But there's a huge downside to it: this subsidy is masking the low EROEI of some of these new energy sources, that otherwise should be preventing ill fated projects from surviving in the market.

Huh!?

1. The very point of feed-in tariffs is to separate still in development renewables from the total market, to boost investment which would presumably bring down prices. Wind power was very expensive when feed-in tariffs were invented, too.

2. A market is not a deux ex machina. What survives best on a market depends on how that market is set up. Feed-in laws are part of how markets are set up. Shareholder expectations of regular quarterly profits are also how markets can be set up. Differing exposure of initial investment to interest rates is also part of how a market is set up. Safety requirements, carbon credits, decommissioning fund requirements are all part of how a market is set up, too. And so on.

3. I would also remark that when thinking of energy policy, one could think beyond markets, I mean a public role going beyond setting up the rules of markets.

Having said all that. I remain curious if wave power can ever achieve more than a marginal role. It's not just that we will see only in a decade or so if it can work reliably from a technical point of view and if its economics can be improved substantially compared to the pilot phase. There is also a relatively low total exploitable capacity. (Same problem for tidal power.) So I suspect it will become only locally important, if at all.

_{*Lunatic*, n.
One whose delusions are out of fashion.}