ureaucracy’s agenda"dri#en analysts do not ha#e necessary training, proper incenti#es or appropriate reporting structo make in#estment grade decisions. +:P+"/ should become a publicpri#ate partnership, with the mandate to in#est in game"changing enechnology research. It will be sta7ed with professionals accustomed to making these types of in#estments, and Auali;ed to e#aluate pro@en their economic potential and practicality. 3o#ernment should pro#ide the funding to the entity, but the partnership should be consisten

with the long"term strategic plan of the go#ernment. The partnership should be e#aluated on the basis of the success of their in#estments

n#estment strategy. The professional in#estors should be told to make the focus of their in#esting broader than typical #enture in#esting irder to encourage other inno#ati#e ideas. 8oreo#er, they should hand o7 their portfolio entities to pri#ate eAuity as they mature to ensurommercial #iability. Placed in the right hands this concept could be implemented in the ;rst Auarter of 2*)L. These are tangible, realistic elati#ely easy changes to make. &et the pri#ate sector do what it does best, help the economy grow and e#entually thri#e again. It is thatuccess that will bring @obs.

http://www.renewableenergyworld.com/rea/blog/post/2012/02/a-shining-star-of-bipartisan-cleantech-supporthttp://www.renewableenergyworld.com/rea/blog/post/2012/02/a-shining-star-of-bipartisan-cleantech-supporthttp://www.renewableenergyworld.com/rea/blog/post/2012/02/a-shining-star-of-bipartisan-cleantech-supporthttp://www.renewableenergyworld.com/rea/blog/post/2012/02/a-shining-star-of-bipartisan-cleantech-supporthttp://www.renewableenergyworld.com/rea/blog/post/2012/02/a-shining-star-of-bipartisan-cleantech-support


18/33

Solar

Solar incentives useless – solar "o(er chea"er than the grid7arrell 1% M6ohn !arrell, author of /nergy elf":eliant tates and researcher at the institute for locaelf"reliance, 0ow to Phase 4ut Incenti#es and 3row olar /nergy, QQ)K, httpBgrist.orgarticlehow

phase"out"incenti#es"and"grow"solar"energyCutmSsourceZsyndicationUutmSmediumZrssUutmScampaignZfeedUutmSreaderZfeedly, accessed)J)KO4#er the ne-t decade, solar electricity will let consumers get cheaper energy from their rooftop thanrom their utility. +mong the uphea#al in the electricity system, the coming of solar “grid parity” meae"thinking incenti#es for solar energy. The success of solar is remarkable, no less because the amou

of federal subsidy in absolute terms has been far less for renewable energy than for fossil fuel esources Msee graphic belowO.) +s the cost of solar drops toward and below grid parity, the Auestion is how to ad@ust solarubsidies appropriately. hould they be eliminated immediatelyC Phased outC 4r shifted from reducing the upfront cost to some other solar

oosting strategyC #his is the :'th o' :ve parts o' o!r ;oo'top ;evol!tion report "eing p!"lished in serial. ;ead Part or Part / or Parr Part .


19/33

ser#es. +nother spin on the feed"in tari7 may be 8innesota’s recently adopted “#alue of solar” policy. If implemented by eligibletilities, it would pro#ide solar producers with a 2Q"year, ;-ed price contract for their power production, paid as an electricity bill credit.

Production Payments (“Feed-In Tarif Lite”) ince there are potential legal and political hurdles to implementing a full feed"in tari7rogram in the nited tates, a compromise policy might be a “!eed"In Tari7 &ite.” Instead of pro#iding the full contract price, the e-istingederal solar subsidy could be con#erted to a production payment that would co#er the di7erence between a regionally appropriate contrarice for solar Msu5cient for the owner to earn a modest return on in#estment o#er 2* yearsO and the local net metering rate. Note( theollowing chart is "ased on late // solar energy prices, m!ch higher than today=s. Mechanics of a 7ederal Production Payent or7eed!=n Tari@ Lite> J45!year contract "riceK The following chart illustrates how the payments would be relati#ely small in regions witmple sun and high electricity prices Mand net metering ratesO. Payments would be larger in places like eattle, where cheap electricity an

