-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
How a Broken Energy Policy Hurts Business
- Thread starter Robert.Boston
- Start date
-
- Tags
- Energy Environment Policy
Decent article. Thinking about the power companies "wondering if they'll be allowed to recover their costs" for renewables. I suppose that doesn't apply in NY, with its "deregulated" energy market (I put the word in quotes because the "deregulation" actually seems to involve a lot *more* regulation than the "regulated utility" model, just a different sort). What "deregulated" really means is that power production and power distribution are supposed to be segregated, without cross-subsidization, and with competition in power production.
This should make renewables for the NY market a pure business bet; if you think that you're going to be able to beat fossil fuel prices over the lifetime of the installation, you (as a power producer) would do it. And any respectable estimate of the future of fossil fuels would suggest that their prices will go up. Have you seen different behavior in "deregulated" states vs. fully regulated states?
This should make renewables for the NY market a pure business bet; if you think that you're going to be able to beat fossil fuel prices over the lifetime of the installation, you (as a power producer) would do it. And any respectable estimate of the future of fossil fuels would suggest that their prices will go up. Have you seen different behavior in "deregulated" states vs. fully regulated states?
The last President to supply a high-level vision on energy was Jimmy Carter, says Stoddard, but that Administration’s energy policies ran into political and business opposition, and didn’t get the popular support they needed.
CFO.com (http://s.tt/1ngZc)
Could not the same be said about the efforts of Steven Chu?
@vfx: Unfortunately, I never saw a bold vision from Secretary Chu that was comprehensive in scope. He clearly has done exceptionally well at fostering energy innovation (a part of the interview that didn't make it into the article), where I think government has an appropriate role.
- - - Updated - - -
For development of renewables, no. It is the rare exception to see a "merchant" renewable power plant being built, at least these days (where "merchant" means the developer is bearing the long-term capital risk, i.e. no long-term contracts). Before the 2009 crash, there was a certain volume of merchant renewables in restructured markets (="deregulated," but as you correctly note, that's not quite accurate), but that's dried up as natural gas prices collapsed.
Renewables development has been driven strongly by local policies. Texas volunteered to pay for all the transmission costs to bring wind to market, so it leads the country in wind development. California utilities are required to have plans in place, with contracts, to meet a 33% RPS standard by 2020, so we see lots of development there in spite of low fossil-fuel prices. Solar development is highly dependent on state policies, particularly whether "net metering" or other pro-distributed-generation tariffs are in place.
The challenge for a business in this environment is that the greatest risks are what we call "stroke of the pen": a quick reversal of policy, possibly by a single person in a powerful job, can collapse your business plan. Given that many of these policies have questionable public support--particularly in lean economic times--this isn't a great time to be counting on government largesse to turn a profit.
- - - Updated - - -
For development of renewables, no. It is the rare exception to see a "merchant" renewable power plant being built, at least these days (where "merchant" means the developer is bearing the long-term capital risk, i.e. no long-term contracts). Before the 2009 crash, there was a certain volume of merchant renewables in restructured markets (="deregulated," but as you correctly note, that's not quite accurate), but that's dried up as natural gas prices collapsed.
Renewables development has been driven strongly by local policies. Texas volunteered to pay for all the transmission costs to bring wind to market, so it leads the country in wind development. California utilities are required to have plans in place, with contracts, to meet a 33% RPS standard by 2020, so we see lots of development there in spite of low fossil-fuel prices. Solar development is highly dependent on state policies, particularly whether "net metering" or other pro-distributed-generation tariffs are in place.
The challenge for a business in this environment is that the greatest risks are what we call "stroke of the pen": a quick reversal of policy, possibly by a single person in a powerful job, can collapse your business plan. Given that many of these policies have questionable public support--particularly in lean economic times--this isn't a great time to be counting on government largesse to turn a profit.
Jointguy
Member
"Solar development is highly dependent on state policies, particularly whether "net metering" or other pro-distributed-generation tariffs are in place."
I can say that in California, PG&E is fighting this at every step. They have been forced into net metering but have put measures into place to ensure residential solar does not cut into there business. Currently, if I consistently generate more electricity than I use they will give me the "spot market price" for the energy (currently $0.04/KWh) while they charge their customers $ 0.20-0.40/KWh.
I can say that in California, PG&E is fighting this at every step. They have been forced into net metering but have put measures into place to ensure residential solar does not cut into there business. Currently, if I consistently generate more electricity than I use they will give me the "spot market price" for the energy (currently $0.04/KWh) while they charge their customers $ 0.20-0.40/KWh.
This paragraph stung my eyes:
Same wrong arguments are all over the place when discussing the switch to renewables here in Germany. First, why wrong?
[1] In Germany, the increased cost of power production does not affect business with high power consumption. They are exempt from contributing to the cost of feed-in tariffs
[2] China has the worlds largest wind energy production capacity. Next on their agenda is going solar. It is a planned economy so this didn't happen by chance or forces of the free market. How can anybody call that a "non comprehensive move"???
[3] and the Chinese government edicts to tear down medium capacity, low-efficiency coal plants for every new plant they open. China is running out of coal production capacity and started to import coal at large scale in the last years. They simply swap their coal power plants to make better use of domestic coal. I'd say China is the leading market for top-notch efficiency coal plants (near 46%).
In Germany, some interested parties feed arguments into the public discussion along the lines "we can't afford to switch to renewables right now because our business will lose out in global competition then."
So we cannot afford to save the planet or we would be out of business, all together - Germany, U.S., Japan, China.
This dilemma calls for political action, a call that all politicians chose to ignore in the last 40 years - since the Club of Rome published "limits to growth".
I wonder what must happen to change world leaders' minds.
We need to see renewable power that doesn't need subsidies, but can compete directly with fossil fuels. I'm working on that; stay tuned.
Similar threads