more moderate sunshine dominate. ince the #alue of net metering tends to rise with electricity prices M2V per year in our assumptions,lthough actually K"QV per year for most utilities o#er the past decadeO and the cost of solar is falling Mat V per yearO, using this program

won’t be particularly e-pensi#e. If the federal go#ernment pro#ided the margin for solar pro@ects on a 2*"year contract, and supported e#eolar pro@ect in the ne-t )* years based on the growth e-pectations we used earlier, the program’s peak cost would be under 2* billion in*2), supporting )1* gigawatts of solar. This is in comparison to the current L*V ta- credit, which cost o#er L billion in 2*)), in support . gigawatts of solar. 7ederal Cost of 7=T Lite Progra The abo#e chart shows the cost of the !IT &ite program o#er the ne-t L* yearspro@ects coming online in 2*2) would ha#e contracts through 2*K*O. (e used the cost of solar and net metering rates for t. &ouis as a pr

or the entire country. Conclusion The e-plosi#e growth of solar power has created a con#ergence of solar angrid electricity prices. (ithin the ne-t few years, millions of +mericans will ha#e a local, cost"e7ecti#and cleaner alternati#e to grid electricity . The coming of solar grid parity opens an enormous opportunity for democrati9inglectricity system #ia thousands of distributed solar power systems. nlike traditional electricity generation centrally planned and centrawned by large, pri#ate utilities solar on residential rooftops across the nited tates can open the electricity system to widespreadwnership of decentrali9ed solar energy systems. The economic bene;ts of the transformation would likewise be widely spread. Technical olitical barriers remain, but are surmountable. The most serious barrier is the potentially serious disruption posed by the looming e-pirati

f the federal L*V ta- credit Min 2*)1O. + thoughtless e-tension will enrich solar de#elopers at the e-pense ofa-payersD an abrupt e-piration will seriously a7ect the solar market in the many regions that ha#e not reached solar grid parity by 2*

+ hybrid policy approach is needed, whether to phase out the federal ta- credit in a fashion that is geographically eAuitable or to shift to aeed"in tari7 strategy to be more comprehensi#ely prepared for the economic issues of grid parity. 3uidelines for limiting distributedeneration on local electricity systems can be moderni9ed, #etted by data from actual solar power plants, and the limits raised. +lready, p

tility commissions are considering changes to the )QV rules to allow more solar power on distribution systems, and further research maye#eal e#en greater potential without signi;cant upgrades to the electric distribution system. Policies like net metering ha#e pro#ided a simccounting method for ;nancing on"site solar power and can be impro#ed by allowing for community net metering, lifting aggregate demaaps, and pro#iding policy alternati#es like feed"in tari7s. The coming of solar grid parity portends an enormous opportunity for citi9ens toecome more energy self"reliant, to become power producers themsel#es, and to transform the grid to a decentrali9ed and democrati9edlectricity system.

http://grist.org/article/how-to-phase-out-incentives-and-grow-solar-energy/www.ilsr.org/minnesotas-value-of-solar/http://grist.org/article/how-to-phase-out-incentives-and-grow-solar-energy/www.ilsr.org/minnesotas-value-of-solar/


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="acts

.nding governent subsidies forces co"etitionShah


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eeds to focus on demand creation and not try to manage supply. In doing so, it will unleash talented entrepreneurs as well as the in#estwilling to back them. ome companies will sur#i#e, others will not. %ut those that do will ha#e the essential ingredients for sustained succehere is absolutely a role for go#ernment in technology de#elopment. 8ost companies, especially young ones, cannot a7ord to in#est in besearch. The time frames are long, and only a small portion of the research results in commercially #iable products. ?et, this research is th

oundation of future industries. In#estment in basic research, through our uni#ersities and research institutiohat yields licensable technologies, is a more prudent path for the allocation of public resources. The

confusion behind energy subsidies coupled with slanted media co#erage has resulted in a myth thatolar power is not cost competiti#e and is dependent on go#ernment subsidies. This is simply false. In many paf the country today, solar energy is less e-pensi#e than con#entional forms of energy, creating consumer demand for solar to reduce monergy bills. +nd the solar industry is both an a7ordable and sustainable source of clean energy, and a signi;cant @ob creator. The .. sola

workforce today is around )2*,*** strong and growing. The facts are clear. The costs of de#elopment and production of fossil fuel energy heen underwritten with our ta- dollars to the bene;t of a few traditional energy companies. If we build the true costs into the price of all

nergy, solar power is not only competiti#e, it’s cheaper. 0owe#er we will only see that truth if we remo#e direct andndirect energy subsidies . (e ha#e a strong market for solar power today. (e ha#e a willing market, the necessary technology, an undisputable imperati#e to create a cleaner, safer planet. I’m committed to leading a company that deli#ers the best technology and

er#ice. (e will continue to re#olutioni9e power generation on a global scale, one kilowatt hour at a time. %ut a robust, renewableenergy market will remain hampered if the energy industry continues to chase the ne-t subsidy. !or good of our energy future, subsidies for all energy must e#entually end .

/ov# needs to sto" (ith subsidies!the energy arket can be co"etitive(ithout theLoris


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Solvency

/overnent choosing (inners and losers ends catastro"hically – ethanol"rovesNe(an 14 M:ick Newman, L))2, a @ournalist and author who speciali9es in business and consumer trends, News,

httpBwww.usnews.comnewsblogsrick"newman2*)2*L)more"e#idence"that"its"time"to"dump"ethanol, accessed on )Q)KO &ike many bad ideas, it seemed like a good one at ;rst. nfortunately, 'ongress went way o#erboard.+bo

* percent of the corn produced in +merica is used to make ethanol, a gasoline additi#e that ends up in most +mericansR gas tanks. (henorn is cheap and plentiful, this is a marginally sensible idea. %ut when corn becomes scarce and prices riseYwhich is happening now, as a

withering drought wrecks much of the nationRs corn cropYethanol production competes directly with the use of corn for food, causing a

eedless rise in food prices. ome e-perts are now calling for (ashington to temporarily issue wai#ers from aw so that more corn can be di#erted away from ethanol production and help stabili9e rising foodpricesYwhich would help consumers not @ust in the nited tates, but in poorer countries as well. The problem is that subsidiedoled out by (ashington for years ha#e distorted the farm economy and left many growerso#erdependent on a fuel that might not e-ist without (ashingtonRs help. o changing policies now would harmome farmers who, rightly or not, ha#e recei#ed implicit promises from (ashington to protect their li#elihood. Though itRs less e5cient thaasoline, corn"based ethanol began to catch on as a home"grown motor fuel during the oil shocks of the )J*s, since it seemed like a way

educe .. dependence on oil from the #olatile 8iddle /ast. Then it gained allure in the )JJ*s as a renewable fuel that helps reducemissions. In the early 2***s, President 3eorge (. %ush appro#ed new measures that raised the reAuirements for the use of renewable fu

mainly, corn ethanol. +ll along, 'ongress, pushed by farm"state legislators, has cranked up ethanol subsidwhich now stand at about 1 billion per year. This has happened e#en though ethanol is not #eryappealing to consumers . The fuel economy it generates is about 2Q percent lower than it is for gasoline, which is why the use of /which is >Q percent ethanol and )Q percent gasolineO ne#er really caught on, e#en though the $etroit automakers ha#e produced millions

=e-"fuel #ehicles with minor modi;cations that allow them to run on any blend of ethanol and gas. /thanol costs about L* cents less perallon than gasoline, but when you factor in the poorer mileage, the o#erall cost of running on />Q would be slightly higher for most dri#ero thereRs no natural incenti#e to choose it o#er gasoline. /thanol is still mi-ed with much of the gasoline sold at gas stations, in a blendnown as /)* M)* percent ethanolO which most cars can burn without any modi;cations. This ser#es two purposesB It o-ygenates the gas,

which reduces harmful emissions and smog, and it pumps up sales for blenders and corn growers who bene;t from the subsidies arranged

heir buddies in 'ongress. 8any dri#ers donRt know it, but one reason they tend to get lower gas mileage than the go#ernmentRs ownstimates is the presence of ethanol, which go#ernment mileage tests donRt account for. /#en 'ongress , howe#er, has begun

acknowledge that go#ernment support for ethanol needs to end , as federal budget cutters raise thepressure to a-e e#ery wasteful dollar. &ast year, the enate #oted to end the KQ"cent"per"gallon federal subsidy on ethanol. T

ill didnRt make it out of 'ongress, but that was before this yearRs drought, which is raising the pressure to stop distorting the market for cotill, that could take a while, because subsidies for ethanol ha#e helped it grow into a K2 billion industry that employs about J*,***

+mericans, and 'ongress may think twice about @eopardi9ing anybodyRs @ob in such a weak economy.

http://www.usnews.com/news/blogs/rick-newman/2012/07/31/more-evidence-that-its-time-to-dump-ethanolhttp://www.usnews.com/news/blogs/rick-newman/2012/07/31/more-evidence-that-its-time-to-dump-ethanolhttp://www.usnews.com/news/blogs/rick-newman/2012/07/31/more-evidence-that-its-time-to-dump-ethanolhttp://www.usnews.com/news/blogs/rick-newman/2012/07/31/more-evidence-that-its-time-to-dump-ethanolhttp://www.usnews.com/news/blogs/rick-newman/2012/07/31/more-evidence-that-its-time-to-dump-ethanol


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.conoy

ncreased governent interference (ill (recks the econoyTerry Miller 520 $irector, 'enter for International Trade and /conomics and the 8ark +. Eolokotron!ellow in /conomic !reedom, degrees in go#ernment and economics from the uni#ersity of te-as,httpBwww.heritage.orgresearchtestimonygo#ernment"inter#ention"a"threat"to"economic"reco#ery)Q, %yron 'hinhe record of governent interference in the econoy 0 whether in the nited tates or in countries around th

(orld0 is not "retty # The TA-P and TAL7 "rogras0 both initiated under the "reviousadinistration0 are good e:a"les of the "robles of governent interference in markets. The policymakers in#ol#ed argued that the programs were necessary to a#oid an immediate melt"down in ;nancial markets. (e cannot, of course, kwhat would ha#e happened in the programsR absence. 0owe#er, from the perspecti#e of si- months following their passage, we can see th

heir lasting result has been not the hoped"for increase in stability and lending in credit markets, but rather greateruncertainty and volatility # 8arkets need sure and stable go#ernment laws and policies in order to properly price assets. ThTA-P0 in particular, has created confusion and interfered (ith the establishment of a arket"clearing priche troubled assets in Auestion. There has been a disappointing lack of transparency in the programRs decision"making processes that lea#otential in#estors uncertain of the direction of the market and therefore unwilling to in#est. The T+:P may ha#e arti;cially in=ated the #a

f the troubled assets, but it has done little to get them o7 the books of the ;nancial institutions# The 8scal stiulus "ackag"assed under the current adinistration is even (orse. /#en if one accepts the Eeynesian notion that increa

o#ernment spending can increase economic growth, and there are real doubts about this, alost none of the oney hasctually been s"ent, or will be spent, in a timely fashion. 4ne estimate this month is that only about L billion of the > billiontimulus package has been spent so far. 8ost of the money is pro@ected to be spent in the future when governent stiulus (o longer be appropriate and will most likely only contribute to inationary "ressure. The cost of these program

creating a huge debt for our children that will ha#e to be ;nanced somehow. =f (e continue the0 (e are goino see either ination or increased ta-es or both, as well as a fall in the value of the dollar and decreasedoreign investent in the nited tates, lo(er "roductivity o#erall, and reduced economic gro(th in the futurehat is far from doing no harm.

-ene(able subsidies destroy the econoy and increase "overty.-


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ower in pain gets the market price plus a subsidy which the country deems more “reasonable.” 'ompanies’ pro;ts are capped at a .Kpercent return, after which renewable owners must sell their power at market rates. The measure is retroacti#e to when the renewab

lant was ;rst built.FiiiG Therefore, some renewable plants, if they ha#e already recei#ed the .K percent return, are recei#ing only the marrice for their electricity. !urther, wind pro@ects built before 2**Q will no longer recei#e any form of subsidy, and this a7ects more than a thf pain’s wind pro@ects. +s a conseAuence of the go#ernment’s actions to rein in their subsidies and supports, pain’s wind sector isstimated to ha#e laid o7 2*,*** workers and its solar sector, which once employed 1*,*** workers, now employs @ust Q,***. In 2*)L, sol

n#estment in pain dropped by J* percent from its 2*)) le#el of )* billion. pain’s 2* percent renewable energy share of generation frowind and solar power has come at a #ery high cost to the nation. /erany In 3ermany, as part of the country’s “/nergiewende”, or “eneransformation,” electric utilities ha#e been ordered to generate LQ percent of their electricity from renewable sources by 2*2*, Q* percen*L*, 1Q percent by 2*K*, and >* percent by 2*Q*. To encourage production of renewable energy, the 3erman go#ernment instituted a fe

n"tari7 early, e#en before pain. In )JJ), 3ermany established the /lectricity !eed"in &aw, which mandatedhat electric utilities purchase electricity from renewable sources at abo#e"market rates. + law passed

2*** e-tended feed"in tari7s for another 2* years.FiG 4riginally, to allow for wind and solar generation technologies to mature intoompetiti#e industries, 3ermany planned to e-tend the operating li#es of its e-isting nuclear =eet by an a#erage of )2 years. %ut, theukushima nuclear accident in 6apan changed 3ermany’s plans and the country Auickly shuttered > nuclear reactors and is phasing out thether J reactors by 2*22, lea#ing the country’s future electricity production mostly to renewable energy and coal.FiiG 'oal consumption in

3ermany in 2*)2 was the highest it has been since 2**>, and electricity from brown coal in 2*)L reached the higheste#el since )JJ*, when /ast 3ermany’s o#iet"era coal plants began to be shut down. 3erman electricity generation from coal increao compensate for the loss of the hastily shuttered nuclear facilities. 3ermany is now building new coal capacity at a rapid rate, appro#ing ew coal plants to come on line within the ne-t 2 years to deal with e-pensi#e natural gas generation and the high costs and unreliability enewable energy.FiiiG +s a result, carbon dio-ide emissions are increasing. In 2*)2, for e-ample, 3ermany’s carbon dio-ide emissions rose

).L percent o#er 2*)) le#els.Fi#G (hile the nited tates is using our low cost domestic natural gas to lower coal";red generation, in3ermany, the cost of natural gas is high since it is purchased at rates competiti#e with oil. 3ermany has also enacted a moratorium on

ydraulic fracturing, in response to opposition to the practice from its 3reen Party. nfortunately, 3ermany has some of thehighest costs of electricity in /urope, making its consumers energy poor. In 2*)2, the a#erage price electricity in 3ermany was L1.2Q cents per kilowatt"hour,FiG compared to @ust )).>> cents for ..

households, triple the .. a#erage residential price.FiiG These prices led 3ermany’s /nergy 8inister tecently caution that they risk the “deindustriali9ation” of the economy. In addition to high electricity prices,

3ermans are paying higher ta-es to subsidi9e e-pensi#e green energy. The surcharge for 3ermany’s :enewable /nergy &e#y that ta-esouseholds to subsidi9e renewable energy production increased by Q* percent between 2*)2 and 2*)L from [L.1 cents MK.J .. centsOQ.2> cents M1. centsO per kilowatt hour, costing a 3erman family of four about [2Q* ML2KO per year, including sales ta-.FiiiG The 3erman

o#ernment raised the surcharge again at the start of this year by )> percent to [1.2K cents per kilowatt hour M>.1) ..entsO representing about a ;fth of residential utility bills,Fi#G making the total feed"in tari7 support for 2*)K eAual to [2).Q billion M2illionO.F#G +s a result, >* 3erman utilities are raising electricity rates by K percent, on a#erage, in !ebruary, 8arch, and +pril of this year. T

poor su7er disproportionately from higher energy costs because they spend a higher percentage ofheir income on energy. +s many as >**,*** 3ermans ha#e had their power cut o7 because of annability to pay for rising energy costs, including 2**,*** of 3ermany’s long"term unemployed.F#iG

3ermany knows reforms are necessary and two are being considered. 4n 6anuary 2J, the 3erman 'abinet backed a plan for new commercnd industrial renewable power generators to pay a charge on the electricity they consume. +s part of the reform of the :enewable /nergyources +ct, the proposal would charge self generators * percent of the renewable subsidy surcharge, Mi.e. the [1.2K cents per kilowatt hnder the proposal, the ;rst )* megawatt hours would be e-empt for owners of solar photo#oltaic pro@ects that are less than )* kilowatts.

+ccording to the 3erman olar /nergy Industry +ssociation, about >L percent of solar self generators would be sub@ect to the new charge. abinet is e-pected to sign the draft into law in +pril and will go to the Parliament for a #ote in 6une. The 3erman go#ernment is also

onsidering a reduction in the feed"in tari7 from the current a#erage of [) cents M2L.K .. centsO per kilowatt hour to [)2 cents M)1.. centsO per kilowatt hour.F#iiG ,nited ingdo The nited Eingdom is targeting a )Q percent share of generation from renewabources by 2*2*, up from )2 percent today. The increased renewable power will cost consumers )2* pounds a year Mabout 2**O abo#e thurrent a#erage energy bill of ),K2* pounds M2,L12O. The E is closing coal";red plants to reduce carbon dio-ide emissions in fa#or of

enewable energy. In the past )Q months, >.2 gigawatts of coal capacity were shuttered. +nother )L gigawatts are at risk of closing b*)J, according to the 'onfederation of .E. 'oal Producers.F#iiiG +s an incenti#e, the E go#ernment pro#ided renewa

energy producers a guaranteed subsidy totaling twice the whole sale price of electricity, costing morhan \) billion a year M).11 billionO. %ecause these costs are placing .E. households in energy

po#erty, the go#ernment has a new proposal where renewable companies will ha#e to sell theirelectricity to the national grid under a competiti#e bidding system . The new proposal limits the total

amount of subsidies a#ailable for green energy, which were pre#iously e7ecti#ely limitless. The reductioubsidies has led to renewable de#elopers scrapping plans amid claims that the proposal will make future renewable de#elopment

npro;table.Fi-G =taly imilar to 3ermany and pain, Italy instituted a feed"in"tari7 in the early )JJ*s to spur renewablee#elopmentF-G, and also found it too costly. In 2*)2, the go#ernment charged all solar producers a ;#e cent ta- per kilowatt hour on all sonsumed energy. The go#ernment also curtailed purchasing power from solar self generators when their output e-ceeded the amount the

ystem needed. Those pro#isions were followed in 2*)L by the go#ernment instituting a “:obin 0ood ta-” of )*.Q percent to renewanergy producers with more than [L million MK.)K millionO in re#enue and income greater than [L**,*** MK)K,***O.F-iG +ccording to Italyolar industry, the result of these and other changes has been a surge in bankruptcies and a massi#e decrease in solar in#estment.

Conclusion /urope was Auick to pursue compliance with the Eyoto Protocol by instituting a cap"and"trade system and mandating andubsidi9ing renewable technologies in their power generation sector. 0owe#er, these policies ha#e left /urope with greenhouse gas emissiigher than targeted, and either huge re#enue losses or consumers in energy po#erty due to incenti#es to promote renewable energy, suceed"in"tari7s. /uropean go#ernments are now slashing these incenti#es despite contracts that would otherwise continue them. The nitedtates should take a lesson from /urope’s e-perience, rather than calling for these policies to be established here, as some are doing.

http://opinion.financialpost.com/2014/03/18/governments-rip-up-renewable-contracts/http://opinion.financialpost.com/2014/03/18/governments-rip-up-renewable-contracts/http://opinion.financialpost.com/2014/03/18/governments-rip-up-renewable-contracts/http://www.institutebe.com/energy-policy/feed-in-tariffs-history.aspxhttp://instituteforenergyresearch.org/germany/Germany_Study_-_FINAL.pdfhttp://instituteforenergyresearch.org/germany/Germany_Study_-_FINAL.pdfhttp://instituteforenergyresearch.org/germany/Germany_Study_-_FINAL.pdfhttp://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=1&pid=1&aid=2&cid=r3,&syid=2008&eyid=2012&unit=TSThttp://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=1&pid=1&aid=2&cid=r3,&syid=2008&eyid=2012&unit=TSThttp://www.ft.com/intl/cms/s/0/e6470600-77bf-11e3-807e-00144feabdc0.html#axzz2xkOpzpcshttp://www.ft.com/intl/cms/s/0/e6470600-77bf-11e3-807e-00144feabdc0.html#axzz2xkOpzpcshttp://www.ft.com/intl/cms/s/0/e6470600-77bf-11e3-807e-00144feabdc0.html#axzz2xkOpzpcshttp://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy-2013/statistical-review-downloads.htmlhttp://www.eia.gov/totalenergy/data/monthly/pdf/sec9_11.pdfhttp://www.nytimes.com/2014/01/22/business/energy-environment/german-energy-official-sounds-a-warning.html?_r=0http://www.reuters.com/article/2014/02/24/germany-powerprices-idUSL6N0LT1SZ20140224http://www.frontier-economics.com/europe/en/news/1501/http://www.frontier-economics.com/europe/en/news/1501/https://www.bnef.com/ViewEmail/6c8704bc-6c83-cd7a-8730-95c002e62d41-297c8a14f064-12f12f#clean_energyhttps://www.bnef.com/ViewEmail/6c8704bc-6c83-cd7a-8730-95c002e62d41-297c8a14f064-12f12f#clean_energyhttp://www.bloomberg.com/news/2014-03-19/green-rules-shutting-power-plants-threaten-u-k-shortage-energy.htmlhttp://www.bloomberg.com/news/2014-03-19/green-rules-shutting-power-plants-threaten-u-k-shortage-energy.htmlhttp://www.bloomberg.com/news/2014-03-19/green-rules-shutting-power-plants-threaten-u-k-shortage-energy.htmlhttp://www.bloomberg.com/news/2014-03-19/green-rules-shutting-power-plants-threaten-u-k-shortage-energy.htmlhttp://www.bloomberg.com/news/2014-03-19/green-rules-shutting-power-plants-threaten-u-k-shortage-energy.htmlhttp://www.telegraph.co.uk/earth/energy/windpower/10670115/Wind-farm-plans-in-tatters-after-subsidy-rethink.html#disqus_threadhttp://www.institutebe.com/energy-policy/feed-in-tariffs-history.aspxhttp://opinion.financialpost.com/2014/03/18/governments-rip-up-renewable-contracts/http://opinion.financialpost.com/2014/03/18/governments-rip-up-renewable-contracts/http://opinion.financialpost.com/2014/03/18/governments-rip-up-renewable-contracts/http://www.institutebe.com/energy-policy/feed-in-tariffs-history.aspxhttp://instituteforenergyresearch.org/germany/Germany_Study_-_FINAL.pdfhttp://instituteforenergyresearch.org/germany/Germany_Study_-_FINAL.pdfhttp://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=1&pid=1&aid=2&cid=r3,&syid=2008&eyid=2012&unit=TSThttp://www.ft.com/intl/cms/s/0/e6470600-77bf-11e3-807e-00144feabdc0.html#axzz2xkOpzpcshttp://www.ft.com/intl/cms/s/0/e6470600-77bf-11e3-807e-00144feabdc0.html#axzz2xkOpzpcshttp://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy-2013/statistical-review-downloads.htmlhttp://www.eia.gov/totalenergy/data/monthly/pdf/sec9_11.pdfhttp://www.nytimes.com/2014/01/22/business/energy-environment/german-energy-official-sounds-a-warning.html?_r=0http://www.reuters.com/article/2014/02/24/germany-powerprices-idUSL6N0LT1SZ20140224http://www.frontier-economics.com/europe/en/news/1501/https://www.bnef.com/ViewEmail/6c8704bc-6c83-cd7a-8730-95c002e62d41-297c8a14f064-12f12f#clean_energyhttp://www.bloomberg.com/news/2014-03-19/green-rules-shutting-power-plants-threaten-u-k-shortage-energy.htmlhttp://www.bloomberg.com/news/2014-03-19/green-rules-shutting-power-plants-threaten-u-k-shortage-energy.htmlhttp://www.telegraph.co.uk/earth/energy/windpower/10670115/Wind-farm-plans-in-tatters-after-subsidy-rethink.html#disqus_threadhttp://www.institutebe.com/energy-policy/feed-in-tariffs-history.aspxhttp://opinion.financialpost.com/2014/03/18/governments-rip-up-renewable-contracts/


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.nergy Prices

.nergy "rices soar – lack of diversity leads to energy ono"olyaen


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-ei:es


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Nuke Tradeo@ DA


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Links

-ene(ables and nuclear energy are utually e:clusive "aths# Henkins 1%&enkins


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his study focuses on the system e7ects of nuclear power and #ariable renewables, such as wind and solar, as their interaction is becomin

ncreasingly important in the decarbonising electricity systems of 4/'$ countries. In particular, the integration of #ariableenewables is a comple- issue that profoundly a7ects the structure , ;nancing and operational mode

electricity systems in general and nuclear in particular . The present study, o#erseen by the (orking Party on Nuclearnergy /conomics M(PN/O of the 4/'$ Nuclear /nergy +gency MN/+O, presents an o#er#iew of the most important system e7ects, propose

methodologies to assess them and pro#ides systematic empirical cost estimates. The introduction of signi;cant amounts o#ariable renewables generates a number of hitherto unaccounted for impacts that are composed intalia of the increased costs for transport and distribution grids, short"term balancing and long"termadeAuacy. The deployment of electricity from #ariable renewables is also signi;cantly a7ecting theeconomics o f dispatchable power generation technologies, in particular those of nuclear power, both in the short andhe long run . In the short run, with the current structure of the power generation mi- remaining in

place , all dispatchable technologies, nuclear, coal and gas, will su7er due to lower a#erage electricity prices andeduced load factors. $ue to its relati#ely low #ariable costs, e-isting nuclear power plants will do better than gas and coal plants,

which are already substantially a7ected in some countries. In the long run, howe#er, high";-ed cost technologies such as nuclear be a7ected disproportionately by the increased di5culties in ;nancing further in#estments in #olatilow"price en#ironments.The outcome of these competing factors will depend on the amount of #ariaenewables being introduced, local conditions and the le#el of carbon prices. The latter are particularly impor

(hile nuclear power has some system costs of its own, it remains the only ma@or dispatchable low"carbon source of electricity, other than hydropower which is in limited supply. 'arbon prices will thus be anncreasingly important tool to di7erentiate between low"carbon and high"carbon dispatchable technologies.

ncrease in rene(ables subsidies forces shut do(n of nuclear "lants

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e-tra costs o#er the coming years because of negati#e pricing resulting from renewable policies . Thesosts will clearly increase as renewable energy targets ramp up in many states between now and 2*2Q. (e are already seeing these impalay out in se#eral regions. The shutdown of the Eewaunee nuclear plant in (isconsin, for e-ample, was blamed on low natural gas prices

arge #olumes of new wind generation. +nd in Te-as, Public tility 'ommission chairman $onna Nelson testi;ed at a state enate Natural:esources hearing last eptember that “the market distortions caused by renewable energy incenti#es are one of the primary causes I belf our current resource adeAuacy issue^FTGhis distortion makes it di5cult for other generation types to reco#er their cost and discourages

n#estment in new generation.” /-elon chief 'hristopher 'rane went e#en further, warning the press earlier this year that “there is a #ery robability that e-isting safe, reliable nuclear plants will no longer be competiti#e and will ha#e to be retired early” if the PT' remains in p

n a recent report by the 4rgani9ation for /conomic 'ooperation and $e#elopment M4/'$O, analysts cautioned that high";-edcost technologies, such as nuclear, will lea#e the market due to their load and pro;tability loss resultrom increased penetration of wind power. %ecause of the departure of these despatchable sources from the grid, the #olaf electricity prices will increase substantially. 4/'$ thus suggests that policymakers “swiftly” work to address this growing challenge by

ducating the public on the need to protect electricity supply security. (e

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